Why the end game for ABC, PwC crises remain uncertain

PwC Melbourne corporate office at Riverside Quay, Southbank. Picture: NCA NewsWire / Andrew Henshaw

Not since the self-inflicted governance debacle of 2018 has the ABC appeared so dysfunctional as it has in recent weeks.

Back then, both the chair and managing director resigned in disgrace. Add to that the “slow motion” calamity now enveloping PwC, one of the world’s largest professional services firms, because of the disclosure of highly confidential tax policy information by one or more of its most senior executives.

The consequences for both have been seismic and intensely distracting from their core business. Both events have trashed the trust that audiences (in the case of the ABC) taxpayers, clients and governments have placed in them.

Equally damaging, but often under-reported, has been the impact on loyal employees who feel devastated and let down by their bosses. I have spoken to many such people in recent days. Are we witnessing a trend or simply one-off episodes of institutional failure, with trust as the major casualty?

ABC managing director David Anderson and chair Ita Buttrose.

It’s long been argued by governance experts that the most potent threats to institutional survival lie externally. But recent developments in Australia demonstrate internal threats are potentially as lethal in determining the trajectory and longevity of some of our most prominent institutions. The end game for both the ABC and PwC remains uncertain.

On the evidence, neither is doing an especially convincing job of protecting its reputation.

Whether in public or private sector occupations, employees are agnostic when it comes to pulling the ripcord on their employer when motivations don’t align.

The ethical and technological levers available to employees are powerful, immediate and potentially disastrous for unwary leaders and organisations. Both public and private sectors are equally vulnerable when it comes to threats from within.

Among the most targeted public sectors are health, aged care, defence and education from whistleblowers fed up with incompetence, inaction, intransigence or poor (or illegal) conduct. In the private sector, banks and professional services are perhaps most vulnerable, but so too are established household brands with a great deal to lose. The recent travails facing the ABC and PwC appear to owe their origins to leadership or organisational incompetence (perhaps worse for PwC), not to the growing emergence of whistleblowing.

In the case of the ABC, so muddy are the waters it remains unclear whether the racism claims made by respected presenter Stan Grant come primarily from inside the ABC, from outside via social media or from a combination of both. Grant himself has been scathing of management and his colleagues inside the ABC.

Justin Stevens

The overt lack of impartial reporting by senior reporters has drawn attack from people far and wide. And yet there is no sign of contrition or even a basic understanding from the ABC. So far, random commentary on the issue has come from chair Ita Buttrose, managing director David Anderson and director of news Justin Stevens, as well as current and former ABC staff. Staff walkouts have exposed the deep veins of discontent about who actually makes decisions at the national broadcaster, and in whose interests. Buttrose is reported to have said that had she been aware of the racism claims by Grant she “would have spoken to him”, as if by doing so the issue would have been resolved.

ABC presenter Stan Grant

But worse than the public display of chaotic leadership is the massive damage to organisational trust. The ABC makes a big deal of trust – and uses the word in much of its marketing to set itself apart as a source of reliable and accurate news and current affairs. Trust in management must now be at its lowest ebb since 2018, when it hit rock bottom.

Not surprisingly, this too is the central nightmare facing PwC.

In that case, the damage has the potential to contaminate global operations, as the firm does business in 152 countries, employing more than 320,000 people. For firms such as this, trust is core business. In a tangible sense, trust is all it has to offer the market. Contamination to operating divisions across the company also remains a possibility. Consider this. In the 2022 financial year, PwC globally provided services to 84 per cent of the Global Fortune 500 companies and at June 30, 2022 gross revenues were more than $US50bn. Huge sums were also earned through government contracts here and abroad.

The extent of the commercial fallout will take months to be revealed in full, but the impact on trust is now widely visible. If it is ever fully restored, especially in connection with public sector work in Australia, the task will take years. In government, the bureaucracy, private sector and the not-for-profit world, trust is hard won and the loyalty of employees and stakeholders can take years to build. As we have seen, such labours can be reduced to nothing by people who aren’t listening, aren’t thinking and who appear to place themselves above the rest of us.

Just as some key personnel have taken leave from PwC in the wake of the tax leak scandal, perhaps it’s time the ABC board took tangible steps to restore confidence in the conduct of those claiming to lead what is a billion-dollar, taxpayer-funded enterprise.

John Simpson is a fellow at the Centre for Strategy and Governance and a former ABC employee, 1980-86.