BBC News reported:
PwC Australia says it will sell its government business for A$1 (50p) after a scandal over the misuse of confidential government tax plans.
The company also said it would sell its Australian federal and state government business to private equity firm Allegro Funds, with the aim of reaching a binding agreement for the deal by the end of next month.
A number of PwC partners participated in the scheme.
PwC Australia said it had identified 76 current and former partners linked to the scandal and handed their names to Australian lawmakers.
Lawmakers? How about sharing those names with criminal justice authorities.
Reuters reported:
...a former PwC partner who advised the Australian government on anti-tax avoidance laws had shared confidential drafts about the government's plans with colleagues then used this to drum up business with companies.
I don't know Australia's rules on confidential government documents but surely there are legal consequences.
...five of Australia's largest pension funds, managing a total of some A$865 billion, have paused work with PwC, which says it is a "leading adviser" to the sector.
So public pension funds are the new law, instituting consequences for bad behavior? The other appeaser is PwC plans to essentially give away the division. I hope the Australian public is smarter than ours.
A tax hating private equity underwriter (PEU) will pay A$1 for a $255m million book of government consulting business because a partner in that firm shared draft government plans to crack down on tax avoiders.
How many tax hating PEUs were on the receiving end of PwC's ethical lapses? Did Allegro or any of their affiliates benefit from the direct sharing of confidential government information?
The new business will be called Scyne Advisory and be fully independent of PwC. The new oversight board plans to establish an ethics subcommittee, chaired by Andrew Greenwood, a former judge of an Australian federal court.
I imagine PwC had a number of internal mechanisms to reign in tawdry behavior. Why would PEU Allegro's work any better?
One only need recall The Carlyle Group's purchase of giant nursing home provider ManorCare. Former Medicare Chief and ManorCare board member Gail Wilensky served on the newly established Quality Committee. It took but a few years for patient harm episodes to result in regulatory action. Allegations of Medicare fraud came afterwards.
The Carlyle ManorCare buyout stunk from the get go. It took less than a decade for The Carlyle Group to strip the company under the watchful eyes of the Quality Committee. Carlyle bankrupted ManorCare while charging it management fees.
This story shows the greed and leverage boys can behave badly under the noses of their oversight structures. PwC's consulting debacle shows how extrinsic motivation schemes distort behavior. Handing the firm over to someone making a bigger bet is likely to not produce the desired behavior change.
I'm sure Andrew Greenwood is as good as Gail Wilensky.
Update 7-14-23: The Guardian reported:
Another big four consultancy firm has confirmed it misused government information last year, widening a scandal that has engulfed global giant PwC.
Deloitte disclosed the breach as part of an ongoing Senate inquiry, but has so far refused to provide any more details about the incident due to client confidentiality.
The ethical race to the bottom continues.
