Senator airs alleged KPMG tender integrity failures, independence breaches

In the Senate on Tuesday (24 March), senator Deborah O’Neill aired allegations of misconduct from a KPMG whistleblower relating to the firm’s audit independence, misuse of confidential information and tender integrity failures.

O’Neill said the allegations, which concerned major KPMG clients including Lendlease, Westpac and Macquarie, had originated from a former KPMG employee that had approached her following multiple attempts to escalate the matter with KPMG higher-ups and ASIC.

“The whistleblower goes on to detail their efforts to escalate their disclosure—which includes KPMG executives, KPMG International, including its global chairman and global general counsel, and eventually ASIC—before making this disclosure to me, a parliamentarian, in the public interest,” O’Neill said.

She added that she had “taken great care to verify via documentation the authenticity of the matters I'm putting on record here.”

According to O’Neill, the former KPMG employee first disclosed their concerns in May 2024 under statutory whistleblower protections. Following this, they alleged that no independent investigation of the substance of their concerns was commenced, the disclosure was recharacterised as a “workplace grievance,” and adverse action was taken against them.

In a joint statement, KPMG Australia chair Martin Sheppard and CEO Andrew Yates refuted these claims. Noting that they were aware of the “serious allegations” made by the former employee in 2024, they said that external investigations had failed to substantiate the whistleblower’s claims.

“While there was no evidence provided at the time to support the allegations, we have treated the matter seriously,” the statement read.

“We commissioned two separate law firms: one to review our firm’s investigation into the claims and one to conduct its own external investigation. On the basis of what we have been provided, we have been unable to substantiate any claims of wrongdoing raised with us.”

In the senate, O’Neill aired five key allegations raised by the whistleblower, the first of which concerned the misappropriation of Lendlease board papers.

“Confidential Lendlease board papers were taken and circulated internally within KPMG and used to support pursuit of major audit tenders, including Westpac and Dexus,” the whistleblower alleged.

These papers were allegedly stored in the locker of one of the lead partners of the account. Lendlease chair Michael Ullmer was not informed that the tender process had been compromised by the misuse of confidential documents, O’Neill claimed.

Furthermore, the whistleblower alleged that KPMG employees gained access to restricted Telstra documents during a live ASX tender, through a Telstra-issued laptop. KPMG was not authorised to access or deploy those materials, the whistleblower alleged.

The whistleblower also raised “serious concerns” about the independence and integrity of KPMG’s tender process in pursuit of a Macquarie audit contract, O’Neill claimed. This was because Michelle Hinchliffe, a former head of audit at KPMG UK and senior partner at KPMG Australia, was allegedly “centrally involved” in the process.

Similarly, the whistleblower alleged that KPMG’s Westpac audit tender had been “structurally compromised” due to the concentration of former KPMG partners in decision-making roles at Westpac, which they said had given KPMG privileged access to feedback and intelligence not available to competitors.

Lastly, the whistleblower claimed that while acting as an internal auditor to asset management company Dexus, KPMG positioned itself to bid for the external audit, stirring up “a clear independence risk.”

They alleged that during a 6 November 2023 meeting at KPMG’s Barangaroo office, despite the acknowledged independence sensitivities, an arrangement was proposed wherein one of the people present would “leave his laptop open with Dexus internal audit documents visible while he went for lunch, allowing external audit personnel to view them.”

KPMG said that the allegations raised by O’Neill in the senate were “new and unsubstantiated,” adding that they had “requested evidence from the former employee to support the claims on more than 20 occasions.”

The firm added that it had offered “multiple pathways” for the whistleblower to provide information including through external legal counsel, a whistleblower service and direct access to KPMG non-executive directors.

“We have contacted the clients named in the Senate about these matters. ASIC has been aware of this matter. We have confirmed that exhaustive and robust processes were established to investigate the claims and we have not substantiated any claims of wrongdoing,” the firm said.