Federal government will 'carefully consider' PwC plan to divest government advisory work to Allegro Funds

PwC confirmed it had entered an exclusivity agreement with the private equity investor on Sunday, with both parties committed to signing a binding agreement by the end of July.

The deal could see current government contracts transferred to the new entity, known as Project Bell, staffed by about 1750 PwC staff and 130 partners.

The $1 figure, and the plan to divest a business which accounted for 20 per cent of PwC's 2023 revenue, highlights the firm's embattled status in the wake of its tax leak scandal.

"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," board chair Justin Carroll said on Sunday.

A spokesperson for the Department of Finance on Monday said the government "is 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," they said.

The plan follows the Tax Practitioner's Board's finding in January that PwC Australia's then-head of international tax shared confidential information on Australia's multinational tax avoidance strategy to other partners and staff.

The board found Mr Collins made unauthorised disclosures after a confidential Treasury briefing and banned him from practising as a tax agent for two years.

Emails tabled in Parliament in May revealed 63 people received the confidential information, prompting Treasury to refer the matter to the Australian Federal Police to consider the commencement of a criminal investigation.

PwC has not released the unredacted emails, despite pressure from members of parliament to do so. It is understood none of the 63 people named in the emails would transfer to the new business.

Politicians, experts sceptical of plan

Public sector experts and politicians remain sceptical about the firm's claim this "marks a new direction for PwC Australia".

Macquarie University Professor of Accounting and Corporate Governance James Guthrie said PwC's plan to "ring-fence" its government activities doesn't solve its main problem.

"To move it into a corporation or to move it into a different organisational form, does not solve the main issue, which is the conflict of interest."

Since January, further examples of conflicts of interest have come to light, including that PwC sought to use confidential information gained through a partnership with Agriculture in 2021 to make an unsolicited proposal for work.

Greens senator Barbara Pocock, a member of the Senate committee which recently slammed PwC for its "calculated breach of trust", echoed these concerns.

"The proposal to carve off its public sector work doesn't deal with the internal inherent conflicts of interest that exist within consultancies doing work for the government.

"The conflicts are still there, they don't just magically disappear when you rebadge the partnership and put up a fence."

Fellow committee member, Labor senator Deborah O'Neill, called out the plan for "putting profit ahead of truth telling".

"The unseemly haste to deal with their profit pain, as evidenced here, is at odds with the tardiness of a response to questions that remain unanswered about: conflicts of interest, ethical failure and a multi-year cover up of their support for Mr Peter John Collins."

Senator O'Neill renewed her call for the firm to release the identities of those named in the redacted emails, and detail their involvement.

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Without answers on who was involved, and to what extent, the plan is "not very significant", Australian National University politics researcher Professor John Wanna said.

He noted that PwC would retain its tax functions, the business area in which the breach of confidential information occurred.

The federal government should also reflect on its processes, Professor Wanna said.

"Treasury should have had their eyes open when they when they consulted on these sort of things.

"What Treasury could have done is consult the Americans, consult the British, consult OECD people, consultant New Zealand, and ask what they were proposing and how it has gone down in their communities.

"Rather than consult PwC confidentially when there's always going to be a risk that you know in their commercial interests, they'll leak it or use it strategically to feather their own nest."

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