Accounting firm KPMG is facing a federal parliamentary inquiry after its new leadership confirmed that a former employee stored printed confidential Lendlease board documents in a locker and shared them with colleagues to secure major audit tenders. According to KPMG chief executive John Sams, an external investigation by law firm Allens uncovered an email from former chief operating officer Eileen Hoggett admitting to keeping and sharing the client papers.
New Evidence Substantiates Whistleblower Allegations
According to correspondence shared in parliament by Labor senator Deborah O’Neil, a whistleblower first raised alarms earlier this year alleging that confidential board papers from Lendlease were used to support bids for major audit tenders at Westpac and Dexus. KPMG initially conducted an internal investigation that failed to substantiate the misconduct. However, following executive leadership changes that included the resignations of CEO Andrew Yates and chairman Martin Sheppard, new CEO John Sams briefed staff that the firm uncovered concrete email evidence proving the allegations true.
“I can confirm that the ongoing investigation by external law firm Allens has uncovered new evidence that supports the whistleblower’s allegation that confidential client information was kept in a locker at KPMG’s Sydney office,” a KPMG spokesperson stated. Mr Sams subsequently sacked Ms Hoggett, who had worked for the firm for over 30 years, and formally apologized to Lendlease for the serious breach of trust. The firm also disclosed the findings to ASIC, Chartered Accountants Australia New Zealand, and the Department of Finance.
Regulatory Probes Expand Across the Big Four
According to corporate watchdog ASIC, formal investigations are underway regarding several individuals tied to the scandal. At a parliamentary hearing, ASIC confirmed that Ms Hoggett and Paul Rogers are the subject of a formal investigation into their roles as engagement partner and lead auditor for the Lendlease audit. A third individual, Kim Lawry, is also under broader regulatory inquiry regarding registered company auditor conduct.
In response to the KPMG leak, ASIC chair Sarah Court announced that the regulator’s surveillance has expanded to examine internal whistleblower complaints across other major accounting firms, including Deloitte, EY, and PwC. Concurrently, the federal government is consulting on industry reforms that could force accounting firms to split their lucrative consulting services from their core auditing functions.
Did you know?
The federal government is actively consulting on structural reforms that could legally mandate accounting firms to separate auditing from consulting work in the wake of repeated industry scandals.
Corporate Clients Reassess Auditor Relationships
During Macquarie’s annual general meeting, chairman Glenn Stevens faced sharp questions from shareholders regarding the firm’s decision to appoint KPMG as its recommended auditor starting in fiscal year 2028. Mr Stevens defended the tender process, stating the board remains confident in the robust selection while managing potential conflicts involving director Michelle Hinchliffe.
Meanwhile, Westpac has also evaluated the future of its $32 million-a-year audit contract with KPMG. Westpac audit committee chairman Peter Nash retired from the bank’s board to alleviate perceived conflicts due to his nearly 25-year history as a former national chairman at KPMG. The Tax Practitioners Board (TPB), led by chair and former KPMG partner Peter de Cure, is separately investigating the matter.
Frequently Asked Questions
What did KPMG’s internal investigation initially conclude?
According to parliamentary records, KPMG’s initial internal investigation failed to substantiate the whistleblower’s claims. A subsequent external investigation by law firm Allens later uncovered email evidence confirming the misconduct.
Which regulators are investigating KPMG and its auditors?
According to official statements, the Australian Securities and Investments Commission (ASIC) and the Tax Practitioners Board (TPB) are conducting investigations into the conduct of the firm and specific auditors.
What actions did KPMG take against the employees involved?
According to KPMG leadership, former chief operating officer Eileen Hoggett was sacked following the discovery of an email confirming she stored and shared confidential client papers.
Have information regarding this investigation? Contact reporter Nassim Khadem at [email protected] or [email protected].