Bureaucrats in charge of the nation’s finances have opened the door to giving scandal-plagued consulting firm PwC Australia new taxpayer-funded contracts by Christmas.

A missive published by the Department of Finance says PwC Australia has agreed not to bid for work until December 1, 2024.

But the news came the same day a company it owns 49 per cent of won more than $700,000 in new taxpayer-funded work.

“It’s a sign that they’re out of the freezer,” says international governance expert Dr Andy Schmulow, who has followed the issues at consulting firms for years.

PwC Australia said in a statement it has sold off the parts of the business that provided services to state and federal governments and “no longer operates in those markets”.

What went wrong

PwC is an abbreviation of PricewaterhouseCoopers and it’s a global-trotting professional services company that sells accounting and consulting services.

It’s one of the ‘Big Four’ firms that do this work, alongside Deloitte, KPMG and Ernst & Young (EY).

Since early 2023, the Australian arm of the consulting firm has been under a cloud over the ‘tax leaks’ scandal.

The Tax Practitioners Board found PwC Australia senior partner Peter-John Collins misused confidential information relating to the government’s plans to tax multinational companies.

Internal emails from Mr Collins on September 3, 2015, read:

The firm used the information to reverse-engineer ways to avoid the taxes, and then reaped millions from marketing and selling a ‘fix’ to the very large companies that were set to be taxed more.

One email showed that PwC made at least $2.5 million from having the information, which gloated that it had helped the firm win “brand-defining” clients.

Multiple inquiries

The December 1 date for a reassessment of PwC Australia’s appropriateness to be awarded government work concerns senator Barbara Pocock who, with her colleagues on a cross-party Senate committee, have relentlessly questioned PwC Australia and other firms about conflicts of interest and internal scandals.

“There are multiple inquiries underway,” she says, somewhat exasperated.

“We’ve got an inquiry by the Australian Federal Police, multiple inquiries still by the Tax Practitioners Board, the certified practising accountants (association, CA ANZ), have inquiries underway in relation to a number of PwC issues. And of course, we’ve got two Senate inquiries still going with their recommendations are yet to be received or acted on.”

The federal government — and, through it, taxpayers — were PwC Australia’s biggest client before the scandal broke.

With so many investigations still underway, Senator Pocock says PwC Australia is not ready to take on new work from government.

Senator Pocock says there are still “many gaps in the story” of what happened at PwC Australia.

“And PwC has yet to really come clean completely,” she says.

“That is reflected in the number of inquiries that still remain underway to hold them to account for what they did wrong.

“And we’re yet to see a comprehensive legislative response from the government that really goes after the behaviour which was so egregious in the first instance.”

‘Divested’ arm

In a statement, a PwC Australia spokesperson said:

The sale of parts of the business that did work for government created Scyne Advisory — where ex-PwC Australia partners and staff work exclusively on jobs for different government agencies. It no longer has any link to PwC Australia. 

In addition, the statement added: “The review being undertaken by the Department of Finance is a matter for the department.”

‘Land and expand’

After the scandal exploded, the tentacles of the firm (and others) were discovered deep inside the work and physical offices of government agencies.

Part of the reason is a consulting firm practice later described as “land and expand”, where the original scope and breadth of work grows over the life of a contract.

For example, the Australian Federal Police (AFP) began investigating Peter-John Collins over potential crimes. 

But the firm was the force’s auditor, held lucrative contracts with it and had staff embedded inside AFP offices.

PwC Australia was by far the AFP’s consulting partner of choice, winning more than $20 million in contracts with it in the two years to 2023, around 39 per cent of the AFP’s spending with the biggest seven of the highly competitive firms.

There is no suggestion of wrongdoing by the AFP.

At the time it said there were “stringent arrangements in place (and) no possible way PwC personnel will be able to access the investigation team or any investigation or operational material.”

Note this note

The Department of Finance missive was posted to remind bureaucrats involved in buying services for government departments and agencies.

It describes a “mutual agreement” where “PwC Australia will not bid for any new Commonwealth work until 1 December 2024”.

But it’s hard to tell whether it was an ‘agreement’ or the obvious result of a firm decision by the Finance Department.

Later, the document uses language that changes the implication of the ‘agreement’. 

Asked about the note, the department released a statement to the ABC, saying the note built on similar advice provided in May 2023:

“Officials must consider, among other things, a potential supplier’s relevant experience and performance history when assessing value for money and factor these into the evaluation of tenders. This could include consideration of any unethical behaviour and/or deficiencies in performance under prior contracts,” it notes.

The most recent note “responds to the latest information on the position between the Commonwealth and PricewaterhouseCoopers Australia (PwC Australia), namely the undertaking from PwC Australia that it will refrain from bidding for new Commonwealth work while the government’s ethical soundness review is underway.

 Senator Pocock doesn’t think the firm — and those linked to it — are ready.

“They are not back in inside the fold, and should not be allowed back to do consulting work until it’s all tidied up and we’ve really seen a change in the way PwC does business,” she says.

$711,544 gig

The note was published the day that PricewaterhouseCoopers Indigenous Consulting, also called PwC Indigenous or PIC, won $711,544 in new government contracts, revealed by news site The Klaxon. 

PIC states it is a “majority owned, led and staffed Indigenous operation”, with the Indigenous co-owners holding a 51 per cent share and PwC Australia owning the remaining 49 per cent. It is a “member firm” in PwC’s global network.

The department’s note clearly states that PwC Indigenous and Scyne Advisory — a company spun-off from PwC Australia that does only government work — are not barred from work. The words “does not apply” are written in bold.

“Finance has separately concluded a review into PwC Indigenous and found that it was appropriate for the Commonwealth to continue engaging with PwC Indigenous,” the note reads.

The department declined to provide the review or its findings.

“The Department has not released a summary of its examination of PricewaterhouseCoopers Indigenous Consulting (PIC),” a spokesperson said in a statement.

There is no suggestion that any members of PwC Indigenous have been or are involved in the ongoing investigations around the tax leaks matter.

Big work

PwC Australia is busy getting its house in order.

The firm sold off its entire government consulting arm for $1, creating Scyne Advisory, recognising it would be unlikely to be welcomed back as a supplier without radical change.

PwC Australia imported new leadership and is dealing with its own internal issues at the same time as the consulting industry adjusts to a federal government keen to trim in the eye-watering cost of services out-sourced to them by hiring public servants to do the work.

“I think there’s going to be a magnificent array of rearranging deck chairs, and virtue-signalling,” says Professor Schmulow, who is unconvinced about the changes that have been made at the PwC Australia.

He uses the example of the firm’s internal legal service, which he disparages as a “play pretend law firm” used to create the ability of legal professional privilege — protection — for clients, as well as PwC’s unwillingness to hand over a key report about what the global business knew about the scandal.

Social problem

PwC Australia complained to Professor Schmulow’s employer, the University of Wollongong, lodging a complaint claiming he had broken the institution’s social media policy.

The governance expert uses highly disparaging and personal language in some posts, calling the firm a “racist, sexist, toxic s**thole”, a “cancer” on society and a “parasite”.

He sees it as evidence of the firm’s misplaced priorities. 

“It’s laughable, it’s ridiculous and it’s pitiful. Who am I? I’m an absolute nobody,” he says.

During a 45-minute meeting with the University of Wollongong’s human resources department, Professor Schmulow says he substantiated the claims using Senate hearing transcripts, parliamentary submissions and content from the Australian Financial Review and ABC’s reporting of the scandal.

“It was so easy for me to demonstrate that these things had been said on the record … that after about 45 minutes, they said to me, ‘Okay, we don’t want to hear anymore’ and I said ‘I’m not finished. I’ve got more examples’,” he says.

In a response to inquiries about PwC Australia’s pursuit of Professor Schmulow, the firm said it was defending staff from disrespectful remarks that included highly personal insults about their appearance. 

Senator Pocock says she’s disappointed to see “how fiercely PwC pursues its critics” in some cases.

“I think PwC really should be spending its time working out how to renovate its internal practices, how to move towards establishing credibility, and integrity in the eyes of the Australian community,” she says.

“It is still an issue for us as a community and PwC have got more work to do.”