by Ganesh Sahathevan
The Education Minister, Jason Clare, has described the failure by PwC to disclose its interest in a private education provider while conducting a confidential review into the Commonwealth regulator of private colleges as "completely unacceptable".
Key points:
- A spokesman for PwC admitted the firm failed to appropriately disclose its interest in Top Education Group while performing a review for the education department
- It is the second time PwC has been found to have concealed its interest in the education provider from the government
- Last week it was revealed PwC took a significant shareholding in Top Education Group while consulting for TEQSA
It is the second time that the firm has been found to have concealed from the federal government its $5.5 million interest in Top Education Group, one of Australia's most prominent and politically active private colleges.
It comes as a group of current PwC employees have issued an internal challenge to the firm demanding far deeper reform than the proposed sale of its government consulting arm.
A letter addressed to eight members of the current leadership team — including acting chief executive Kristin Stubbins — also alleges wideranging misconduct by the firm, including the use of non-disclosure agreements to "facilitate the departure of partners accused of harassment or assault, enabling them to repeat such behaviour in other firms or organisations".
"[We] express our deep concerns regarding the current course of action … we find it lacking in transparency, grossly inadequate, and potentially detrimental to the firm beyond repair," their letter states.
"Urgent corrective measures must be undertaken to salvage our partnership from further disaster."
Last week, an ABC investigation revealed that the consulting firm had taken a significant shareholding in a private education provider while at the same time providing high-level consulting advice to the regulator of private colleges, the Tertiary Education Quality and Standards Agency (TEQSA).
Eight of the firm's senior partners, including its two most recent former chief executives, also made personal investments in the company worth a combined $2.5 million.
Now, another failure to declare the firm's interest has been confirmed.
In December 2016, PricewaterhouseCoopers was hired by the Department of Education to analyse the cost-recovery funding model used by TEQSA, eight months after the firm had invested in Top Education Group. The education provider is regulated by TEQSA.
The department has told the ABC that its "contracts require PwC to advise the department of any conflicts of interest".
"The department has not located any records from PwC declaring a conflict for these contracts."
Mr Clare told the ABC that an external reviewer has been appointed to examine how the department hires consultants.
"Failure to disclose conflicts of interest is completely unacceptable," he said.
"In addition to the actions the government is taking in this area, the Department of Education is conducting an external review of the department's procurement policies to ensure they are as robust as possible."
Previously, PwC had insisted it had "fulfilled its disclosure obligations" to both the Tertiary Education Quality and Standards Agency and the Department of Education.
Now, a spokesman for PwC has admitted the firm failed to do so.
"We recognise that we did not make the appropriate disclosure in regard to a review completed for the department in 2017, in line with their policy and our own professional standards," a spokesman said.
The spokesman told the ABC it had made "prior disclosures" of its interest to both the department and to TEQSA, but did not respond to the ABC's requests to see evidence of those disclosures. One of them, it is understood, is claimed to have been a "verbal disclosure".
"We continue to take the appropriate steps to enhance our governance and controls to better meet the expectations of the community," the spokesman said.
The previously confidential review meant that PwC was granted access to TEQSA's policy framework, its budget information and an insight into the work of its employees.
The department furnished the ABC with a copy of the PwC report, and in so doing, redacted its final appendix which is headlined "Provider Analysis".
This appendix is a list of 173 providers regulated by TEQSA followed by a breakdown of sensitive commercial data including "total revenue" and "total net profit/surplus for all activities".
The department's spokesman said the reason it redacted this data was because "the information could be used to identify some providers".
On Monday, meanwhile, a group describing itself as current PwC employees who have formed a "committee for the restoration of trust in PwC through transparency and accountability" has issued a rallying call for reform of the company via a letter to senior management.
The letter identifies 11 current or former senior partners and directors of the firm to whom the committee sheets home blame for the tax leak fiasco and for overseeing a corroded corporate culture, and calls the current plan to offload the government-consulting arm of the business "grossly inadequate".
It cites the abuse of confidential Treasury information and the investment by the firm and its partners in Top Education Group and expresses "our deep concerns regarding the current course of action".
"We find it lacking in transparency … and potentially detrimental to the firm beyond repair," the employees' letter says.
"Urgent corrective measures must be undertaken to salvage our partnership from further disaster."
The group of employees decry the ongoing retirement payments being made to former senior members of the firm who, it alleges, were the "primary beneficiaries of the actions taken in relation to the tax scheme, subsequent concealment of such conduct, and the lack of accountability".
"These individuals have derived substantial financial, social and reputational benefits from their association with the firm, some of whom continue to receive payments through high draws or retirement benefits."
"These events will directly impact the lifetime earnings of all current and future partners for the next 25 years."
The letter also makes allegations that these issues are "not isolated".
"Disturbing instances have come to light where NDAs have been utilised to facilitate the departure of partners accused of harassment or assault, enabling them to repeat such behaviour in other firms or organisations … while other industries have addressed and condemned such practices, our firm has yet to do so."
A PwC spokesman declined to comment.
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