SYDNEY, June 25 (Reuters) – PwC Australia struck an exclusivity deal with private equity firm Allegro Funds on Sunday to sell its government practice for A$1 as it brought in an executive from Singapore to guide the local firm through the fallout from a national scandal.
The scandal, which broke in January, involves a former PwC tax partner who had advised the federal government on laws to prevent tax avoidance and shared confidential information with colleagues who then used it to pitch multinational companies for work.
Amid a growing backlash from key government clients, PwC said it had entered into an exclusivity agreement to sell its federal and state business to Allegro Funds for A$1 ($0.67) as first reported on Friday.
Both PwC and Allegro are aiming for 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 firm as a limited liability company, not a partnership, according to a source who was not authorized to speak to the media. Ownership will be split between Allegro and the former PwC partners, although the exact split was not known, the source said.
A spokesperson for Allegro Funds declined to comment.
PwC said the sale represented about 20% of revenue for fiscal 2023. The firm earned US$3 billion ($2 billion) in revenue last fiscal year.
“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 approximately 1,750 talented people in our public sector,” PwC Australia chairman Justin Carroll said.
The agreement attempts to isolate the firm’s government consulting business and rebuild trust in the many departments and agencies that have frozen the firm out of new work.
Labor senator Deborah O’Neill, who helped release a cache of internal PwC emails last month, said the firm cannot “phoenix itself” from the scandal until it reveals all the details of those involved in the confidential document breach .
“More of the same with a new name is still more of the same,” she said in a statement.
Global PwC chairman Bob Moritz publicly apologized in a statement, saying PwC Australia had failed to live up to the firm’s standards and values under previous management.
Kevin Burrowes, currently Global Clients & Industries Head based in Singapore, will become Managing Director and take over the role when he moves to Sydney.
Acting CEO Kristin Stubbins will remain in the role until Burrowes’ arrival.
“PwC Australia has significant work to do and I am confident that the steps they are taking … will result in a stronger firm,” Mr Moritz said.
($1 = 1.4977 Australian dollars)
Reporting by Lewis Jackson and Sam McKeith; Editing by Christopher Cushing and Tom Hogue
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