SYDNEY - PwC Australia on Sunday entered an exclusivity agreement 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 through the fallout from a national scandal.
The scandal, which broke in January, revolves around a former PwC tax partner who had been advising the federal government on laws to prevent corporate tax avoidance and shared confidential information with colleagues who then used it to pitch to multinational companies for work.
Amid a growing backlash from key government clients, PwC said it had entered an exclusivity agreement to divest its federal and state government 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 corporation, not a partnership, according to a source not authorised to speak with 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 divestment represented around 20% of revenue for fiscal 2023. The firm made A$3 billion ($2 billion) in revenue last financial 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 c.1,750 talented people in our government business," said PwC Australia Board Chair Justin Carroll.
The deal attempts to insulate the firm's government consulting business and rebuild trust with 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 can't "phoenix their way out" from the scandal until it reveals the full 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.
NEW CHIEF EXECUTIVE
Global PwC Chair Bob Moritz publicly apologised in a statement and said PwC Australia had failed to meet the firm's standards and values under past leadership.
Kevin Burrowes, currently Global Clients & Industries leader based in Singapore, will become CEO and take up the role once he relocates to Sydney.
Acting chief executive Kristin Stubbins will remain in the role until Burrowes arrives.
"PwC Australia has significant work to do and I am confident that the steps they are taking ... will result in a stronger firm," Moritz said.
($1 = 1.4977 Australian dollars)
(Reporting by Lewis Jackson and Sam McKeith; Editing by Christopher Cushing and Tom Hogue)