PwC Australia sells division for 50p after tax leak controversy. After a scandal involving the leak of sensitive government tax plans, PwC Australia has announced that it will sell its government business for A$1 (50p). The accounting firm also revealed the arrival of a new CEO for the region.
PwC Australia said in a statement that the change will allow the company to “move forward with predictability and focus.” A former partner at PwC Australia was responsible for the leak, which came to light in January.
The former partner, who was assisting the Australian government, had given his former colleagues access to drafts of corporate tax evasion rules, which they then used to solicit business. Between 2014 and 2017, leaks happened.
The firm has denied using any client information in confidence to aid in tax avoidance. However, legislators and officials have demanded that government contracts be withheld from PwC Australia until the company has adequately responded to the situation.
PwC Australia reported earlier this month that it had given the identities of 76 current and former partners involved in the scandal to Australian lawmakers.
In a parliamentary hearing on Monday, PwC Australia’s acting chief executive, Kristin Stubbins, said that staff found to have acted improperly would face “severe” penalties. We have fallen short of the expectations we placed on ourselves as a company, and I apologize on its behalf.
On Sunday, Kevin Burrowes was named the new CEO of PwC Australia. Before this, he was the head of global customers and industries for PwC Network.
“He will work with his colleagues and management team to re-earn trust with PwC Australia’s stakeholders,” said Justin Carroll, head of PwC Australia’s governance board.
Company officials also confirmed that they would be selling their government contracts with the Australian federal and state governments to private equity firm Allegro Funds, with a final agreement expected by the end of the month.
Without “disruption in vital services to public sector clients,” PwC Australia claims the sale will result in two separate companies.
About 20% of PwC Australia’s total revenue comes from its government business, which employs about 1,750 people.
Former PwC Australia CEO Tom Seymour resigned in May after admitting he was one of at least 67 people to get the confidential documents at the crux of the issue.
Nine partners were placed on leave, and the company’s board of directors was reorganized later that month. Those revelations were seen as a “shocking breach of trust” by Australia’s Treasurer, Jim Chalmers.
According to publicly available information, the Australian government has contracted with PwC to the tune of A$255 million for the current fiscal year.
AustralianSuper and other large pension funds, as well as the country’s central bank, have publicly said that they will not renew their contracts with PwC following the scandal’s revelations.