As if PwC didn’t have a bad enough year, the embattled firm has been drawn into the robodebt scandal.
Fearful of any more bad press, PwC has acted swiftly after the robodebt royal commission highlighted that the firm was paid $853,859 for a report it never delivered.
PwC has said it will repay the money in full — which would mean a roughly 0.03% hit to its annual revenue of $2.6 billion — and has also parted ways with a partner who gave evidence to the commission.
To be fair to PwC, it appears the consultancy had been fully prepared to deliver the report, which had been pitched by the Department of Human Services (DHS) in January 2017 as an external process review of the robodebt scheme.
But a mysterious direction from then-DHS secretary Kathryn Campbell in June 2017 to PwC saying it didn’t need to finalise the report meant the consultancy was off the hook. Instead, it distilled its work into a PowerPoint presentation to ministerial staff, and proceeded to bill the government for the full amount.
It appears that by April 2017, the government’s half-hearted interest in the report had become something of an in-joke at PwC.
“A number of PwC staff began referring to the document as the ‘notreport’, ‘non-report’, and other variations on that theme,” the royal commission report said. “One email said ‘Attached is the latest version of the DHS report (or not report, whatever you want to call [or not call] it).'”
The PwC report, before it was scrapped, was “a Word document which comprised almost 100 pages”, the royal commission found, meaning each page would have cost taxpayers about $8500.
The PowerPoint presentation was just eight pages. That would mean each slide was worth more than $100,000.
The Sydney Morning Herald revealed last week that acting PwC chief executive Kristin Stubbins has promised to repay the fee in full.
“Following the findings of the royal commission review into the robodebt scheme, we do not feel it would be appropriate to retain the $853,859 fee for work carried out for the DHS on this matter,” she said. “We have made representations with the minister’s office and will take the necessary steps for these fees to be returned.”
Crikey’s sister publication The Mandarin reported a PwC partner had been pushed out just hours after the royal commission report was issued last Friday.
“A PwC partner who testified to the royal commission was asked to exit the partnership and is no longer with the firm,” Stubbins told the publication.
The royal commission report said Campbell had been the one to hire PwC to look into robodebt, a welfare clawback scheme that unlawfully used a shoddy formula to incorrectly claim recipients owed the government money.
Campbell also monitored PwC’s work, including “personally attending presentations”.
Yet she was also the one to let PwC know the report wasn’t needed anymore.
“The commission finds that on or about June 6 2017, Ms Campbell communicated to [PwC partner Terry] Weber that the report was not to be finalised and provided to DHS. Despite the importance of that indication from DHS, it does not appear to have been documented at the time,” the royal commission report said.
“As detailed above, the report was far more extensive and critical of the scheme’s failings than the PowerPoint presentation; it revealed that it would not deliver the projected budget savings, that it was producing a significant percentage of inaccurate debts, and, crucially, that the online process had been a failure.”
So why would Campbell have axed the report?
“The rational inference is that although the report was contracted for and all but finalised, Ms Campbell formed the view that its detail as to the deficiencies of the scheme was damaging and that it would be better for the department’s reputation, and her own, if it were not produced,” the royal commission concluded.
According to a PwC “transparency report” issued for the 2022 financial year, the firm reported $2.6 billion from its Australian operations in that period. That represented a 21% growth in profit.
PwC is an appalling outfit in many ways, but in this instance it seems to have done nothing wrong. Campbell commissioned the report, and without any valid grounds Campbell cancelled it after most of the work was done. Why is PwC repaying its fee when it appears it did the work it was contracted to do? It’s quite obvious who should be footing the bill personally for this particular episode in the Robodebt debacle, and it is not PwC.
I agree. PwC did as it was asked and was ready to deliver the product that had been requested by DHS (ie Kathryn Campbell). It is Campbell who should be repaying the money, which would be slightly less than her current annual salary at AUKUS. She didn’t return a faulty product for refund, she paid the money, then said she didn’t want it when it was ready for delivery..
There might be a bit more to this, with the fact that a PwC partner who appeared at the hearings was asked to leave. At a minimum, there should be a solid record at PwC of the decision to can the report.
But also, it’s not a great look that the only item delivered by the company did not fully represent the harms that the govt was doing to its people. I’m not sure of what the best avenue for PwC staff was here, but it surely is getting close to whistleblower territory.
PwC only delivered the 8 page power point because its client told it not to deliver the report. So what else could it do, and how is this PwC’s fault rather than Campbell’s?
But if someone at PwC leaked its contents to Campbell pre-delivery? Why else would she shoot the messenger before he arrived?
If…
I’m not aware there was any leak. Campbell might have simply sniffed which way the wind was blowing, or seen the draft report, or been told in a meeting with PwC how it was going. There would not be anything strange about the client monitoring the progress of the contract. In fact, it would be derelict of Campbell not to do that.
You may be right, but monitoring the progress implies to me having input. And if so, there would be no need to refuse delivery. But the truth as usual is hidden. And I am only speculating (again).
It’s been reported elsewhere of other situations where the govt would receive a “draft” report, not be happy with the contents, and tell the provider that a final report was not needed. Nothing to (officially) communicate higher up, nothing to report, nothing to FOI.
Seems to have worked spectacularly for them in this case… up till now.
Thanks. So, just another devious common practice then. Plausible deniability strikes again.
“ I don’t need to know that”
On a past occasion, my consultant , before starting , stated that in the possibility that his study provided a conclusion which went against my wishes, he would be obliged to still present it to me.
My response was that if that proved to be the case, I would accept that as a fact and abandon my proposed action as I wished to use the report in representations with government and would expect that it would stand up to forensic examination.
I was being paid substantially less than Campbell
There was a draft report delivered for review/comment. Campbell and everone else knew what was coming! Don’t be so naive!
They could have leaked it to the press or Crikey
The partial answer would seem to be in this line: “A PwC partner who testified to the royal commission was asked to exit the partnership and is no longer with the firm,” Stubbins told the publication.” Who the partner was and what they testified to, would seem to have embarrassed PwC to the point where it felt compelled to return the fees and oust the partner. What they charged for the non report and/or the 8 page power point presentation would hardly seem worth the $853,859 fee, charged by and paid to them by the previous government. The billions that have gone out as slush to various companies for not very much if anything at all during this period is astonishing.
None of that suggests PwC did not carry out the work it was contracted to do. It was not PwC that chose to substitute the report required under the contract with a ‘non-report’ and an 8 page power point presentation so it makes no sense to use that against PwC. That was Campbell. So far as anyone can tell, PwC entered the contract in good faith, did its research properly and drafted an appropriate report based on the findings of its research. And that appears to be the problem, from Campbell’s point of view: the report was too accurate, revealing and credible. If, as appears, PwC fulfilled its part of the contract there is no reason for PwC not to receive and keep its fee. Any other money, billions according to you, paid by the government to anyone else for doing not much has no relevance to this one contract.
Who the partner was who testified and why they left PwC seems to be unknown and may just as well be irrelevant to the report. From the information here they could merely be one more who was involved in the breach of non-disclosure agreements.
The partner probably told the truth to the Commission. Career-limiting. No place for him/her/prefernottosay in any 21st century corporate.
It would seem to be one of those not so usual occasions where a consultant did not deliver what the client wanted to hear and could use. Instead, provided something almost like traditional public service behaviour but with the advantage that if you didn’t like what you were being told you could junk it. Perhaps the level of mendacity required was too high for the mere $850,000 plus change on offer.
The emperor (empress?) sought advice on their latest outfit from a top-flight couturier, and was vexed when told it didn’t actually exist.
The fact that PwC (undoubtedly) did nothing wrong is the second most concerning thing here. The most concerning is that, notwithstanding, they promised to give the money back. I look forward to reading it when it’s leaked.
$850,000 in hush money. What a farce. If it’s evidence in a royal commission, why should we have to wait for it to be leaked?
No dishonor on PwC offering to repay the dollars. They delivered the goods as requested and had it rejected by a civil servant, who would have faced ignominy if it had been made public. So it would be timely for that civil servant to face the music along with her masters in Government who instigated the scheme and then aided and abetted an ongoing cover up.
Sorry, it’s not rational behaviour to repay the money if you did what you were asked.
Correct its a media stunt by PwC
Campbell should be sacked and stripped of any public honours she has been granted
She should be jailed for extortion:
‘If you use menace or force to demand property from another person in an attempt to steal it, you could be punished with a prison sentence of up to 2 years (if heard in the Local Court) or maximum penalty of 10 years’ imprisonment (if heard in the District Court) or 14 years if done in company with others.’
Oh !YES she should be. BUT !I bet she is not . Morrison will get off too. They are all(Morrison Tudge Porter and Robert) are all in denial that they have done any wrong! We have not heard much from Campbell,but her performance before the Royal Commission tell us a lot.
“Major General” Campbell…. They don’t take kindly to having their orders questioned….
Half of Australia could have told the government that it was a crock of s**t in 30 seconds for nothing.
I would have been one of them. I dodged robodebt long before it got a name.