PwC Australia sells government practice for A$1 amid tax scandal

June 26, 2023 (MLN): PwC Australia on Sunday entered an exclusivity agreement with private equity firm Allegro Funds to sell its government practice for one Australian Dollar (A$1) as it brought in an executive from Singapore to lead its local firm through the fallout from a national scandal, as reported by Reuters.

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 authorized to speak with 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 divestment represented around 20% of revenue for fiscal 2023. The firm made A$3bn ($2bn) in revenue last financial year.

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 authorized to speak with 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 divestment represented around 20% of revenue for fiscal 2023. The firm made $2 billion in revenue last financial year.

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.

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