PwC Australia Seeks to Sell Embattled Unit to Allegro: AFR

PricewaterhouseCoopers’ Australia unit is seeking to sell the government consulting operation at the center of a tax scandal to Allegro Funds, the Australian Financial Review reported.

(Bloomberg) — PricewaterhouseCoopers’ Australia unit is seeking to sell the government consulting operation at the center of a tax scandal to Allegro Funds, the Australian Financial Review reported.

The firm has prepared a term sheet for a prospective sale of its government, education and health-care practice, and is in negotiations with the private equity firm, the AFR reported Friday, without citing sources for the information.

“We do not comment on market speculation,” a PwC spokesperson said in an emailed statement to Bloomberg. A representative for Allegro couldn’t be reached for comment.

In a memo in May, acting chief executive Kristin Stubbins disclosed plans to split off the troubled government, education and health-care business from the rest of the Australian partnership and flagged that the unit’s new board would “have the responsibility to consider the strategic options for the business.” It would become “operationally ringfenced from other businesses within PwC Australia,” she wrote.

The Australian arm of the global consulting giant has been under pressure following revelations that a former senior partner obtained confidential tax policy information while advising the government and the firm then used it to advise global clients. The firm stands to lose millions of dollars in revenue due to its breach, as clients review their relationship with the consultant.

Scrutiny by lawmakers culminated in a Senate report this week accusing PwC of a “deliberate and planned breach of trust.” There is also an ongoing police investigation in Australia that’s examining the issue.

Allegro, founded by Chester Moynihan and Adrian Loader in 2004, earlier this year bought law firm Slater & Gordon, according to its website. The firm has more than A$4 billion ($2.7 billion) in assets under management.

(Adds detail on Allegro from first paragraph)

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