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The backstory: PricewaterhouseCoopers (PwC), a well-known global consulting firm, has been facing some issues down under in Australia. In January, it came to light that a former partner at PwC Australia got into serious trouble with the country's tax practitioners board. Apparently, he spilled the beans on some confidential government tax plans.
Allegedly, this ex-partner leaked classified information while working as an advisor to the Australian government. He handed out drafts of corporate tax avoidance laws to his PwC colleagues, who then used them to impress potential clients. This all went down between 2014 and 2017. PwC clarified that it didn't use confidential information to help clients dodge their taxes. But in response to the scandal, the Australian Senate launched an inquiry into the entire consulting sector, and the Treasury passed the case to the police for a criminal investigation.
More recently: A few weeks ago, PwC Australia revealed that it had identified the current and former partners involved in this scandal. The firm even gave those names to lawmakers in Australia. So, the Australian government, which also happens to be a major client of PwC, is fuming. Treasurer Jim Chalmers called it a "shocking breach of trust." Some lawmakers are even suggesting cutting off PwC from any government contracts.
Last month, the former CEO of PwC Australia, Tom Seymour was found to be one of the 67 employees who received those leaked emails. Seymour decided to step down, and acting CEO Kristin Stubbins will stick around until newly-appointed CEO Kevin Burrowes, who's currently in Singapore, can swoop in and take over. PwC also put nine partners on leave and made changes to its governance board. Stubbins made it clear that the company’s committed to getting to the bottom of this.
The development: Now, PwC is taking some action to deal with this scandal. The company is selling off its government advisory business in Australia. And guess how much it’s going for – just one Aussie dollar, which is like 70 cents in US dollars. This decision will create two separate entities to make sure that crucial services for its public sector clients continue to run smoothly, according to PwC. After all, this government business division brings in about 20% of PwC Australia's yearly revenue and employs around 1,750 people.
Allegro Funds, a private equity firm, is stepping in as the buyer. And to steer the ship in a new direction, PwC Australia appointed Burrowes as its new CEO, as he's got some experience under his belt, previously leading he PwC Network’s Global Clients and Industries. But here's the fallout. Big players like AustralianSuper, which handles pension funds, and even Australia's central bank have decided to hold off on entering any new contracts with PwC because of the scandal.
“Some of the confidential information was disclosed by Mr. Collins with other PwC personnel who, in turn, disclosed to clients or potential clients of PwC,” said Australia’s tax board on its website.
“Specifically, I apologise to the community; to the Australian government for breaching your confidentiality; to our clients for any questions this may have raised about our integrity and trustworthiness and to the 10,000 hard-working, values-driven PwC Australia partners and staff who have been unfairly impacted,” said PwC Australia’s acting CEO Kristin Stubbins last month.
"Flogging off the confidential information to make a buck is not consistent with the sort of good faith that we want to see when we consult business on changes, whether it's tax changes or other changes," said Treasurer Jim Chalmers in May