KPMG instructed to disclose any payments made to staff who raised wrongdoing

The Parliamentary Joint Committee on Corporations and Financial Services reconvened on Friday (14 August) for the Oversight of ASIC, the Takeovers Panel, and the Corporations Legislation to scrutinise ethics and professional accountability at KPMG as it faces scrutiny over its audit practices and the treatment of whistleblowers who disclose misconduct within the firm.

Several former KPMG Australia partners appeared at the hearing, including former chairman Martin Sheppard, former CEO Andrew Yates, former chief operating officer Eileen Hoggett, former national managing partner, audit and assurance Julian McPherson, and former partner audit and assurance Kim Lawry.

During the hearing, Greens Senator Barbara Pocock addressed the practice of KPMG reaching settlements with whistleblowers, and ordered the accounting firm to provide the committee with details of all the agreements it has made with former or current staff members in the past 10 years who have raised concerns around misconduct in the firm.

Addressing the former partners, Pocock said she would like details of any agreements that have been agreed to by KPMG including the dates, payments, the topic or issue at the centre of those settlements, the division the payments relate to, whether a non-disclosure agreement was signed, and who signed those agreements.

“I'm looking for a comprehensive list of matters which have been dealt with in this way,” Pocock told the former partners, adding that she would be seeking cases of settlement payments of a minimum of $10,000.

“Now they may extend across a wide range of issues. They may be about issues of ethics or internal behaviour. They may relate to sexual harassment. There may be other matters, but I'm seeking an appropriately anonymised listing of that.

“And I would like the total figure for that payment over the last decade. I'm looking to go back 10 years for a full accounting of payments and arrangements. Do you see any difficulty in supplying that to the committee?”

Yates responded that the former partners “can go back through the firm to provide that”, but highlighted challenges that he foresees in gathering the requested information.

“One difficulty I can see is that settlements range very much in terms of why a situation is settled. I think it will be helpful to get some clarity on exactly what you're looking for,” Yates said, adding that he would like more details on the nature of the settlement.

“Because there's many, many reasons why organisations and employees might come to an arrangement to separate,” he said.

Pocock responded: “I don't think a reasonable person listening to the work of this committee would have much doubt about what I'm interested in. I'm interested in complaints by people who have difficulties, who've raised issues of ethics, including behaviours within the firm that have resulted in them being paid some form of settlement, and often accompanied by an NDA. Do you understand?”

Yates said he understood the request and that he would need to go back through the firm to obtain the information on the history of any settlements made with former and current staff members.

Calls for KPMG to reveal the payments in the past 10 years came after Pocock referred to media reports last week of a separate case where the firm confirmed that it had reached a settlement with a whistleblower who alleged wrongdoing within the firm’s tax division three decades ago.

KPMG asserted to Accounting Times that the settlement deed “had no impact on the investigations” into the allegations made against the tax division.

This case is separate from the allegations of misuse of client data by the audit division currently engulfing KPMG.

When Pocock asked if the settlement figure of more than $500,000 quoted in an Australian Financial Review media report was accurate, Sheppard responded that he would need to seek permission with the whistleblower or the “counterpart” in the settlement to disclose the amount. When asked to confirm the figure of more than $500,000 quoted in the media report, Sheppard responded that the “sort of magnitude that you mentioned seems right to me”.

The inquiry covered significant ground around the alleged conduct of KPMG. We present a guide on what was said.

There are ‘many, many’ more whistleblowers out there

During the hearing, Labor Senator Deborah O’Neill said there are “many, many” more whistleblowers who have contacted the parliamentary committee to raise concerns about misconduct at KPMG, and a repeat of similar behaviour. This is in addition to the whistleblower in the tax division raised earlier by Pocock.

She slammed the manner in which KPMG treats whistleblowers, stating that the standard of treatment has no “currency with what people think is a whistleblower speak-up culture”.

“There is no connection between what people think you're doing and what the PR is and what all the lovely glossy documents are and what the whistleblower's testimony to us has represented,” she said.

“You weren’t paid to look after whistleblowers. It’s not identified as part of your salary as a special role. It’s just part of what you do when you get to the top of the food chain.”

Former partners asked point blank if they failed in their obligations

Labor MP Tania Lawrence asked every former partner if they failed in their partner and professional obligations. She referred to the partners’ agreement where partners acknowledge that they have important legal, fiduciary, and ethical obligations to each other and the firm.

“Amongst different obligations, some include not to undertake any activity which is detrimental to or could put at risk the financial, property, or reputational interests of the firms. If I can just go through one by one, just a yes or no,” Lawrence said.

McPherson said he “should have and could have done things differently”, while Yates said he has “taken accountability for all the things that I feel failed under my watch”. Lawry said “in respect to my involvement in the matters that I’m involved in, I haven’t”.

Sheppard said he believes that “I continue to meet my professional standards”, to which Lawrence said: “You do, but you fail the obligations as set out in your partner obligations to KPMG because you have put at risk the financial, the property, or the reputational interests of the firm, have you not?”

Sheppard replied: “In the broader sense of my involvement in this matter, yes. No in terms of the activity which you described and I’ve not been sanctioned in any way by the firm yet”.

Hoggett responded that she “self-reported my conduct”, and added that “I don’t feel like I failed that obligation… I made a mistake and I’m very sorry for it”.

Deputy counsel apologises, external firms likened to ‘Pulp Fiction cleaner’

James McClelland, executive director and deputy general counsel of KPMG, expressed regret over the June 2024 internal report that dismissed allegations made by the whistleblower.

In the frank admission on Friday afternoon, McClelland said the work he undertook “was fundamentally undermined by the answers” given by senior employees of KPMG, of which were “misleading, if not directly deceptive, to the questions that I asked”.

He also reflected on the “nature and tenure” of the emails sent to the whistleblower, on instruction from the firm.

“I want to take this opportunity to say I am sorry, I am sorry I have been a part of this, I am sorry,” McClelland said.

His superior, the now-resigned general counsel Louise Capon, told the inquiry she did not oversee any investigation undertaken by McClelland and had no oversight of the whistleblower policy.

McClelland and Capon were seated beside partners for Allens and Ashurst, firms that were separately engaged to conduct external investigations of the allegations following McClelland’s report.

Documents previously protected under legal professional privilege appeared before the inquiry hearing for the first time.

Greens’ Senator Deborah Pocock said a report prepared by Allens in December 2025 – which did not substantiate a single allegation – was “very, very poor” and they should “give up investigations”.

Pocock also accused the firm of working in a “conflict of interest” and allowed itself to be used as “delay and cover” for KPMG.

Partner Ross Drinnan said he did not accept this characterisation.

“We are lawyers with legal and ethical obligations, we were given a set of instructions, we carefully, thoroughly worked through those instructions, we delivered a report, we consider that report appropriately reflects our professional judgement in December 2025 and we stand by it,” Drinnan insisted in reply.

Lea Constantine, partner for Ashurst – which also fielded criticisms of its own work – said she did not accept the proposition.

Senator Paul Scarr for the Liberal National Party grilled both firms on why a forensic examination of KPMG emails was not done at the outset. He said a later examination uncovered an “absolute mess”.

Lawyers for Allens said the examination would have been a disproportionate response to their scope of inquiry.

While Ashurst accepted, in hindsight, an examination would have uncovered key material earlier, its lawyers did not accept the proposition that the work it did complete was unsatisfactory.

Inquiry chair and senator Deborah O’Neill said the firms had been engaged similarly to “Mr Wolf in Pulp Fiction, who is the cleaner when there is a big mishap in the middle of that film”.

“It feels an awful lot like that to me from where I sit and I don’t know how this system upon which we rely, the proper law of the land, allows lawyers to be paid to come in and allow their names to be used as investigators, declared as investigators, when what you are being asked to do is totally at odds with what ordinary Australians would think of an investigation,” O’Neill said.

“I think you have been positioned terribly in this, very terribly.”

Chairman’s independence under fire

KPMG’s latest chairman, Michael Ebeid, joined the inquiry after stepping into his role yesterday (13 August).

Ebeid told the committee that he has sought to establish an election system for the chairperson in line with ASX companies, where the board and independent directors would vote for the position, as opposed to the former system where partners would vote on the totality.

He added that he wanted to bring his “corps experience” to the chairman role.

“I think I have a lot to be able to provide,” Ebeid said.

Ebeid won the role under the previous election system, which KPMG deputy chair Carmel Mortell said was after a partnership vote by a significant majority. During the inquiry, it was revealed that Ebeid was the singular candidate put forward, where the prior election saw three.

Chair of the committee, Senator Deborah O’Neill said: “No more cosplaying corporations.”

When asked about his independence, Ebeid revealed that his previous work on the KPMG subcommittee was not remunerated.

“I don’t know how this made you independent. It would make you pretty powerless,” O’Neill said.

It was revealed that Ebeid is now paid around $1 million to be the firm’s independent chairman.

“A million dollars [to be] independent. Why is it worth a million dollars now when the ‘independent tag’ [was] worth zero … last August?” O’Neill said.

“There's something really, really lost about the power structure there,” she said.