Luke Sayers - PWC Scandal

[Belnakor]

If you’d asked the Sayers equivalent in the firm I worked in (one of the Big 4) what work the partner I worked for was involved in - they wouldn’t have had a clue.

another big 4 story - two guys were at a function and were having a chat - they introduced themselves and then realized they were both partners in the tax team, in the same office.

 

[Belnakor]

What it does do is re-expose the core issue with the Big 4 - that they provide audit, tax and consulting services.

I have zero doubt if the other big 4 firms were given the level of access Collins was, it would have played out in a very similiar way.

 

[WillHayward]

Probably off topic with regards to Sayers - but here’s my prediction for what happens next with regards to PwC.

Worth saying up front that I have previously worked for two of the ‘Big 4’, my wife worked for one of the others and she also worked for Arthur Anderson when it collapsed (she was in her second year on the graduate program).

Not a lot of people realise that these organisations are not single global entities. They are a network of single jurisdiction partnerships that come together under a single brand and binding agreements.

The sudden ‘collapse’ of Arthur Anderson came off the back of two quick scandals in the US partnership (Enron and then WorldCom) that threatened to drag the whole reputation of Arthur Anderson through the mud. Why I put ‘collapse’ into quote marks is because it was the brand that collapsed, not the people or the contracts. Across the world the various national partnerships sold out to the biggest bidder. In the UK (where my wife worked) they went home on the Friday as Arthur Anderson employees and came to work on the Monday as Deloitte employees. Same desk, same clients, same colleagues and boss, same laptop - just a different business card and email address. Across mainland Europe, Arthur Anderson sold out mostly to EY and so on. This all happened in the space of about 10 days across the world.

What this meant was the the US partnership was left high and dry with all of the liabilities and prosecutions. Many US partners not directly involved in Enron or WorldCom resigned their partnerships and took their teams and clients to other firms (the main difference being that individual partners in the US had to do this themselves rather than the whole national partnership moving as one).

The big difference between Arthur Anderson then and PwC now is this was the US partnership’s problem for Anderson and so got global coverage. With PwC it’s a more of a local Australia problem. The chances of it irreparably damaging PwCs brand globally is far smaller (mind you, in 2001 in the UK nobody in Arthur Anderson thought what was going on in the US would impact the European business).

So, what happens now with PwC. We’ve already seen global leaders come in to try and do damage control - but if this continues to spiral the next step for the global firm could well be they effectively disown and cut off the Australian practice. There may even be a ‘cease and desist’ notice on the firm in Australia using the PwC brand.

PwC partners (especially in consulting who don’t deal with Tax/Finance) will start to hawk themselves around to other local firms; trusting that their clients buy them as much as they buy the PwC brand. (I’m sure some will be doing this already). You may even see the consulting arm divorce from the audit/tax business and set up under a new name.

All of this will be designed to keep their individual fees rolling in - because in my experience most of the partners don’t really give a sh*t about the firm; they care about their own little fiefdom.

The tax partners will be the ones to suffer because they will be too toxic for other firms to touch (guilt by association); the audit partners may be impacted but the consulting/Digital partners will come out just fine.

There are plenty of jurisdictions where one or more of the Big 4 don’t operate and Australia isn’t a big enough fish for the global PwC brand to care about - they’ll just keep out for a few years.

Great post.

Remember to use "Big 4" in italics because it's an invented bullshit term they call themselves based on an idea from an external marketing consulting as a branding and cartel tactic.

 

[WillHayward]

It's "Big 4" not Big 4.

It's a self invented bullshit term.

 

[Belnakor]

Great post.

Remember to use "Big 4" in italics because it's an invented bullshit term they call themselves based on an idea from an external marketing consulting as a branding and cartel tactic.

they should do well to remember it was once the "Big 5"

 

[WillHayward]

they should do well to remember it was once the "Big 5"

Some government jobs like routine program audits should be awarded randomly to approved panel members
Take out the BS networking and lobbying.

 

[Corn Cobbers]

they should do well to remember it was once the "Big 5"

It will be Big 3 pretty soon, once this snowballs

PWC can no longer exist in Australia in its current form

 

[Belnakor]

It will be Big 3 pretty soon, once this snowballs

PWC can no longer exist in Australia in its current form

Retool rebrand. They could potentially just close their tax practice. Plenty of options.

Maybe Sayers group will buy the brand out!

 

[Belnakor]

Some government jobs like routine program audits should be awarded randomly to approved panel members
Take out the BS networking and lobbying.

I mean its worse in industry when you have internal audit and external audit for ASX companies and they all have rules it must be a big 4, and you can't reappoint your current auditor + one firm can't do both internal/external, and so boom you have a rotating panel of back-scratching.

 

[big_e]

I have zero doubt if the other big 4 firms were given the level of access Collins was, it would have played out in a very similiar way.

The new head of the TPB - who is from KPMG - didn't seem that fussed by the whole thing. Pushed for a two-year ban instead of five, and the Fin reported that he didn't want the full set of emails released.

 

[GWT6]

was he though.

he was the CEO, he wouldn't be across those kind of actions

You seem to have very little understanding of how corporate organisations work. Maybe sit this one out and instead read the replies to get a bit more educated.

 

[Mofra]

You seem to have very little understanding of how corporate organisations work. Maybe sit this one out and instead read the replies to get a bit more educated.

As the CEO he was either complicit, or inadequately discharged his duties by not knowing.

 

[Corn Cobbers]

As the CEO he was either complicit, or inadequately discharged his duties by not knowing.

There's just no way that a CEO would not know that someone is emailing valuable but confidential govt stuff around the place, he would have known within ten minutes.

 

[Mofra]

There's just no way that a CEO would not know that someone is emailing valuable but confidential govt stuff around the place, he would have known within ten minutes.

Partner bonuses are tied to profitability, and we're talking tens of millions of extra fees.
This is huge and Sayers should have been all over it.

 

[Belnakor]

You seem to have very little understanding of how corporate organisations work. Maybe sit this one out and instead read the replies to get a bit more educated.

I think you'll find I'm far more qualified than most to comment on how big 4 organizations work mate. Far more than you.

 

[Belnakor]

There's just no way that a CEO would not know that someone is emailing valuable but confidential govt stuff around the place, he would have known within ten minutes.

you do you realize PWC has hundreds of partners and the firm is thousands of employees yeah?

He was the CEO not sitting there checking what everyone is up to. The moment he is elevated into the csuite his focus is on the firm as a whole. Tax is one of the profit centers thats it.

 

[Belnakor]

Partner bonuses are tied to profitability, and we're talking tens of millions of extra fees.
This is huge and Sayers should have been all over it.

I guess there is a distinction between should have been and was across it.

He isn't in the emails so he wasn't directly involved, the question is whether he fostered a culture that supported this kind of behavior.

10s of millions of fees aren't necessarily1 going to show up unless it's significantly above what the team would normally do in fees.

 

[Corn Cobbers]

you do you realize PWC has hundreds of partners and the firm is thousands of employees yeah?

He was the CEO not sitting there checking what everyone is up to. The moment he is elevated into the csuite his focus is on the firm as a whole. Tax is one of the profit centers thats it.

Crap

 

[BarbieITFC]

Crap

I’m with Belkanor on this.

Having deep experience of three of the big 4 - let me tell you that the CEO will quite deliberately not get involved in what the partners are doing (plausible deniability) - and will be simply focused on revenue, margin and profit.

Oh, and beasting partners and directors not meeting their revenue, margin and profit targets.

Having been on the end of a couple of such beastings I can assure you I was never once asked what work I was actually doing.

 

[Corn Cobbers]

I’m with Belkanor on this.

Having deep experience of three of the big 4 - let me tell you that the CEO will quite deliberately not get involved in what the partners are doing (plausible deniability) - and will be simply focused on revenue, margin and profit.

Oh, and beasting partners and directors not meeting their revenue, margin and profit targets.

Having been on the end of a couple of such beastings I can assure you I was never once asked what work I was actually doing.

I think it would be very difficult in any normal organisation for such open and egregious behaviour not to make its way up to the CEO pretty quickly.

Your post makes me think unethical and criminal behaviour at the big 4 is standard practice rather than unusual.

Disgusting but not surprising.

Either way, it's on Sayers as CEO.

 

[big_e]

the CEO will quite deliberately not get involved in what the partners are doing (plausible deniability)

Turning a blind eye to bad behaviour as long as it makes money when your purpose is to "build trust in society"?

When value number 1 is "Act with integrity"?

Come on, man. Take your blinkers off and see how this shit is seen by the rest of the country.

 

[BarbieITFC]

Turning a blind eye to bad behaviour as long as it makes money when your purpose is to "build trust in society"?

When value number 1 is "Act with integrity"?

Come on, man. Take your blinkers off and see how this s**t is seen by the rest of the country.

I’m not justifying the behaviour - just explaining it how I experienced it. The higher up the organisation the more I was exposed to it (the junior staff and managers really don’t see what’s behind the curtain). Once I truly realised what was going on - I left and haven’t looked back.

 

[The Nostradamus]

This sayers character just seems incompetent in everything he does

 

[Gavin Excell]

And escaping to Europe when the heat is o PwC and Carlton in a dynamic show of leadership

 

[StillAtLarge]