An email, a smiling emoji and the expulsion of a KPMG high-flyer

Sacked KPMG executive Eileen Hoggett has been confronted with evidence showing she emailed a colleague about confidential documents stored in her locker, as a high powered-parliamentary inquiry probes the whistleblower scandal rocking the firm.

Hoggett also revealed she would cop a hefty financial penalty after being expelled from the firm, which has been thrown into turmoil by damaging allegations aired by a whistleblower.

Hoggett was once a contender to become KPMG Australia’s chief executive, but was expelled from the firm last month after new evidence emerged to support a whistleblower’s allegation that sensitive Lendlease board documents were kept in a locker in KPMG’s Sydney office.

The board documents were used to win business with other clients, and it was Hoggett’s locker. New CEO John Sams sacked her immediately over the issue, after Hoggett had previously denied the documents were in the locker.

On Friday, Hogget said she did not remember storing the documents in her locker, but also admitted she had been made aware of new evidence in recent weeks that “has caused me to recognise that some of my previous recollections, and therefore some of the answers I gave in interviews, were not accurate.”

Hoggett apologised, said she had not sought to mislead, and had “answered the questions based on what I genuinely remembered at the time about events that took place in 2023”.

“I was provided with a copy of an email dated back from one May 2023, three weeks ago, that would convey that I had a copy of Lendlease documents that were in my locker,” she told a public hearing into the whistleblower scandal on Friday.

“I don’t actually recall printing those documents and storing them in my locker. Clearly, this email conveys that there were Lendlease documents that were stored in my locker.”

She told the committee that she is not aware that those documents were used in any way to win work on other clients or distributed widely.

Senator Barbara Pocock then read out from an email that Hoggett had sent her executive assistant about allowing another KPMG executive access to the documents.

“I think we confidentially allow him to look at the printed version in my locker when he is back in Sydney. He needs to do it sensitively without letting too many people know,” she said in an email that concluded with a smiley emoji.

Hoggett told the hearing she is still trying to ascertain the reason for her unprecedented sacking, and attested to the financial cost.

“I don’t get my accrued annual leave. I don’t get the retirement payment, which I contributed to as a partner for 21 years, and I did not get paid for the last month up until to the date of my expulsion. So (it’s a) significant financial penalty.”

The financial penalty for the firm may end up being far bigger, with former RBA governor and current Macquarie Group chairman Glenn Stevens offering his clearest warning that KPMG may lose its audit contract – the most lucrative in corporate Australia.

Stevens said he expects to get answers soon to Macquarie’s review of whether KPMG should keep a prized Macquarie audit tender it won last year.

The audit contract at Macquarie is worth about $70 million a year. Macquarie’s current auditor, PWC, has held the contract since the early 1990s, but Macquarie has committed to reviewing the contract every 10 years, making it worth about $700 million over the next decade.

At the hearing on Friday, Stevens made clear that the core allegations of senior KPMG executives accessing confidential client information to win fresh work is top of mind.

“I expect that we’ll be able to get the information that we need pretty soon, and the board will then have an opportunity to review that and come to a conclusion,” Stevens said.

“What we’re focused on is, ‘in your pursuit of our tender, is there any evidence that any of our info, or more problematically, perhaps other people’s, was misused? And how can we be confident that that is a reliable conclusion?’” he said.

“So that’s why we’ve asked for that work to be externally reviewed.”

Earlier, former Lendlease chair and current Westpac board member Michael Ullmer told the committee how the only warning of the KPMG whistleblower allegations relating to the bank was made to fellow director Peter Nash, who did not tell the rest of the bank’s board.

The board did not hear of the allegations until Labor senator Deborah O’Neill read them out in parliament in March this year. Nash, a former KPMG partner, resigned due to perceived conflicts last month. He stayed at the home of KPMG chairman Martin Sheppard as the firm was preparing its pitch for the $25 million-a-year audit contract. KPMG had told Nash there was no issue to be concerned about.

“He resigned because of the fact of those social contacts that we became aware of, when at the beginning of the process we made it very clear to members of the subcommittee and to people involved that there should be no form of social contact during the tender process,” Ullmer told the committee.

“I believe he did fail because that was clearly something that should not have occurred during the process.”

Ullmer was chairman of Lendlease when senior KPMG executives accessed sensitive board documents about the tender of its lucrative audit business. KPMG was later awarded the audit work for Westpac.

He ridiculed a statement O’Neill read out from internal KPMG communications on the matter stating that there was no such thing as “Chinese walls”, the so-called ethical walls meant to protect sensitive client information from wrongful exploitation.

“I think that’s a ridiculous statement to make because there obviously have to be Chinese walls or ethical walls,” he said.

“You expect that the confidential information, the secrets that they gain access to, will remain confidential.”

Dexus chairman Warwick Negus also appeared before the committee and refuted KPMG claims that it was allowed to use sensitive information it possessed from conducting the company’s internal audit work to pitch for its external audit.

“I think when we denied Miss (Eileen) Hoggett participation in the internal audit meeting, where she wanted to learn more about Dexus to inform their bid, when we said that was inappropriate, I think that that was a pretty obvious signal,” Negus said.

Law firm Allens did not talk to Dexus about any of the allegations when it conducted an investigation, and Negus did not see the law firm’s report until it was published this week.