Tuesday, August 19, 2014
How much does a government sanction hurt a company's reputation and business? PricewaterhouseCoopers is about to find out. The auditing and consulting firm is barred for 24 months from doing any work that requires a sign-off from the New York Department of Financial Services, and it is paying a $25 million fine. The government unit accused PwC of watering down a report on foreign transactions at the Bank of Tokyo. News of the penalty and punishment has been broadcast widely. PwC is in damage-control mode, but it might not be enough given that it cannot work for two years for the top banks in New York. While it is too early to predict that the consulting unit will implode because of the punishment, it is almost a certainty it will suffer financially. Then, once the two year sidelining is up, how will the unit win back business lost in the interim? PwC is officially standing by its work in the case, but unofficially there must be terrible morale in the unit and a fear for jobs. One of the first steps the company should take is to boost internal morale, then it needs to figure out what its consultants will do while sitting on the bench.