Why PwC is selling part of its business in Australia for less than $1

By Michelle Toh, CNN

(CNN) — PwC, one of the world’s big four consulting firms, is selling its government advisory business in Australia for just cents after a scandal left its reputation there in shreds.

The company announced its “exit from all government advisory work” Sunday after a former tax partner was allegedly found to have been passing around confidential government information, prompting public fury.

As a result, PwC will sell its government consultancy practice in Australia to Allegro Funds, a private equity firm, for just 1 Australian dollar ($0.7), PwC said in a statement. The business accounts for about 20% of the firm’s revenue in the country.

The fire sale follows allegations by the Australian Treasury that Peter Collins, a former PwC partner, had improperly shared government documents, leading to a “wide range of individuals within PwC who were directly and indirectly privy to the confidential information.”

The Australian Senate has launched an inquiry into the broader consulting sector, and late last month the Treasury referred the matter to police for criminal investigation.

The Australian federal police confirmed to CNN at the time that a probe had “commenced,” declining to comment further. Police did not immediately provide an update Monday.

PwC Australia has taken steps to try to regain trust. In early May, when the scandal broke, CEO Tom Seymour stepped down, as did two board members.

The firm also ordered nine partners to go on leave as it carried out an investigation “into who may have shared or misused confidential information,” acting CEO Kristin Stubbins said in an open letter in May.

Stubbins apologized and said Collins had “breached confidentiality in connection with tax consultations.”

“Some of the confidential information was disclosed by Mr. Collins with other PwC personnel who, in turn, disclosed to clients or potential clients of PwC,” Australia’s tax board, a government agency, said on its website. Collins has since had his license as a tax agent revoked.

The issue has prompted questions about PwC’s broader culture.

In her open letter, Stubbins acknowledged that “we had a culture at the time in our tax business that both allowed inappropriate behavior and has not, until now, always properly held our leaders and those involved to account.”

To rectify that, PwC had initiated an independent review of the firm’s culture and governance practices, she added.

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