27 June 2023

PwC's new bloke boss and 'exit' from government work met with cynicism

| Chris Johnson
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PwC building in Barton

If ever a company needed a new direction, PricewaterhouseCoopers is that company. Photo: David Murtagh.

What should be made of PwC’s “extremely difficult decision” to divest itself of all government work by selling that arm of the business to private equity investor Allegro Funds for $1?

Not too much, I would suggest. At least nothing positive.

In a weekend press release announcement, PwC named its new chief executive officer and told the world it was no longer interested in advising governments at the federal or state levels.

The divestment will create two independent firms, the company said, while ensuring there will be no disruption in vital services to public sector clients.

The company will do the honourable thing and work with Allegro Funds to ensure a seamless transition.

“We have taken this step because it is the right thing to do for our public sector clients and to protect the jobs of [around] 1750 talented people in our government business,” PwC Australia board chair Justin Carroll said.

“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.”

READ ALSO Senate inquiry scathing of PricewaterhouseCoopers’ ‘calculated breach of trust’ tax leak

What it means for PwC Australia is that it will remove itself from all government advisory work – the type of work it has shown it can’t be trusted with anyway.

“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.

If ever a company needed a new direction, PricewaterhouseCoopers is that company.

The brand damage to PwC cannot be overstated. It’s trashed.

Treasury engaged the firm to help the Federal Government devise a scheme to end multinationals avoiding paying their share of tax.

Then PwC released the confidential information to its multinational clients, along with a plan to cheat the scheme it was helping the government to establish.

Coming back from that, once it became public knowledge, was never going to be a walk in the park.

It’s now a matter of criminal investigation, internal investigation and parliamentary inquiry, so amputating its government advisory arm is the least PwC could have done.

But the move has been met with scepticism (surprise, surprise).

Labor Senator Deborah O’Neill was straight out with the “phoenixing” term – where a business in trouble liquidates then sets up a new entity with the same people.

She said while PwC had been very slow with its responses to public inquiries into its breach of trust, it has acted with “unseemly haste” with this move “to try and phoenix itself back into some sort of connection with the government”.

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“I am very concerned at this point of time that the motivations of those at PwC remain self-centred and not about service,” Senator O’Neill said during an ABC radio interview.

“Let’s face it, people who have been on the partner track for most of their life have been [indoctrinated] into the ways of PwC, which have now been revealed to the Australian people as contemptuous,” O’Neill said.

“There is a very big bridge between where PwC currently is and any modicum of trust that a government might have with services provided to them by a company still dominated by a majority of PwC staff.”

The Department of Finance says it will be considering the implications of the changes in relation to existing and future government contracts.

Hopefully, it will also consider what Senator O’Neill says about it.

She is making some valid points.

The other part of PwC’s announcement – the bit about the new CEO – is lifted right from the boys’ club manual and is playing out just as predicted here at Region.

Singapore-based Kevin Burrowes, currently the PwC network’s global clients and industries leader, will be appointed CEO.

He will become a partner in PwC Australia and relocate to Sydney after the Australian immigration process.

That will send acting CEO Kristin Stubbins back to her old desk once Burrowes arrives.

It’s called the glass cliff – put a woman at the helm when the business is in trouble, but she’s only warming the seat for one of the lads.

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Better make sure they pay the GST on that $1 sale and not dodge the tax.

Tom Worthington1:38 pm 27 Jun 23

The $1 for PwC’s government consulting arm seems overpriced.

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