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Ziggy Switkowski AO to lead independent review of PwC Australia
Rear Window
PwC staff apply ice baths to epic burns
Myriam RobinColumnistCan personal growth coincide with total reputational degradation? You betcha!
How else to explain the no-holds-barred lauding of PwC’s corporate coachella The Outside, taking place for the second time this month even as the consultancy stands shadow-banned from government work over its treatment of confidential consultations as a business development tool, undermining the very laws it was trusted to improve.
Not your usual corporate shindig: PwC’s The Outside
Still, across LinkedIn, PwC operatives are gushing at their chance to participate in the second personal growth smorgasfest, which puts 2000 “future leaders” through a four-day, $5000-a-head “personal learning journey” at the Elysia Wellness Retreat in the Hunter Valley. Think tipis, corporate cover bands, inspirational speakers, running sessions and lots of manifesting.
This year’s highlights, as revealed by participants, have included smoking ceremonies, ceilidh dancing, sessions on gut health and the microbiome. Oh, and ice bucket challenges, presumably applied to calm the epic burns left by chief PwC tormentor Deborah O’Neill.
On LinkedIn, relatively few attendees made any public reference at all to the wider context, beyond dark allusions to respite from a “difficult week”.
If there were any training sessions on something as dour as corporate and professional ethics, they certainly didn’t make the happy snaps.
PwC staff anonymously strung up their dreams in the House of Common Hopes .
This all took place in a week when CEO Tom Seymour and two other partners stepped down, and global chiefs were called in to force the business to confront the sheer calamity it has put itself in.
To be fair, for all their cloying enthusiasm, this is a crisis far above the pay grades of the relatively junior hacks who overwhelmingly populate The Outside. Though plenty of partners head along too.
Seymour, for one, was a gushing participant of the inaugural event last year, grateful for the chance to be “learning about myself and others”.
He’s had plenty of other learning experiences of late, though we doubt those dished out by the Senate are quite as uplifting.
Rear Window
PwC banks a win on Slater and Gordon train wreck
Joe AstonColumnistHot on the heels of PricewaterhouseCoopers’ tax leaks scandal, in which disgraced partner Peter Collins leaked secret Commonwealth Treasury information and his colleagues turned it into tax avoidance schemes for clients, PwC’s UK arm has successfully defended a lawsuit in London over an alleged client confidentiality breach with a uniquely Australian twist.
There really was something in the water coolers at PwC circa 2015, when the firm’s Australian tax practice was conspiring to cheat its largest client, the Australian government, out of revenue.
Around the same time, London PwC partner Ian Green, who was advising London Stock Exchange-listed Quindell on its acute cashflow troubles, held a private meeting with Gareth Davies, a banker at Greenhill & Co, which was advising Slater and Gordon in Melbourne on the acquisition of Quindell’s legal arm.
Greenhill is not to be confused with Greensill, the dodgy factoring shop of disgraced Bundaberg chancer Lex Greensill.
This private meeting was discovered in 2019 litigation between Slaters and Watchstone, which is the litigation fund left over from the carcass of Quindell.
Watchstone then sued PwC for leaking confidential information – there they go again! – and sued Greenhill for – at least Watchstone contended – using the information to help Slaters bid less than it would have otherwise.
It was an audacious piece of litigation, frankly, to claim that PwC’s so-called leak had “a real and substantial effect on the purchase price which [Slaters] paid for [Quindell’s professional services division] under the transaction”.
Slater and Gordon paid £645 million ($1.3 billion) for that business, which was utterly worthless. Slaters even had to advance Quindell £12 million on the purchase price before due diligence had even commenced just so Quindell could make payroll! Have you ever heard of anything so stupid?
The deal was announced in March 2015. Arnold Bloch Leibler partner Jonathan Wenig, as chairman of Slater and Gordon’s due diligence committee, signed off on the $900 million equity raising led by Citi’s Aidan Allen. By Christmas of that year, Slater and Gordon shares had lost 87 per cent of their value. Yet Watchstone says Slaters underpaid!
ABL and Wenig were later sued over their advice and in 2021, ABL paid $28 million to settle the matter (while admitting no fault). Imagine the premium today on their professional indemnity insurance!
Ahead of his January 2015 meeting with Green at PwC’s London headquarters, Greenhill’s Gareth Davies – who the UK’s High Court heard is a “larger than life character” – emailed his Australian colleagues asking for suggested questions. In response, managing director Michelle Jablko “identified some areas which she wished to better understand.”
A fortnight earlier, Jablko had emailed Davies after having spoken to Quindell’s bankers and reported that they had characterised Quindell’s projections as “meaningless and they have no idea what their sustainable earnings are”.
What a prospect this asset sounded like. I mean, we just can’t understand why there weren’t multiple bidders.
The following year, in May 2016, Jablko left investment banking to be ANZ Banking Group’s CFO and Bell Potter broker Angus Aitken was sacked for criticising that appointment on the basis that “former investment bankers tend to be crap at most things in the listed world”.
Broadly speaking, his point was absolutely correct though he was specifically wrong about Jablko. She performed strongly at ANZ, jumped to Transurban in 2021 and is rightly considered a frontrunner to replace Scott Charlton as chief executive of that despicable company.
Not that Fat Angus actually named Jablko or even identified her gender. He also extracted a financial settlement from ANZ sufficient to fund his weekly gelato expenditure until the year 2090.
These tangentials aside, Watchstone’s civil suit ultimately fizzled, with the judge entirely unpersuaded that the PwC-Greenhill meeting was material to the agreed price of the transaction in any way.
Whatever the quantum of shareholder capital expended on lawyers and advocates, it was a worthy endowment to the canon of satire – especially given the testimony by various parties, including former CEO Andrew Grech, that Slater and Gordon’s due diligence was “enormous”, “colossal” and “forensic”.
Seventy lawyers spent three months poring over an insolvent business only to determine it was worth $1.3 billion. It’s high farce! An insolvent business dealing in industrial deafness claims and that particular infirmity spread to the bid team. The message was loud and clear: hold on to your shareholders’ money and back away slowly. Even now, they can’t hear it.