Finance considering whether Scyne Advisory should take over PwC government contracts

The government department has told a Senate inquiry that it is still determining whether Scyne Advisory has introduced the right structures to allow it to take over existing PwC contracts.

Finance is still undecided whether Allegro Funds’ new offshoot, Scyne Advisory, will be able to inherit contracts held by PwC Australia’s government consulting business.

The government department is currently assessing whether Scyne Advisory has the right governance structures and arrangements in place to deal with the failures identified after the PwC tax scandal came to light, deputy secretary Andrew Jaggers told the Senate inquiry into consulting services on Wednesday.

It is weighing up the finalisation of the structure that Syne Advisory will operate under to allow the department to determine the “appropriateness and ethical soundness” the rebadged PwC firm had to hold government contracts.

PwC’s government contracting arm was sold to private equity group Allegro Funds for $1 earlier this year and renamed Scyne, with more than 1200 staff due to come across from PwC.

“The focus of our work has been to determine if the new entity, which has created a new government structure, a non-partnership structure in Scyne, is appropriate to contract with and meets the requirements,” Mr Jaggers said.

“Our review of the Switkowski report has been to determine if Scyne is an entity that has addressed all of those findings.”

Mr Jaggers said that the nature of the sale of the PwC’s government consulting arm was “not normal” and required more checks and balances. The inquiry heard that when a company on the Advisory Services Panel was sold to another company, an automatic novation of contracts to the new firm occurs.

“We have commenced a thorough examination to determine whether Scyne is a reasonable organisation for those contracts to be novated to and for it to be on the panel in replacement of PwC,” he said.

“We issued a procurement policy note that reminded all procuring entities that they should be considering the ethical standing of entities. And in relation to this PwC to Scyne transition, we are doing that examination of whether Scyne is an entity that’s reasonable to be contracted with.

“That work isn’t complete.”

PwC remained on its Advisory Services Panel while Finance determined whether contracts held by PwC should novate to Scyne.

Scyne Advisory will be headed up by chief executive Richard Gwilym.

Finance confirmed it had received an advance copy of the Switkowski report last Monday, ahead of Wednesday’s general release that found PwC’s “aggressive growth agenda” overshadowed the firm’s values.

Mr Jaggers said that the department had asked Scyne to address any findings made by the review to ensure that the correct structure is in place for the new firm.

“Scyne has identified how it is addressing all the recommendations and findings of the Switkowski Review. And that will form part of our examination of the ethical soundness of sign and whether they can be contracted with,” he said.

Senator Deborah O’Neil told Mr Jaggers that he was in a privileged position to have received a copy of the report ahead of time, saying that the ATO, Tax Practitioners Board nor the committee had seen the report.

“Very interesting selection of who they provided to. I mean, it’s important for your work. But seriously, the contempt continues from PwC for public transparency.”

Mr Jaggers said that Finance was looking at the finalisation of the structure of Scyne Advisory, to allow it to determine the appropriateness and ethical soundness of government contracting with the rebadged PwC firm.

“One is that the personnel that were engaged previously by PwC that were involved in the Tax Practitioners Board matter, the handling of that matter, or any other ethical concerns or internal actions within PwC,” he said.

“We’ve been looking at the policies and frameworks that Scyne is implementing to strengthen its ethics, governance, and accountability, and how that is different from PwC.”

Finance also moved to reassure the inquiry headed by Senator Richard Colbeck that the new polices it had put into place would allow an event such as the PwC scandal to be avoided. Mr Jaggers said that the significant event clause now part of the commonwealth contracting suite would require the entity to advise immediately if they were the subject of legal action or other serious matters.

He added that any firm subject to a PwC-style event that did not report at the earliest opportunity would be subject to material breach and allow the government to terminate the contract.

Originally published as Finance considering whether Scyne Advisory should take over PwC government contracts