The Australian arm of professional services firm PricewaterhouseCoopers (PwC) has struck a deal to offload its controversial government business Allegro Funds for $1, following a scandal that involved leaking confidential tax plans for the benefit of private sector clients.
The group has also announced PwC Network’s Singapore-based Global Clients & Industries leader Kevin Burrowes will relocate to Sydney as the new CEO of PwC Australia.
In the interim Kristin Stubbins will remain as acting CEO, having taken on the role after Tom Seymour resigned in May following revelations of the scandal.
PwC Australia and Allegro Funds are targeting signing a binding agreement by the end of July, in a move that will mean an exit from all government advisory work for PwC, at both the state and federal levels.
"We have taken this step because it is the right thing to do for our public sector clients and to protect the jobs of the circa 1,750 talented people in our government business," PwC Australia board chair Justin Carroll said yesterday.
"This transaction will result in the first pure play, at scale, government business in the market.
"This was an extremely difficult decision, but we are determined to take all necessary steps to protect the jobs of our people and re-earn the trust of our stakeholders."
The government business represented around 20 per cent of PwC Australia's FY23 revenue, so whilst the exit will impact the firm’s future size and operations, PwC expects it will allow the firm to "move forward with predictability and focus, and ensure stability for the rest of PwC’s clients in other parts of the business".
"This transaction marks a new direction for PwC Australia and puts us on a path for success as we focus on our people and serving clients across Australia and our critical role in supporting the capital markets,” Carroll said.
Incoming CEO Kevin Burrowes will also serve as chair of the firm's executive board to ensure PwC fully responds to the need to enhance leadership and governance, and reinforce the group's values throughout the organisation.
"The Board wants to thank our Acting CEO Kristin Stubbins for leading the firm during this challenging period marked by rapid change," Carroll said.
"We look forward to welcoming Kevin to our firm and leveraging his decades of executive leadership, unique experience working with PwC’s largest global clients and his extensive knowledge of the PwC Network.
"Kevin’s experience across other parts of the PwC Network ensures that as he takes over the leadership in Australia he brings a fresh perspective to the firm, and he will work with his colleagues and management team to re-earn trust with PwC Australia's stakeholders."
Carroll said under past leadership PwC Australia "failed to meet the Network’s Code of Conduct and uphold the Network’s professional standards and values".
"Its past actions are not representative of the work and behaviours of PwC around the world and I am deeply sorry to our clients, our broader stakeholders and our people," he said.
"PwC Australia has significant work to do and I am confident that the steps they are taking with the Network’s support will result in a stronger firm."
Kevin will work with the firm’s new chief risk and ethics leader, Tony O’Malley, and the wider management team to implement the recommendations of Dr Ziggy Switkowski’s independent review of PwC Australia, which will be published in September as well as implement any other necessary changes that need to be made to improve the firm’s culture and standards.
"I am honoured to have been asked to lead an organisation that has been part of the Australian business community for 150 years,” Burrowes said.
"Along with the leadership team, I will work tirelessly to increase transparency and repair trust with our stakeholders, while also enhancing our governance and culture."
Today's update follows moves in late May to 'ringfence' the Federal Government business to minimise conflicts of interest and enhance governance. Nine partners were directed to go on leave pending the outcome of PwC's own investigation, and it was announced a process was underway to appoint two independent, non-executive directors to the firm's governance board.
PwC has reiterated previous claims that its clients were not involved in any wrongdoing and no confidential information was used to enable clients to pay less tax.
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