Source : the age
Welcome to our live blog of the parliamentary joint committee public hearing into the KPMG whistleblower scandal in Canberra.
Baird was asked what an independent investigation would have looked like: “It’s a good question. I mean, it’s like a complete independent external view of all facts and letters, including interviewing the whistleblower, interviewing staff, interviewing clients.”
He later confirmed that decisions were made by Yates and Sheppard, not the board.
Pocock: “So, if I were to understand correctly, no independent inquiry and no real oversight by independent board members of an investigation. Have we understood that correctly?”
Baird nods.
Pocock: “Thank you. You’re nodding. I’m going to take that as a yes.”
Mike Baird, a former KPMG board director, has detailed his unhappiness with how the whistleblower issue was portrayed to the board initially.
“The context as it was presented was that this is an HR matter that’s complex, and here’s some claims. The presentation from management was that we don’t think there’s any substance to what’s been raised. Now, were we too trusting in that position? Clearly, we were,” Baird says.
Mike Baird, a former KPMG board member, has confirmed that the change in the board’s role from a purely Australian operation to a regional group was the trigger for his departure.
“The additional workload that came with that meant that I was going to be unable to participate, which was from the first of September,” he says.
But he also makes clear he was not happy with how the firm was handling the whistleblower claims: “As you’ll see in my letter, I was also unhappy with the progress on the whistleblower claims, and my request was that, well, pursuing the external investigation had been secured before I resigned, and that was important to me.”
He also offered to stay on the whistleblower committee “post my resignation, to help, because I felt that what I had seen was that there wasn’t the urgency, we hadn’t had the transparency … we should have in the process, and I think the whistleblower deserved to have those claims properly assessed, and I made that comment in my last board meeting as well.”
The committee is looking at KPMG’s attempts to withhold information about the scandal by claiming it is legal advice (known as legal professional privilege), which did not meet with a kind reception from the committee.
Former KPMG independent director and Cricket Australia chair Mike Baird has been answering questions.
Baird says he has not seen the documents that the firm is keeping from public view by claiming legal professional privilege, but had a clear view on whether they should be allowed to do this: “On the matter of privilege, Senator. The position’s pretty clear, I don’t think it should apply.”
O’Neill: “Thank you very much, Mr Baird.”
KPMG board member Jane Hemstritch, who is also appearing before the inquiry, shares Baird’s view on KPMG’s use of legal professional privilege. “My position on this is that you should have been provided with everything that you needed to conduct the inquiry,” she says.
KPMG Australia’s Eileen Hoggett, who stood down as chief operating officer (COO) as the whistleblower scandal engulfed the firm, confirmed she is one of the employees under investigation by the corporate watchdog over the allegations.
Hoggett: “I am under ASIC investigation, as you, I think you are aware, through that process, I have been provided very strict confidential confidentiality protocols that I must adhere to, and so providing any information here today compromises the important work that I think ASIC are doing around that matter.”
Pocock: “You continue to provide advice and operate as an auditor, is that correct?”
Hoggett: “I remain a registered company auditor.”
ASIC confirmed earlier this month it had launched a formal investigation into three KPMG Australia partners, including Hogget.
KPMG chairman Martin Sheppard was asked the awkward question. “I think there are some differences, but I think the commonality is they’re both, they’re both matters around confidentiality … for our firm, for the four firms, confidentiality, and for lawyers and bankers as well, I mean, confidentiality is just fundamental to our licence to operate.”
He also acknowledged the damage: “Senator, we don’t have our chief executive, we don’t have our head of audit, you know, we have a range of regulatory issues that we are dealing with. You will know that through finance, we’re working with them around our government contracts. There’s absolutely a recognition that the confidentiality matters that have arisen … are deadly serious.”
KPMG’s attempts to withhold information about the scandal by claiming it is legal advice (known as legal professional privilege) did not meet with a kind reception with the committee.
Liberal senator Paul Scarr: “The way you constructed this investigation using legal professional privilege, and you’re hiding behind legal professional privilege whilst at the same time claiming to be transparent. Do you understand how we might find that quite risible?”
KPMG’s Martin Sheppard: “There are certain reports that are subject to professional privilege, which we’re seeking to preserve.”
There are new witnesses before the committee, with KPMG chairman Martin Sheppard and other non-executive directors now facing questions.
Labor Senator Deb O’Neill is questioning Sheppard on what led the firm to finally hit the alarm button and jettison its chief executive Andrew Yates and head of audit Julian McPherson last month. Sheppard says the trigger was a breach involving Optus and Telstra, where information was shared between two different teams, representing a breach of internal ethical walls.
Sheppard says: “It’s the flowing of information in relation to one client from one team that serves one client to another team, so information moving through an ethical divider that shouldn’t have moved through that divider.”
“This is kind of short-hand insider information sharing, where there should be absolutely no way that that would occur, Senator. The retention of confidential information within KPMG is paramount to our licence to operate.”
Labor’s Tania Lawrence has asked whether the alleged conduct within KPMG could meet the threshold for criminal behaviour.
“Under the Crimes Act, is it your understanding that unauthorised retention and use of confidential information for commercial gain can meet the threshold of theft or fraud?” she asks.
McPherson: “I’m honestly not in a position to answer that question because I’m not, I’m not a lawyer, I’d be operating outside my area of expertise. I apologise, I’m not trying to deflect the question, I just generally don’t know the answer to that.”
One of the most serious allegations in this scandal concerns an open laptop and confidential information that may have been accessed by other KPMG staff.
This allegedly orchestrated arrangement meant KPMG staff from a different part of the firm, who were pitching for Dexus’ multimillion-dollar external audit business, could gain access to this sensitive information against the express wishes of Dexus.
According to the whistleblower’s account, the day before the 2023 Melbourne Cup, a KPMG executive providing services for Dexus casually announced that he was going to lunch and walked out with sensitive Dexus documents open on his laptop.
KPMG has previously said its investigations had turned up an “inappropriate informal remark in a team setting” for which the individual had been reprimanded.
The Greens’ Pocock and KPMG’s former boss Yates debated the semantics of this joke/serious lapse in ethical behaviour.
