Former Deloitte staff push for royal commission into big 4 firms
Former partners, juniors and contractors have called for a royal commission where they can testify about the practices of Deloitte, says Senator Pocock.
A raft of partners, directors, juniors and contractors that previously worked at Deloitte have called for a royal commission into the big four firms in reports made to Senator Pocock as part of the consulting services inquiry.
Speaking at the Senate inquiry hearing on Friday, Ms Pocock stated that in the past few months, she had been contacted by staff members and contractors who previously worked at Deloitte or alongside the firm who have openly shared concerns about the firm and its business model.
“People have been very open about sharing concerns about a couple of issues in Deloitte. One is the business model. The second is the question of governance and leadership,” she said.
“I’d like to get across that a number of those [people] have said to me that they want to see a Royal Commission into the big four, as they want to testify about practices within the firm.”
Ms Pocock said the former staff members want to see a full inquiry where witnesses can be called and compelled to give evidence under oath and the “full detail of issues at both state and federal level across big partnerships and Deloitte and can be fully investigated”.
“Some have been privy to board conversations, they tell me, they allege that you have lied to the Senate. They speak of a dark culture and an aggressive pursuit of contracts in government at state and federal level,” said Ms Pocock.
The calls from former Deloitte staff for a Royal Commission echo those by former KPMG partner Brendan Lyon who has also previously pushed for a royal commission into the big four consulting firms, as reported by The Australian Financial Review.
Ms Pocock said informants also described the employment structure at Deloitte as a “pyramid model of employment” where highly paid partners benefit from the heavy lifting and large workloads of more junior staff.
“I’m told by informants that some juniors are utilised on jobs, regardless of their experience and expertise – ‘as long as they have a heartbeat’ as one put it,” she said.
“Highly paid partners of up to 30, which one informant referred to as the ‘greedy 30’ earning between 1.5 and $3 million a year, don't have a practical caseload but effectively live off the heavy lifting and the long hours of more junior staff who are paid in the vicinity of around $70,000 a year.
Ms Pocock stated that past Deloitte directors told her these highly paid partners “sit behind their desk and push junior staff pretty hard for high utilisation rates to service the earnings for partners.
Deloitte chief executive Adam Powick said while the reports made to the Senator by former staff were “concerning at face value” he rejected claims that partners “sit at desks and push pencils”.
“All of us are expected to be servicing clients or respectively managing teams. I still serve clients. Tom Imbesi, [Deloitte’s chair], still services clients. Our partners absolutely service clients and are on the front line every single day, working with clients,” he told the inquiry.
“One of the expectations for partners and leaders is that as you go through the organisation is that they are very much still market-focused and serving clients.”
Mr Powick told the inquiry that there will always be people who make comments but that overall the reports about the firm’s culture was not a culture he was familiar with.
“I don’t have a lot of tolerance as a leader for people that don't put their clients first and don't put their people first,” he said.
Senator Pocock told the inquiry she had also received a report from a former partner who had left the firm recently and described the inside of Deloitte “like a war zone”.
“They described it as like a war zone with partners fighting each other to snatch and grab revenue so that they could save their jobs and win bonuses,” she stated.
The former partner said that what’s best for the client is often forgotten in that scenario, with the partner deciding to leave the firm due to the “ethical failures arising from the business model”.
