Deloitte to audit Indigenous suppliers after taking stake in consultancy

Audit and consulting firm Deloitte has picked up a 49 per cent stake in Indigenous consulting firm Yamagigu which targets the growing demand from government and the private sector.

Deloitte chief executive Adam Powick.

Audit and consulting firm Deloitte supports more regulatory oversight of Indigenous suppliers after taking a minority stake in consultancy Yamagigu.

Deloitte chief executive Adam Powick said his firm would examine its rules and requirements around indigenous businesses, as it makes a push into the space.

“We strongly believe in the principle of self determination, so this process should cover domains such as majority Indigenous ownership, governance, management and workforce,” Mr Powick said.

Deloitte’s proposal would involve it scrutinising companies that participate in its Indigenous supplier processes to reveal the composition of those firms’ management and workforce.

Major players in Australia’s corporate and government procurement sector are increasingly seeking Indigenous suppliers.

Groups like Supply Nation certify Indigenous-owned businesses, however some in the sector had expressed concerns about “black cladding”, when businesses took advantage of an Indigenous business to gain access to procurement processes.

“As this sector becomes larger and more impactful, there will be a need for stronger regulatory oversight, and we’re very comfortable being subject to any future regulatory regime,” Mr Powick said.

He said Deloitte was ensuring “our parameters meet and exceed all regulatory requirements for Indigenous-led businesses”.

Deloitte had moved to transfer its existing Indigenous services group into Yamagigu, the Indigenous consulting operation previously minority-owned by PwC Australia. This will result in about five people joining the 60-strong Yamagigu workforce.

Yamagigu means for “our purpose is to go with you”.

Deloitte bought a 49 per cent ownership stake in Yamagigu from PwC after the rival audit and consulting firm moved to it in March, amid a broader shake-out of services within the professional services giant associated with government contracts.

Mr Powick said the firm bought the stake in Yamagigu as “we saw this as an opportunity to make a positive impact on an agenda we think is really important for the country”.

He said Yamagigu would operate as a separate business with a separate board and independent chair, and Deloitte would only provide the Indigenous consulting firm access to its services and systems.

“From day one, we’ve been very conscious to set up robust governance protocols,” he said.

“Like our governance at Deloitte, we want the governance of Yamagigu to be consistent with ASX standards and we have established a separate governance board with an independent chair.”

Yamagigu chief executive Gavin Brown.

Yamagigu chief executive Gavin Brown said the growth in Indigenous business had been good for the sector and community, but he was concerned about integrity.

He aid regulators should consider changing the rules regarding integrity and certification to “confirm the authenticity” of companies which made claims of Indigenous origins.

Mr Brown will continue to head up Yamagigu, after its sale by PwC.

He said the departure from PwC was necessary for the firm to continue in its current form.

PwC sold its government consulting operations to private equity players Allegro Funds, since renamed Scyne Advisory, in a $1 deal.

Mr Brown said the majority of Indigenous firms’ revenues came from public sector contracts, which made continuing as part of PwC after its Scyne sale “difficult to maintain”.

He said the public and private sectors were both expected to need Indigenous consulting services in the years ahead

“You’re talking closing the gap; it’s every level of government,” he said.

“On the non-public sector side, you can see the burgeoning decarbonisation agenda with capital, with the increasing interest of some of the groups to get involved from an investment point of view.”

Mr Brown said many Indigenous homeland corporations, often beneficiaries of mineral rents and royalties, needed skilled services to provide “really quality advice”.

Originally published as Deloitte to audit Indigenous suppliers after taking stake in consultancy