Settlement payment to tax division whistleblower 'had no impact on investigations', says KPMG

The Australian Financial Review recently reported that KPMG paid more than $500,000 to a former senior manager who alleged wrongdoing in its tax division. The allegations concerning KPMG's tax division are separate from the allegations of misuse of client data by the audit division currently plaguing the firm. The $500,000 figure has not been confirmed by the big four firm.

A KPMG spokesperson told Accounting Times that the “settlement agreement was reached in recognition of the substantial legal expenses incurred by the former employee”.

The firm told the publication that the settlement deed "had no impact on the investigations" into the allegations made against the tax division.

"While KPMG treated these matters seriously, the historic nature of the allegations made corroboration particularly challenging. You have to remember that most of the claims dated back some two to three decades. We investigated the allegations to the best of our ability," a spokesperson told Accounting Times.

Details of the allegations

The report by the Financial Review said that KPMG learned about the whistleblower’s allegations in June 2023, when a lawyer acting for the former senior tax manager wrote to then KPMG chairman Alison Kitchen to allege “appalling actions of former senior partners”.

The former senior manager alleged that the firm had breached its duty of care, claiming that they had been wrongly blamed for the illegal actions of a KPMG partner.

While preparing for the possible case against KPMG over its treatment of the former senior manager, the former senior manager and a former KPMG tax partner claimed they had unearthed wider wrongdoing by KPMG partners stretching back to the 1990s and early 2000s, according to the media report.

The former partner sent an email to the then-KPMG chief executive, Andrew Yates, detailing some of these allegations. Yates arranged a Teams meeting for the former partner with law firm Allens in August 2023 to investigate these claims. Following this, the partner sent another detailed email outlining evidence that could support the allegations, with some of it dating back to the 1990s.

Some of the allegations detailed in the excerpt from the former manager’s correspondence with KPMG state that the partners engaged in “nefarious practices” including receiving personal cash commissions from clients to participate in taxation schemes, illegally moving cash across international borders for clients to avoid taxation, offsetting client fees for personal benefits and gifts, misusing firm trust accounts for personal benefit, misusing client trust accounts for personal tax advantage without consent, and destroying client records related to this matter on the back of raids conducted by the ATO.

In July 2024, new media reports covered the broader (and unrelated) claims of tax partner misbehaviour, with the former partner and former senior manager alleging that partners had misused client funds.

Both KPMG’s internal investigation and Allen’s had dismissed the allegations. However, the Financial Review reported that days later, former KPMG Australia chair Martin Sheppard contacted the former partner to recommence discussions, and within days KPMG had offered $500,000 (an amount KPMG has not confirmed) to settle the former senior manager’s claim for legal costs.

KPMG to front fresh hearings

The firm is already under intense scrutiny over audit misconduct allegations raised by another whistleblower, who alleges that senior auditors at the firm misused client data and used inside information to win audit work. They also face allegations of mistreating the whistleblower after they raised concerns.

This has resulted in the departure of several key figures since the scandal came to light. This includes former KPMG Australia chief executive Andrew Yates, as reported by Accounting Times’ sister brand Accountants Daily, and national managing partner of audit and assurance Julian McPherson.

Sheppard – who accepted McPherson’s resignation – also resigned a few weeks later, along with two senior audit partners at the centre of the controversy, Paul Rogers and Eileen Hoggett. Hoggett was later expelled from the partnership following new evidence which indicated she had stored confidential client audit information in a locker.

Furthermore, two more top officials departed this week, including KPMG general counsel Louise Capon and head of HR Dorothy Hisgrove.

As scrutiny of KPMG’s scandal continues, the Parliamentary Joint Committee on Corporations and Financial Services will reconvene today (14 August) for the public hearings into the oversight of ASIC, the takeovers panel and the corporations legislation.

On Friday’s hearing – the joint committee’s sixth since the matter was referred in July 2025 – several of KPMG’s former partners will be grilled on its investigation of the allegations raised by the whistleblower, and how KPMG has treated the whistleblower.

Also appearing at the hearing are KPMG Australia chief executive John Sams and former independent board member and newly appointed KPMG chair Michael Ebeid.

Ebeid issued an apology letter to senator Deborah O’Neill this week after previously accusing her of making “completely false” statements when she aired whistleblower allegations in parliament.

The apology came at the same time as the release of several documents produced by law firms Ashurst and Allens by the Inquiry, with the Inquiry stating that they were published on the basis of compelling public interest.

The committee noted that it provided KPMG with every opportunity to publish the documents itself.

“KPMG has been free to do so. It has chosen not to,” it said.