Macquarie director met ex-KPMG colleagues amid $700m audit bid

Macquarie Group has detailed interactions between its board member, former KPMG partner Michelle Hinchliffe, and KPMG executives during the tender process for its lucrative audit contract but did not indicate there was any wrongdoing on her part.

KPMG was dumped as Macquarie’s preferred auditor last week following the revelations that emerged from the whistleblower scandal, in which senior audit partners accessed confidential client information to win new business.

One of the whistleblower allegations was that the audit tender was compromised by KPMG involvement, including that of Hinchliffe, who left the firm to join Macquarie’s board in 2022.

In response to questions from the Senate committee investigating the whistleblower scandal, Macquarie responded on Friday with details that include Hinchliffe meeting with the firm’s then chairman, Martin Sheppard, via her role as a BHP director.

She also socialised with other partners involved in the tender process.

“As a director and audit committee chair of three public companies operating in multiple jurisdictions, Michelle Hinchliffe frequently meets with representatives of professional services firms, including but not limited to KPMG,” Macquarie said in response to questions from the committee.

She also met with KPMG partner Charles Hatchman for dinner with his wife but “Mrs Hatchman was unwell and unable to attend the dinner, but Mr Hatchman visited the restaurant briefly to excuse them both from dinner”, Macquarie said.

Hinchliffe also had a meal with another KPMG partner, Patricia Stebbens, and met with various UK partners through other board roles.

Macquarie noted that the list was not exhaustive: “It is not practicable for her to maintain a comprehensive record of every contact, formal and informal, that she has with every person.”

Hinchliffe also met with KPMG executives who were directly pitching for Macquarie’s business, but she did not vote on the matter due to potential conflicts over her previous role with KPMG.

This masthead has asked Macquarie if it was satisfied with the responses provided by Hinchliffe. The bank has yet to respond.

Macquarie chairman Glenn Stevens last year described concerns over Hinchliffe’s role in the audit tender – despite strong links to KPMG – as “silly talk”.

But he dropped a bombshell at the Macquarie annual meeting at the end of July by announcing a review of KPMG’s ability to conduct the audit, and review of how it won the tender.

Last week, Macquarie said its decision to dump KPMG “follows Macquarie’s formal enquiries of KPMG to consider its capacity to deliver the audit, as well as the nature and impact of ongoing issues at KPMG Australia.”

At the most recent public hearing into the scandal, Stevens told the committee there were protocols which applied to the board and management relating to their conduct during the formal tender period.

He was asked to query Hinchliffe on whether she had followed these protocols and provide answers to the committee.

Greens Senator Barbara Pocock, who made the request, was critical of Hinchliffe’s conduct.

“This raises serious conflict of interest concerns,” she said.

“It’s certainly not a great look to be wining and dining with prospective clients, to be seen to be having unfair access to the right people, even in a personal capacity.”

At the same hearing where Stevens was questioned, former Lendlease chair and current Westpac board member Michael Ullmer told the committee how fellow director and former KPMG partner Peter Nash, recently resigned after the bank’s board became aware of his socialising with KPMG executives during its own audit tender process.

“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.

Macquarie’s audit contract is the biggest in corporate Australia worth more than $700 million over 10 years.

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