PwC Appoints Kevin Burrowes as Australia CEO & to Relocate from Singapore to Sydney, Sells Australia Government Business with 1,750 Employees to Allegro Funds for $1 Representing 20% of FY2023 Revenue
25th June 2023 | Hong Kong
PwC has appointed Kevin Burrowes (PwC Global Clients & Industries Leader) as PwC Australia CEO & Partner and to relocate from Singapore to Sydney, with PwC also announcing to sell PwC Australia government business with 1,750 employees to Allegro Funds for $1 representing 20% of FY2023 revenue. Earlier in 2023 May, PwC Australia CEO Tom Seymour had resigned with for involvement in Australia government tax policy information leak. Ex-PwC advisor Peter-John Collins, who was de-registered in 2022 as tax practitioner by Australia Tax Practitioners Board, had shared confidential tax information with PwC partners. PwC advised governments on creating tax laws & implement tax policies, and at the same time creating new tax arrangements for clients to reduce or avoid tax. In 2023 June, Australia largest $191 billion pension fund AustralianSuper suspended the $1.3 million (AUD 2 million) yearly contract with PwC, several Australia government agencies have stopped signing new contracts with PwC, and PwC has suspended 9 partners from the Australia government tax leak scandal. See PwC full statement below.
“ PwC Appoints Kevin Burrowes as Australia CEO & to Relocate from Singapore to Sydney, Sells Australia Government Business with 1,750 Employees to Allegro Funds for $1 Representing 20% of FY2023 Revenue “
PwC Kevin Burrowes – Kevin first joined PwC in 1986. His most recent role at the firm is Global Clients and Industries Leader, based in Singapore. Prior to that, he was a member of PwC UK’s Executive Board for the past four years where, as Managing Partner, he led on Clients and Markets for the UK firm. As well as working for PwC earlier in his career, Kevin has held senior executive positions at IBM, Credit Suisse and Royal Bank of Scotland. He has been a PwC partner for 19 years, having re-joined PwC UK in 2009. He has lived and worked in London, New York, Singapore and Frankfurt. Throughout his career, he has focused on advising, leading and delivering strategy and transformation projects, predominantly in Financial Services.
Allegro is Australia’s most-awarded team in the turnaround, special situations and transformation investing space. In total, Allegro’s Assets Under Management are in excess of A$4 billion.
PwC Appoints Kevin Burrowes as Australia CEO & to Relocate from Singapore to Sydney
Justin Carroll, PwC Chair of the firm’s Governance Board: “The Board wants to thank our Acting CEO Kristin Stubbins for leading the firm during this challenging period marked by rapid change. We look forward to welcoming Kevin to our firm and leveraging his decades of executive leadership, unique experience working with PwC’s largest global clients and his extensive knowledge of the PwC Network. “Kevin’s experience across other parts of the PwC Network ensures that as he takes over the leadership in Australia he brings a fresh perspective to the firm, and he will work with his colleagues and management team to re-earn trust with PwC Australia’s stakeholders.”
Bob Moritz, Global Chair, PwC: “I am pleased that PwC Australia has appointed Kevin as CEO. In addition to working with PwC’s largest clients over the past several years, Kevin is an expert in PwC’s Network standards and governance structures and will be a great asset to the firm. Under past leadership, PwC Australia failed to meet the Network’s Code of Conduct and uphold the Network’s professional standards and values. Its past actions are not representative of the work and behaviours of PwC around the world and I am deeply sorry to our clients, our broader stakeholders and our people. PwC Australia has significant work to do and I am confident that the steps they are taking with the Network’s support will result in a stronger firm.”
Kevin Burrowes, incoming CEO, PwC Australia: “I am honoured to have been asked to lead an organisation that has been part of the Australian business community for 150 years. Along with the leadership team, I will work tirelessly to increase transparency and repair trust with our stakeholders, while also enhancing our governance and culture.”
PwC Australia appoints Kevin Burrowes to lead firm as new CEO; Announces intent to divest its Government Business to Allegro Funds
25th June 2023 – PwC Australia, following consultation with the PwC Network, has announced today that Kevin Burrowes, who is currently the PwC Network’s Global Clients & Industries leader, will be appointed CEO. He will become a partner in PwC Australia and relocate to Sydney upon completion of the Australian immigration process. In his capacity as CEO, Kevin will lead the management team and serve as Chair of the firm’s Executive Board to ensure the firm fully responds to the need to enhance leadership and governance and reinforce our values throughout the organisation. Kristin Stubbins will remain Acting CEO until Kevin’s relocation.
Kevin’s key priority will be to enhance the firm’s culture, with a focus on ethics and controls. Kevin will work with the firm’s new Chief Risk and Ethics leader, Tony O’Malley, and the wider management team to implement the recommendations of Dr. Ziggy Switkowski’s independent review of PwC Australia, which will be published in September as well as implement any other necessary changes that need to be made to improve the firm’s culture and standards.
PwC Australia enters exclusivity agreement to divest its government business
PwC Australia has announced today that it has entered into an exclusivity agreement to divest its federal and state government business to Allegro Funds for $1. Both parties are targeting signing a binding agreement by the end of July. The divestment will create two independent firms, while ensuring that there will be no disruption in vital services to public sector clients. PwC Australia will work with Allegro Funds to ensure a seamless transition. For PwC Australia, the transaction will result in an exit from all government advisory work, at both the state and federal levels. The divestment of this business, which represented c. 20% of the firm’s FY23 revenue, will impact the firm’s future size and operations. However, it allows the firm to move forward with predictability and focus, and ensure stability for the rest of PwC’s clients in other parts of the business.
The appointment of a new CEO and the intent to divest the government business is the latest in a series of actions taken by the firm to enhance its governance, culture and accountability. As previously stated, PwC’s clients were not involved in any wrongdoing and no confidential information was used to enable clients to pay less tax.
Justin Carroll, PwC Chair of the firm’s Governance Board: “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. This transaction will result in the first pure play, at scale, government business in the market. This was an extremely difficult decision, but we are determined to take all necessary steps to protect the jobs of our people and re-earn the trust of our stakeholders. This transaction marks a new direction for PwC Australia and puts us on a path for success as we focus on our people and serving clients across Australia and our critical role in supporting the capital markets.”
About PwC – We’re a network of firms in 152 countries with almost 328,000 people who are committed to delivering quality in assurance, advisory and tax services.
Allegro
Founded in 2004 by Chester Moynihan and Adrian Loader, Allegro is Australia’s most-awarded team in the turnaround, special situations and transformation investing space. We have one of the largest private equity teams on the ground and our track record demonstrates that we successfully partner with management teams and other stake holders to create value in a business regardless of how that business may be performing. Since we began investing institutional capital, our market-leading operational improvement and restructuring capability has helped reposition several of businesses for sustained long term growth. Allegro manages a number of funds and separately managed accounts and mandates on behalf of our investors, including:
- Allegro Fund II – This fund is in realisation mode with four remaining businesses located in Australia and NZ.
- Allegro Fund III – This fund is in value creation mode and is fully invested across seven businesses located in Australia and NZ. The fund was oversubscribed with a final close of approximately AU$390 million in December 2017.
- Allegro Fund IV – This fund is actively seeking investment opportunities and management teams to partner with. Allegro Fund IV closed in May 2022 and was oversubscribed at $750 million of committed capital. 19 new investors were welcomed with a 93% re-up rate from Allegro Fund III.
In addition, Allegro manages a number of separately managed account and mandates on behalf of its investors. In total, Allegro’s Assets Under Management are in excess of A$4 billion.
PwC Australia Government Tax Leak Scandal: Australia Largest $191 Billion Pension Fund AustralianSuper Suspends $1.3 Million Yearly Contract with PwC, Government Agencies Stopped Signing New Contracts with PwC, PwC Suspends 9 Partners on Australia Government Tax Leak Scandal
2nd June 2023 – PwC Australia Government Tax Leak Scandal – Australia largest $191 billion pension fund AustralianSuper has suspended the $1.3 million (AUD 2 million) yearly contract with PwC, several Australia government agencies have stopped signing new contracts with PwC, and PwC has suspended 9 partners from the Australia government tax leak scandal. Earlier in 2023 May, PwC Australia CEO Tom Seymour resigned with immediate effect for involvement in Australia government tax policy information leak. Ex-PwC advisor Peter-John Collins, who was de-registered in 2022 as tax practitioner by Australia Tax Practitioners Board, had shared confidential tax information with PwC partners. With PwC Australia CEO Tom Seymour resigning, Kristin Stubbins is appointed as the Acting CEO for PwC Australia. PwC advised governments on creating tax laws & implement tax policies, and at the same time creating new tax arrangements for clients to reduce or avoid tax. See below for latest Open letter from PwC Australia Acting CEO Kristin Stubbins. (PwC ~ PricewaterhouseCoopers)
Open letter from PwC Australia acting chief executive Kristin Stubbins
- Open letter from PwC Australia acting chief executive Kristin Stubbins
29th May 2023 – I want to apologise on behalf of PwC Australia. For sharing confidential government tax policy information and for betraying the trust placed in us.
Specifically, I apologise to the community; to the Australian government for breaching your confidentiality; to our clients for any questions this may have raised about our integrity and trustworthiness; and to the 10,000 hard-working, values-driven PwC Australia partners and staff who have been unfairly impacted.
Although investigations are still underway, we know enough about what went wrong to acknowledge that this situation was completely unacceptable. No amount of words can make it right. But I am fully committed to taking all necessary actions to re-earn the trust of our stakeholders. And, as we work through this process, I am committed to being fully transparent.
Our previously announced investigation, supported by external counsel, is well underway and so I wanted to set out what we know so far, explain the steps we have taken and are committed to take, and address some of the questions that remain about what happened.
What happened
We failed in three ways.
First, there was a clear lack of respect for confidentiality.
A former PwC Australia tax partner, Peter Collins, breached confidentiality in connection with tax consultations with the Department of Treasury and the Board of Tax in which he participated. Contrary to the obligations he undertook with the government, as well as PwC policy and values, he shared information with certain PwC Australia personnel and a limited number of overseas PwC personnel.
Second, PwC Australia did not have adequate processes and governance in place.
There was poor decision making. The breach of confidentiality exposed weaknesses in our culture and processes. What is evident now, is that we failed to conduct an appropriate root cause investigation and thorough assessment of accountability for both the conduct at issue and the culture that allowed the underlying conduct to occur. That was the result of a failure of leadership and governance. This is deeply regrettable and has led us to where we are today.
Third, we had a culture at the time in our tax business that both allowed inappropriate behaviour and has not, until now, always properly held our leaders and those involved to account.
At the time this occurred, there was a culture of aggressive marketing in our tax business. Over a period, this aggressive behavior and drive for growth permeated certain parts of our leadership and allowed for profit to be placed over purpose. Our governance process failed to identify and keep this in check.
What we are doing about it
In 2021, PwC Australia commissioned a review of the effectiveness of our tax governance and internal control framework, which was conducted by former Australian Taxation Office (ATO) official Bruce Quigley. The ATO participated in this review and all recommendations were implemented, including prohibiting market facing partners from participating in confidential tax consultations. However, it is clear, in hindsight, that PwC Australia did too little too late.
As we have commenced our broad investigation to determine root causes, we have taken the following actions over the last few weeks:
- Tom Seymour stood down as CEO on 8 May 2023;
- Two Executive Board members have stood down from their leadership positions;
- We commenced a comprehensive investigation, with the assistance of external counsel, into who may have shared or misused confidential information in connection with these matters;
- On 15 May 2023, we announced that Dr Ziggy Switkowski AO will lead an independent review of the firm’s governance, accountability and culture; and
- Tony O’Malley, a PwC partner and legal and governance expert, was appointed on 15 May as Chief Risk and Ethics Leader for PwC Australia. He will have responsibility for all aspects of risk and ethics at the firm and will help lead the implementation of the independent review’s findings.
My team and I are committed to taking any and all further action to enhance accountability, governance, and culture. To that end, we are announcing the following additional actions:
Accountability
- PwC Australia has directed 9 partners to go on leave, effective immediately, pending the outcome of our ongoing investigation. This includes members of the firm’s Executive Board and Governance Board.
Governance
- Two independent, non-executive directors will be appointed to PwC Australia’s Governance Board and this process is underway. External board members will bring independent, outside-in perspective and objectivity to the firm’s governance.
- In addition, the Chairs of the Governance Board and its designated risk committee have decided to step down from their respective roles. These decisions are in addition to the leadership actions already announced.
- PwC Australia has commenced a process to ringfence the provision of services to Federal Government Departments and Agencies to enhance our controls to prevent conflicts of interest. We are moving to quickly establish separate governance and oversight arrangements for the business by the end of September. It will cover all services to Federal Government Departments and Agencies, include people, operations and governance within its perimeter and be operationally ringfenced from other businesses within PwC Australia. The business will have a standalone Executive and Governance Board who will have the responsibility to consider the strategic options for the business. This will establish independence and enhance controls relating to confidentiality and conflicts. PwC will consult with the Australian government on these arrangements including timing and process.
Transparency
- After listening to our stakeholders, we will publish Dr Ziggy Switkowski’s report and recommendations, in full, at the conclusion of the Independent Review in September.
Correcting misunderstandings
There is no excuse for breaching confidentiality. However, I want to address two important points.
First, I fully understand and acknowledge the calls for PwC to release the names of the individuals in the emails released by the Senate on 2 May 2023. There has been an assumption by some that all those whose names have been redacted must necessarily be involved in wrongdoing. That is incorrect. Based on our ongoing investigation, we believe that the vast majority of the recipients of these emails are neither responsible for, nor were knowingly involved in any confidentiality breach. We have and will continue to take appropriate action against anyone who is found to have breached confidentiality or failed in their leadership duties.
Secondly, in relation to the breach of confidentiality, our clients were not involved in any wrongdoing and no confidential information was used to enable clients to pay less tax.
Let me close by again apologising for our breach of trust. I have worked at PwC for my whole career, and this has been personally and professionally devastating for me and my colleagues at PwC. I am fully committed to doing everything it takes to make the wrongs of our past right, and to re-earn your trust.
Yours sincerely,
Kristin Stubbins
Acting Chief Executive, PwC Australia
PwC Australia CEO Tom Seymour Resigns for Government Tax Policy Information Leak, Ex-PwC Advisor Peter-John Collins De-registered in 2022 as Tax Practitioner for Sharing Confidential Tax Information with PwC Partners
10th May 2023 – PwC Australia CEO Tom Seymour has resigned with immediate effect for involvement in Australia government tax policy information leak. Ex-PwC advisor Peter-John Collins, who was de-registered in 2022 as tax practitioner by Australia Tax Practitioners Board, had shared confidential tax information with PwC partners. With PwC Australia CEO Tom Seymour resigning, Kristin Stubbins is appointed as the Acting CEO for PwC Australia.
PwC
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with over 276,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at www.pwc.com.
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