Scyne Advisory appears before NSW consulting inquiry

Less than three months in business and PwC public sector consulting breakaway Scyne Advisory has made an appearance before the NSW government’s parliamentary inquiry into the use of consultants.

Public sector consulting ‘start-up’ Scyne has taken the opportunity of its parliamentary debut to issue a backhander to its progenitor and the fellow Big Four accounting and consulting firms by describing their business model of serving both the government and private sectors as an ‘inherent conflict’.

Fronting a NSW government inquiry into the use of consultants, Scyne also said its personnel had cut all financial ties with PwC via early retirement payouts.

“I would like to say upfront that Scyne Advisory understands, unequivocally, the importance of the public’s trust in the government’s use and management of consulting services,” opened board member Adrian Loader, the co-founder of parent Allegro Funds. “In this light, the breach of this trust by PwC Australia was damaging and completely unacceptable. The conflict of interest was plain. Governments require, and the community deserves, a higher standard.”

When questioned later, Loader told the committee that Scyne had eliminated such conflicts and other governance issues by establishing itself as a public sector pure-play in the structure of a corporate rather than partnership. “If you’re doing work on both sides, that’s where the inherent conflict is,” he ventured.“The real question is, ‘How do you manage it? And what are the ramifications for how you actually manage it?’ It’s easier to manage if there’s no inherent conflict.”

Ernst & Young, which was established in its current form three and a half decades ago and last year failed in its own bid to separate its consulting and auditing divisions, had the misfortune to follow the three-month-old upstart on the hearing call-sheet, arguing that it didn’t suffer from conflicts and that Scyne hadn’t structurally reduced the potential for conflicts anyway, as individuals could still be conflicted or conflicts could arise in working for different government departments.

Pre-empting that argument, acting Scyne chief Rich Gwilym earlier told the inquiry that the consultancy would have clear conversations with clients as to whether its work in other jurisdictions might present a direct conflict, while to reduce concerns at the individual level the firm had introduced a ‘cooling-off period’ for ex-politicians and public servants before they could join. EY famously attempted to recruit Christopher Pyne barely a week after leaving office.

Gwilym also revealed that its leadership has successfully severed all financial ties with PwC, with a number of its partners – 23 according to the AFR – having negotiated a payout of their accrued retirement entitlements before crossing to Scyne, adding up to more than $10 million. Scyne has no such loyalty scheme in place, Gwilym added, with its leaders classed as directors receiving a monthly salary and superannuation like ordinary folk.

Meanwhile, EY also copped flak for failing to disclose it had been serving Santos as an auditor while also performing economic modelling for the state’s gas policy, the firm denying that its dual roles constituted a conflict which required declaration.

Committee chair, Greens MP Abigail Boyd, described EY’s response as “breathtaking arrogance”, while natural resources minister Courtney Houssos said the lack of disclosure requirements reflected poorly on the system in place.”