Allegro taps ex-judge to join PwC business buy
Former Federal Court judge Andrew Greenwood joins Allegro’s new government consulting business that it has snagged for $1 from embattled tax and advisory firm PwC.
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Private equity company Allegro has brought in former Federal Court judge Andrew Greenwood as a director of the government consulting business it is buying from troubled accounting firm PwC, with plans to inject some $100m into the new firm.
Allegro announced on Tuesday that it had reached a binding term sheet with PwC on the sale of its government consulting business – a business to be renamed Scyne Advisory.
Scyne Advisory is hoping that its pure focus on government business will give it an edge over rival firms which will continue to consult in both private and public sector work, according to leadership team member, Ben Neal.
“Our new firm is a company, not a partnership, and will have 100 per cent focus on the public sector,” the former PwC partner, who led PwC’s work with the Federal Defence Department, said in an interview with The Australian on Tuesday.
Mr Neal, who will play a key role in the new firm, which is being bought by private equity firm Allegro, which is backing it with a $100m investment, said public sector clients were finding it increasingly difficult to manage conflicts of interests with the consulting firms they were dealing with.
“What our clients are saying is that it is getting increasingly difficult to manage perceived or actual conflicts of interest if (consulting firms) have a large government business and a large private sector business,” he said.
A former first assistant secretary with the Department of Prime Minister and Cabinet and former assistant secretary with the Department of Immigration, Mr Neal joined PwC as a partner in September 2016 focusing on government consulting work.
He said the structure of Scyne Advisory-the new name for the firm being spun out of PwC in the wake of the tax leak scandal as PwC exits government consulting business completely, would be an advantage given it was only focusing on consulting to government, both state and federal.
“This (the structure of Scyne) will help solve that problem for them, as our firm will be firmly focused on supporting our government clients without the potential conflicts which could arise of also consulting to the private sector.”
Former PwC partner, Tim Jackson, who is also joining Scyne, said the pitch to government departments to retain their firm as a client was that the new firm would “be a separate organisation with world-class governance standards.”
A leadership team of former PwC partners is now talking to government clients, both state and federal in an effort to keep as many of PwC’s government business as possible.
The potential conflicts of interest with consultants working with the federal government is also being considered by a parliamentary committee, headed by Senator Deborah O’Neill.
The deal is a part of PwC’s response to the tax leak scandal which has already claimed the careers of 12 partners and cast a cloud over its future, prompting reviews by government committees, the Australian Federal Police and the Tax Practitioners’ Board.
Allegro, which will take over a business with some 130 former PwC partners and around 1750 staff, says it plans to inject as much as $100m into the business, which it is buying from PwC at a cost of $1 to “support operational costs during the transition and make the necessary investments in people and systems.”
Announcing the sale last week, PwC said its government consulting business was responsible for some 20 per cent of its revenues, which are around $3bn a year.
PwC’s acting chief executive Kristin Stubbins said the firm was pleased to have signed the binding agreement with Allegro on the sale of its government consulting business.
“We’re confident that Allegro, the PwC partners moving to the new business, and the staff joining them, will create an excellent business, committed exclusively to the public sector, with a strong governance framework in place,” she said.
Ms Stubbins said the move would “provide clarity for our people and our government clients.”
She said PwC would “work quickly” with Allegro to conclude the transaction by the end of August, “while at the same time focusing on providing stability for our clients and staff in our corporate and private sector business.”
Allegro is bringing in Mr Greenwood as a director of Scyne Advisory, and he will also will chair a probity, conflict, and ethics subcommittee of the board.
Mr Greenwood, a former partner with law firm MinterEllison, who retired in July last year after a distinguished legal career, including 17 years on the bench, will chair a subcommittee which will set the standards for hiring new staff and a code of conduct for employees.
Allegro said this will include reviewing all contract advisory work for potential conflicts of interest and the probity of employees involved.
Mr Greenwood’s career has included advising the Federal Treasury on the transition to a new federal competition law in 1995 following the Hilmer Report, president of the Australian Copyright Tribunal, a presidential member of the Commonwealth Administrative Appeals Tribunal, chair of Queensland Government water company, SunWater, deputy chair of Queensland’s electricity Transmission and Supply and deputy chair of Stanwell.
Mr Greenwood is the first director of the new firm to be named Scyne Advisory as Allegro now searches for a chair and other independent directors for the new company, which will have its work cut out for it retaining PwC’s extensive consulting business with both Federal and state governments.
The announcement follows PwC move on Monday to oust former CEO, Tom Seymour, former chairman, Peter Van Dongen, and six other partners, for their role in the tax leak scandal.
Singapore-based PwC veteran Kevin Burrowes is set to take over as CEO as soon as his visa is approved, a move instigated by the intervention of the global PwC “network”, chaired by New York based Bob Moritz.
Allegro is at pains to point out that the new business will be fully independent of PwC and will not include any former staffers or partners who have been involved in the tax leak scandal.
The firm has committed that Scyne will have an independent board with the same standard of governance as an ASX listed company, with other candidates for independent directors currently being interviewed.
Picture: Damian Shaw/NCA NewsWire
Allegro said the deal is “targeted to complete” by the end of August.
In a statement released on Tuesday, Scyne Advisory partners Tim Jackson and Ben Neal, both former partners in PwC’s government advisory business, said the new leadership’s immediate focus would be on “achieving a rapid transition to independence, with ethics, strong governance and a government-only focus embedded from the start.”
“We have a once-in-a-generation opportunity to lead the change required in government advisory in Australia,” they said.
“The DNA of our people is solving complex problems impacting the public sector.
“Governance and culture will be at the core of the new business.
“Our people have deep sector knowledge, and they will set our new culture, with the needs of our clients’ remaining paramount. Restoring those clients’ trust is our number one priority.”
Adrian Loader, Allegro’s co-founder, said his firm was “backing the leaders of Scyne Advisory and their vision to drive real change in the public service advisory sector.”
“It’s clear there is a need for a strong and independent government advisory firm of scale in the Australian market.”
“Scyne Advisory will have an industry-leading governance model able to meet the requirements of the Australian government and its agencies.”
“We have been incredibly impressed by the quality of the people and their attitude and outlook.”
Mr Loader said Allegro, which was founded in 2004, had “deep expertise in managing corporate carve-outs – extracting businesses from complex organisational structures and putting in place a strong governance framework that supports cultural change and improves performance.
“The recent process of buying Toll Global Express from Japan Post is a great example.”
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