KPMG discloses new evidence to regulators regarding whistleblower allegations

Newly appointed KPMG chief executive John Sams has written to the Parliamentary Joint Committee on Corporations and Financial Services, informing the Committee of a significant development relating to the allegations of misconduct raised by a whistleblower against the firm.

In the letter, Sams stated that the investigation by Allens had identified new evidence which substantiated an allegation made by the whistleblower that client information relating to the Lenders audit was retained in a locker at KPMG’s Sydney office by Eileen Hoggett, KPMG Australia’s former chief operating officer.

“This allegation had previously been denied by Ms Hoggett. However, based on the evidence now obtained, KPMG accepts that the allegation has been substantiated,” Sams said.

KPMG said it had disclosed the matter to ASIC, Chartered Accountants ANZ, the Tax Practitioners Board, and the Department of Finance.

Sams said KPMG had also informed Lendlease of the new evidence, and apologised again for the “serious breach of trust”.

He also acknowledged the role played by the whistleblower in bringing the matter to light.

“The substantiation of this allegation reflects the importance of ensuring concerns are thoroughly and objectively investigated. KPMG recognises that the whistleblower demonstrated persistence in continuing to raise these concerns and I regret the way aspects of this matter were handled in the past.”

“It is unacceptable that it has taken this long for the truth to come out, and that it has come to light in this manner. It is also very clear that we need to reflect on this, learn from it, and make meaningful changes.”

Sams also told the Committee that following the conclusion of the investigation of Allens, KPMG “intends to provide the factual findings report to the Committee”.

“I appreciate that this development may raise questions for the Committee. KPMG remains committed to cooperating fully with the Committee’s inquiries and to providing any further information that may assist its work.”

Senator Deborah O’Neill, the chair of the Parliamentary Joint Committee on Corporations and Financial Services, first aired allegations concerning the misuse of client data by auditors at KPMG in Parliament back in March.

Since then, the firm has seen a number of departures from its senior leadership team, including former chief executive Andrew Yates, former chairman Martin Sheppard, and former national managing partner of audit and assurance, Julian McPherson.

Eileen Hoggett previously stepped down from her role as chief operating officer in early June and announced she would retire from the partnership. Following the new evidence uncovered by Allens, Hoggett has now been expelled from the partnership, as reported by the Australian Financial Review.

Accounting Times also reported this week that the firm had agreed not to bid for any new Victorian government contracts and withdraw from most of its current tender processes.

KPMG signed a deed of undertaking with the Victorian government not to use personnel involved in the audit leak, not bid for new Victorian government work until the written report is published, and to withdraw from current tender processes with the Victorian government unless the tender relates to the delivery of an urgent requirement, specific unique capability, or continuity of services previously delivered.