SYDNEY, June 25 (Portal) – PwC Australia on Sunday struck an exclusivity deal with private equity firm Allegro Funds to sell its government practice for A$1 while hiring a Singaporean manager to run its local firm to lead the aftermath of a national scandal.
The scandal, which erupted in January, involves a former PwC tax partner who had advised the federal government on legislation to prevent corporate tax avoidance and shared confidential information with colleagues, who then used it to solicit business from multinational companies.
Amid mounting backlash from key government clients, PwC said it had entered into an exclusivity agreement to sell its federal and state government business to Allegro Funds for A$1 ($0.67), first reported on Friday.
Both PwC and Allegro are targeting a binding agreement within a month, the professional services firm said in a statement on its website.
If the deal goes through, Allegro will set up the new company as a corporation rather than a partnership, according to a source who is not authorized to speak to the media. Ownership will be split between Allegro and the former PwC partners, but the exact split is unknown, the source said.
A spokesman for Allegro Funds declined to comment.
PwC said the divestment accounted for about 20% of revenue for fiscal 2023. The company had sales of AUD 3 billion (US$ 2 billion) last fiscal year.
“We have taken this step because it is right for our public sector clients and to protect the jobs of the approximately 1,750 talented people in our government business,” said Justin Carroll, Chief Executive of PwC Australia.
The deal aims to seal off the company’s government consulting business and restore confidence to the many departments and agencies that have kept the company from taking on new business.
Labor Senator Deborah O’Neill, who helped declassify a cache of internal PwC emails last month, said the company could not extricate itself from the scandal until full details of the people involved in the confidential breach were released documents were involved.
“More of the same with a new name is still more of the same,” she said in a statement.
NEW CHAIRMAN
Global PwC Chairman Bob Moritz issued a public apology in a statement, saying under previous leadership PwC Australia had failed to live up to the company’s standards and values.
Kevin Burrowes, currently Global Clients & Industries Leader based in Singapore, will become CEO and will assume this position once he relocates to Sydney.
Acting chief executive Kristin Stubbins will remain in office until Burrowes arrives.
“PwC Australia is very busy and I am confident that the steps they are taking will result in a stronger company,” said Moritz.
($1 = 1.4977 Australian dollars)
Reporting by Lewis Jackson and Sam McKeith; Edited by Christopher Cushing and Tom Hogue
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Lewis Jackson