KPMG faces demand to release secret scandal documents after chair’s resignation

KPMG is facing calls to publicly release confidential whistleblower investigation documents to help federal watchdogs probe its misconduct, after chairman Martin Sheppard and two senior partners became the latest leaders to resign over its handling of the scandal.

Labor senator Deborah O’Neill, who is chairing a parliamentary committee investigating the KPMG scandal, was on Monday granted access to some of the documents under the condition the information cannot be shared outside the committee. But after reviewing the files on Tuesday, O’Neill pressured KPMG to release the documents publicly.

“Having had the benefit of reading KPMG’s legal advices provided to the committee, I call on the firm to release these documents immediately to ASIC, the TPB (Tax Practitioners Board) and the general public,” she said.

KPMG has been thrown into crisis after a whistleblower’s claims prompted it to admit some of its staff accessed confidential information from corporate clients to win auditing business, breaching basic rules that ensure trust in Australia’s financial markets.

The parliamentary committee, which grilled KPMG executives and board members on Friday, said on Tuesday that KPMG has yet to provide all of the documents requested in “the committee’s order for the production of documents”.

Australian Securities and Investments Commissions (ASIC) executives told the committee on Friday that its investigation is also being hampered by KPMG’s insistence on keeping the documents protected under legal professional privilege.

Sheppard’s performance at the hearing – including his backflip late in the day on not releasing the confidential documents – proved to be the last straw for KPMG partners who have watched the firm’s disastrous response to the scandal unfold in recent weeks.

KPMG’s leadership team was made aware of the whistleblower claims more than two years ago.

Sheppard will be replaced by an independent chairman, KPMG announced on Tuesday, while two other senior KPMG partners, Paul Rogers and former chief operating officer Eileen Hoggett, will also leave the partnership.

KPMG Australia’s interim chief executive, Stan Stavros, said: “The decisions announced today are necessary and immediate.

“We did not meet the standards expected of us, and we recognise the impact this has had on the whistleblower, our people, our clients and the community.”

Labor’s O’Neill said: “Today’s announcement confirms that KPMG Australia is only just beginning to understand the scale of its cultural failures that are at the heart of this crisis.”

Rogers and Hoggett were both implicated in one of the most serious breaches identified so far: gaining access to confidential Lendlease board documents, including rival bids to audit the company. Lendlease chairman John Gillam described that as a “grave misuse of their access privileges” on Friday.

The parliamentary hearing on Friday was told how the firm’s HR team recommended a $78,000 fine for Hoggett but former chief executive Andrew Yates halved this to just $40,000. Rogers was fined $22,000 over his misconduct. That amounted to a fraction of the annual bonus for both.

Hoggett told the hearing that she was under ASIC investigation and therefore was limited in her testimony. “I have been provided very strict 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,” she said.

Late last month, Sheppard accepted the resignations of Yates and audit head Julian McPherson after KPMG confirmed the allegations that confidential client data had been shared and potentially used to win new business with other clients.

Stavros said the committee had highlighted issues that included “unethical behaviour by senior personnel and the human impact of KPMG’s handling of the whistleblower”.

“KPMG Australia is focused on ensuring those failings are understood, addressed and not repeated,” Stavros said in a statement.

After the hearing, the committee tabled documents from the whistleblower about his experience, including his experience with KPMG’s international wing, which he said essentially refused to deal with him and referred him back to the local firm.

“I do not say this lightly, but at a leadership and governance level, I believe KPMG, locally and globally, is presently an organisation that cannot be trusted,” the whistleblower said in his statement to the committee.

Former KPMG Australia CEO Gary Wingrove – who was recently appointed to run the global firm – was among those appearing at the hearing and defending the role that his international office played in dealing with the whistleblower.

“We took this incredibly seriously, and we engaged with the whistleblower multiple times over months to understand the concerns he was raising. The issue was that he refused to provide us with information that would allow us to look into the matter properly, and indeed also insisted that we not speak to KPMG Australia about the matter,” Wingrove said.

Lendlease is preparing to dump KPMG as its auditor and the federal government has effectively suspended the firm from winning any further business for several months.

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