PwC Australia announces further actions on governance, accountability and culture

Monday, 29 May 2023

PwC Australia announces further actions to enhance the firm’s governance, accountability and culture and rebuild trust with stakeholders

• Directed 9 partners to go on leave effective immediately
• Ringfencing of the Federal Government business to minimise conflicts of interest and enhance governance
• Will appoint two independent, non-executive directors to its Governance Board
• Will publish Independent Review report and recommendations in full

PwC Australia is today announcing further actions to enhance the firm’s governance, accountability and culture.

“Our previously announced work is well under way. We are announcing these actions today, despite the fact that our investigation continues, because we recognise that our stakeholders want more transparency in order to restore confidence in our firm,” said Kristin Stubbins, acting Chief Executive of PwC Australia.

In addition to the actions already announced, today’s announcement focuses on four primary areas.

PwC Australia has directed 9 partners to go on leave, effective immediately, pending the outcome of our investigation. This includes those with leadership or governance roles. In addition, the Chairs of the Governance Board and its designated risk committee have decided to step down from their respective roles. These decisions are in addition to the leadership actions already announced.

PwC Australia has also commenced a process to ringfence the provision of services to Federal Government Departments and Agencies to enhance our controls to prevent conflicts of interest. We are moving to quickly establish separate governance and oversight arrangements for the business by the end of September. It will cover all services to Federal Government Departments and Agencies and include people, operations and governance within its perimeter and be operationally ringfenced from other businesses within PwC Australia. The business will have a standalone Executive and Governance Board who will have the responsibility to consider the strategic options for the business. This will establish independence and enhance controls relating to confidentiality and conflicts. PwC will consult with the Australian government on these arrangements including timing and process.

Ms Stubbins said: “We recognise that enhanced governance, structures and controls are necessary and the decision to ringfence our Federal Government business is a critical next step.”

Two independent, non-executive directors will also be appointed to the firm’s Governance Board and that process is underway. External board members will bring independent, outside-in perspective and objectivity to the firm’s governance.

It is now clear that when we learned of the confidentiality breach and related issues we failed to conduct an appropriate root cause investigation and thorough assessment of accountability for both the conduct at issue and the culture that allowed the underlying conduct to occur. That was the result of a failure of leadership and governance. As previously announced on 15 May, PwC Australia has appointed Dr Ziggy Switkowski AO to lead an Independent Review of the firm’s culture, governance and accountability. We will publish the report and recommendations, in full, at the conclusion of the Independent Review in September. PwC Australia also announced the appointment of Tony O’Malley as Chief Risk and Ethics Leader, who is overseeing immediate changes and will lead the implementation of the external review’s findings.

Separately, PwC Australia has been continuing its investigation, with the assistance of external counsel, into the sharing or misuse of confidential information. There have been calls for PwC to release the names of the individuals who received the emails that were released by the Senate on 2 May 2023. There has been an assumption by some that all those whose names have been redacted must necessarily be involved in wrongdoing. That is incorrect. Based on our ongoing investigation, we believe that the vast majority of the recipients of these emails are neither responsible for, nor were knowingly involved in any confidentiality breach. We have and will continue to take appropriate action against anyone who is found to have breached confidentiality or failed in their leadership duties.

In addition, in relation to the breach of confidentiality, our clients were not involved in any wrongdoing and no confidential information was used to enable clients to pay less tax.

“We understand that we betrayed the trust of our stakeholders and we apologise unreservedly. We know that action is critical to restore confidence in our firm and rebuild trust with our stakeholders and I am committed to taking all necessary steps to make this happen,” said Ms Stubbins.