Beleaguered accounting and consultancy firm PwC is considering its next steps after a judge ruled its attempt to forcibly retire partner Richard Gregg did not satisfy the firm’s own partnership agreement.
Gregg was told to retire amid the political fallout that followed revelations confidential Australian Taxation Office information had been shared with PwC’s private clients, which eventually resulted in wider scrutiny of the big four accounting firms and their attached consulting businesses.
However, Gregg argued the requirements of the partnership agreement had not been met because management failed to adequately specify why he should retire.
On Aug. 11, New South Wales (NSW) Supreme Court chief equity judge Justice David Hammerschlag agreed.
“It is squarely a case about a contract and the qualities of a bargain,” the judge said.
The court’s ruling could, however, open the door for other cases and Gregg’s lawyers have indicated potential defamation action against PwC.
Acting CEO Kristin Stubbins published an open letter on May 29 apologising on behalf of the firm “for sharing confidential government tax policy information and for betraying the trust placed in us” and announced nine unnamed partners had been directed to go on leave, one of whom was Gregg.
PwC’s partnership agreement says a partner can be required to retire if management makes a recommendation to the board of partners.
“If the board of partners determines that you should be required to retire, you will, without any further act, cease to be a partner of the firm,” Gregg was informed by way of a letter from Stubbins, two days after Gregg marked 10 years as a partner in July.
PwC announced that day that eight partners exited or were being removed from the partnership, naming two who exited “because their actions failed to meet their professional responsibilities”.
With regards to Gregg, the firm said he had been given notice of findings against him and a process had started to remove him from the partnership “for similar reasons”.
The firm did not assert Gregg materially breached the partnership agreement and acknowledged the recommendation he retire was not based on a finding he misused confidential information from government clients, after his solicitors questioned the validity of the recommendation he retire.
With regard to the contract, the judge ruled Gregg was entitled to his sought declaratory relief and ordered the parties to agree on the terms within a week.
“If they are unable to agree on those terms, the court will settle them,” Judge Hammerschlag said.
PwC was also provisionally ordered to pay Gregg’s costs.
AAP attempted to contact Gregg through his solicitors, however, as noted by Justice Hammerschlag, Gregg was instructed not to talk to the media.
Gregg was also told not to contact PwC staff or partners, attend its premises or access its computers when he was directed to go on special leave in May.
A PwC Australia spokesperson responded to questions from AAP with a statement saying the firm respected the court’s decision and was considering its “next steps in relation to Mr Gregg”.
“We remain committed to taking the appropriate action against those we believe have failed to live up to the firm’s professional, ethical or leadership standards,” they said in the statement.
A report on commonwealth procurement tabled in federal parliament on Aug. 9 called for increased competition to avoid PwC and its peers at KPMG, Deloitte, and EY from dominating the procurement process.
“Panels should not continue to be a protection racket to channel work to the big four consulting firms,” it said.
