SYDNEY, June 25 (Reuters) – PwC Australia on Sunday signed an exclusive deal with private equity firm Allegro Funds to sell its government practice for A$1, as it brought in an executive from Singapore to lead its local firm reeling from a national scandal. .
The scandal, which broke in January, centers around a former PwC tax partner who advised the federal government on laws to prevent corporate tax evasion and shared confidential information with colleagues.
Amid growing backlash from key government clients, PwC first announced an exclusive deal on Friday to divest its federal and state government business to Allegro Funds for $1 ($0.67).
Both PwC and Allegro are targeting a binding agreement within a month, the professional services firm said in a statement. Report on its website.
If the deal goes through, Allegro will set up the new entity as a corporation, not a partnership, according to the source, who was not authorized to speak to the media. Ownership will be split between Allegro and former PwC partners, although the exact split is unknown, the source said.
A spokeswoman for Allegro Funds declined to comment.
About 20% of earnings for fiscal year 2023 are expected to be exempted, PwC said. The company posted $3 billion ($2 billion) in revenue last fiscal year.
“We’ve taken this step because it’s the right thing for our public sector clients and to protect the jobs of the c.1,750 talented people in our government business,” PwC Australia board chair Justin Carroll said.
The deal seeks to isolate the company’s government consulting business and rebuild trust with multiple departments and agencies.
Labor senator Deborah O’Neill, who helped release a cache of internal PwC emails last month, said the firm “cannot phoenix out” of the scandal until it reveals the full details of those involved in the confidential document breach.
“There’s more of the same with a new name,” he said in a statement.
New Chief Executive
Global PwC chair Bob Moritz publicly apologized in a statement and said PwC Australia had failed to meet the firm’s standards and values under past leadership.
Kevin Burroughs, currently Head of Global Clients & Industries in Singapore, will take over as CEO upon relocating to Sydney.
Acting chief executive Christine Stubbins will remain in the role until Burroughs arrives.
“PwC Australia has significant work ahead of it and I am confident that the actions they will take will create a stronger organization,” Moritz said.
($1 = 1.4977 Australian dollars)
Reporting by Lewis Jackson and Sam McKeith; Editing by Christopher Cushing and Tom Hogue
Our Standards: Thomson Reuters Trust Principles.
Reports on breaking news in Australia and New Zealand cover the biggest news across politics, companies and commodities. Morningstar has previously written about stocks.