By rejecting demergers on their own terms, the Four have chosen uncontrolled and possibly chaotic break-ups on someone else’s terms and clock
– Apple, Microsoft, Mercedes-Benz – are owned by companies with integrated global operations and very robust brand-management strategies. Even McDonald’s, which farms out the management of its restaurants to franchisees, can intervene if its reputation is at risk.
As a network of partnerships, however, PwC – like the other Big Four firms – has no board of that kind. Nor is there an equivalent at the national level. As thenoted, PwC Australia’s governance board is “made up of partners more junior than the CEO and a partnership secretary”. As such, it lacks the clout to go against the firm’s CEO and executive committee.
PwC’s current travails arise from that same conflict. Delighted PwC tax personnel crowed internally that their access to secret government information about future anti-avoidance strategies would allow the firm to make A$2.5m in additional business. That blunder put hundreds of millions of dollars of other work at risk.
And therein lies a conundrum. As the failure of EY’s Project Everest showed, the Big Four are probably incapable of unwinding their own deep-seated conflicts. Sooner or later, the task of imposing structural changes will fall to governments and regulators around the world.
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