Stench from KPMG Australia whistleblower scandal grows
Image: Sven Piper @svenpiper via Unsplash
The fallout from KPMG Australia’s whistleblower scandal continues to expand in the wake of last week’s announcement that chief executive Andrew Yates had resigned with immediate effect.
Yates fell on his sword on Friday, almost three months after Labour senator Deborah O’Neill used parliamentary privilege to air revelations by a whistleblower that six audit partners had helped the consulting arm of the business win contracts by using confidential audit information.
Julian McPherson, national managing partner of audit and assurance, also resigned due to his position in the firm. He has not been accused of wrongdoing or personally accessing the confidential documents.
Also implicated in the scandal were chairman Martin Sheppard and chief operating officer Eileen Hoggett, who stepped down this week but will remain as an audit partner while investigations are ongoing.
KMPG Australia had previously described the whistleblower’s allegations as unsubstantiated. But Yates quit after the firm admitted in a statement that “its treatment of a whistleblower and investigation into their allegations fell short of the firm’s expectations, those of the whistleblower and the broader community”.
The whistleblower, who is a former audit director at KPMG, first reported the concerns in 2024. The audit firm then launched an internal investigation and external legal review that did not support the allegations. This prompted the whistleblower to approach board members, sparking another legal probe “with new evidence and an expanded scope”, which is ongoing.
Before approaching senator O’Neill, the whistleblower also went to the Australian Securities and Investments Commission (ASIC), which opened its own investigation, and KPMG International’s chair and global counsel.
A parliamentary inquiry into the matter, which senator O’Neil heads, will hold a public hearing on 19 June. The focus will likely extend to KPMG’s FairCall whistleblower hotline, used by an array of blue chip companies, public sector entities, and the likes of the Reserve Bank and the Australian Securities Exchange.
O’Neil told The Australian her committee was considering expanding its work to cover KPMG’s whistleblower management service too. “Clearly KPMG operating such a service is incompatible with the necessary professional standards they have so egregiously and publicly failed,” she said. “I’m interested to know how these services operate, and whether they are providing the support that whistleblowers so clearly deserve, or are more about containing and managing situations on behalf of their clients.”
This is the latest scandal in recent years to hit one of the big four accounting firms in Australia. Three years ago it was revealed that PwC had used confidential Treasury information gleaned from providing advisory services to the government to pitch for work and craft advice on tax avoidance for global clients.
The tax leak scandal shone the light on billions of dollars in public money being spent on the consulting industry with little oversight or accountability, prompting the government to consider reforms. These were not implemented after the accounting firms vowed to changed their ways.
The KMPG scandal, which only came to light thanks to a whistleblower’s disclosures being aired in parliament, suggests this was a naïve expectation.
