PwC brings in Singapore-based executive Kevin Burrowes to take over troubled Australian office

The troubled firm has been forced to install an overseas chief executive and spin off its government consulting arm in a dramatic rescue attempt.

Troubled accounting firm PwC Australia has been forced to install an overseas company veteran as chief executive and spin off its profitable government consulting business in a dramatic rescue attempt.

The global headquarters will bring in Singapore based PwC veteran Kevin Burrowes to run the Australian business, and some forced partner retirements are planned, while private equity firm Allegro will take control of government consulting.

PwC is hoping that moves to bring in fresh leadership at the top, will stem the tide of criticism of the organisation as fallout from its damaging tax leak scandal continues.

But the organisation is still staring down pressure to publicly name 63 current or former partners and staff who received emails containing confidential tax briefings.

It is also in the crosshairs of a string of inquiries and probes, including Monday’s inquiry by the NSW Legislative Council into the use of consultants which will hear evidence from acting chief executive Kristin Stubbins.

Focusing on the use of consultants in the health sector, the inquiry will also hear from two other senior PwC Australia executives: National Health Industry Leader Nathan Schlesinger and Consulting Risk and Quality Leader Niamh Scanlon.

PwC’s staff were briefed on the developments on Sunday, following weeks of behind the scenes work.

They will see the Australian firm give up some $600m in annual revenues from its government consulting practice, representing around 20 per cent of its $3bn in revenues.

Private equity firm Allegro will pay a token $1 for the government consulting business, including 130 partners and almost 2,000 staff, and assume its liabilities.

The move will see PwC Australia exit all government advisory work at a state and federal level with its former partners to run the separate new private company, currently operating under the code word Bell.

A spokeswoman for the federal Department of Finance said it was “aware of PwC Australia’s proposed future governance structure.”

“As further details become available the Department will carefully consider the implications of these changes for existing and future contracting arrangements,” she said.

PwC Network Global Clients and Industries leader Kevin Burrowes.

Announcing the appointment of Mr Burrowes — who has been a PwC partner for 19 years — as chief executive as soon as his visa allows, PwC’s New York based global chair, Bob Moritz took a swipe at PwC Australia’s past leadership, saying it had “failed to meet the network’s code of Conduct and uphold the network’s professional standards and values.”

He said the firm’s past actions were “not representative of the work and behaviours of PwC around the world.”

“PwC Australia has significant work to do, and I am confident the steps they are taking with the network support will result in a stronger firm,” he said.

The highly experienced Mr Burrowes, who has played key roles in PwC’s operations in Britain and Asia and worked for IBM, Credit Suisse and the Royal Bank of Scotland, takes over the embattled Australian business with clear riding instructions to restore trust in the business, as it deals with the fallout from the scandal over leaking government tax information to its multinational clients.

Ms Stubbins has been in the role for less than two months after former chief executive Tom Seymour stepped down and announced plans to retire from the partnership in September in the wake of the scandal.

Announcing the new structure and appointment on Sunday, PwC said Mr Burrowes would lead the PwC Australia management team and “ensure the firm fully responds to the need to enhance leadership and governance and reinforce our values throughout the organisation.”

Bob Moritz said he was “deeply sorry to our clients, our broader stakeholders and our people.

He said Burrowes had been working with PwC’s largest clients over the past several years, and was an expert in PwC’s network standards and governance structures.

Acting chief executive Kristin Stubbins.

The chair of PwC’s Australia’s governance board Justin Carroll, said the firm “looked forward to welcoming Kevin to the 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.”

PwC said Mr Burrowes’ key priority would be to “enhance the firm’s culture, with a focus on ethics and controls.”

“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,” Mr Carroll said.

“He will work with his colleagues and management team to re-earn trust with PwC Australia’s stakeholders,” Mr Carroll added.

He said Mr Burrowes would work with PwC Australia’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.

Mr Burrowes said he was “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 also confirmed plans to enter into the deal with Allegro to sell off its government business, with both parties targeting signing a binding agreement by the end of July.

It said the sale would “create two independent firms, while ensuring that there will be no disruption in vital services to public sector clients.”

PwC Australia said it would work with Allegro Funds to ensure a seamless transition.

Mr Carroll said PwC had taken the step “because it is the right thing to do for our public sector clients and to protect the jobs of some 1,750 people in our government business.

“This transaction will result in the first pure play, at scale, government business in the market,” he said.

“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.”

The divestment of this business, which represented around 20 per cent of the firm’s FY23 revenue, will mean a significant reduction in PwC’s future size and operations in Australia.

However Mr Carroll said it would allow 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.”

“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,” he said.

The moves are the latest in PwC’s attempts to stem the fallout from the scandal.

They come as corporate regulator the Australian Securities and Investments Commission (ASIC) is considering taking action against the firm’s former head of international tax, Peter Collins.

ASIC deputy chair Sarah Court told a Senate inquiry last week that the corporate regulator was examining the firm’s use of confidential government tax briefings.

She said ASIC was looking at the conduct of Mr Collins as well as “any others that may have been involved in relation to the alleged conduct.”

PwC had handed a list of 63 names to another Senate committee of people who have been copied into emails regarding the tax information, but these have not been made public.

PwC’s former head of international tax Peter Collins was banned by the Tax Practitioners Board as a result of his sharing of the confidential information he gained from advising the Australian Taxation Office, which the firm monetised.

PwC is now facing multiple investigations ranging from the Australian Federal Police, which was referred the matter and the allegations against Mr Collins, as well as two further regulatory probes.

The TPB has indicated it will be investigating PwC’s other tax partners over their role in the scandal, as well as why the firm failed to disclose the use of confidential information sooner.

The Australian Securities and Investments Commission has also indicated it will be casting its glare over PwC’s financial services operations, after finding Mr Collins was operating under the firm’s Australian Financial Services License.

ASIC told parliament last Friday as many as 160 PwC staff were also delegated under the license and could face enforcement action from the corporate regulator.