It took three independent directors at the firm to intervene for the probe to happen, according to reports
Three independent directors at KPMG Australia had to intervene in order for a third probe to be carried out into the allegations that the company was misusing clients' confidential data, according to reports.
The probe, which ultimately led to the firm's chief executive's departure, only went ahead after intervention from former NSW premier Mike Baird, Jane Hemstritch, and Patty Akopiantz, the Australian Financial Review reported.
According to the report, KPMG initially declined to start a new inquiry into the allegations after two previous reviews cleared the company of wrongdoing.
Baird, Hemstritch, and Akopiantz reportedly demanded the third review after receiving information about the allegations that made it clear the previous reviews fell short.
The directors had offered to meet the whistleblower last year but were blocked after the firm declined to grant the former audit executive the legal protections normally extended to whistleblowers, the AFR reported.
Baird, frustrated by the absence of decisive action and unable to continue in a role restructured to require meetings in Singapore, left the board before the Allens inquiry was commissioned late last year. Hemstritch and Akopiantz remain.
Allegations against KPMG
The third probe found the firm had used confidential client information to win work from rival companies, a conclusion that led to the abrupt resignations of chief executive Andrew Yates and national head of audit Julian McPherson.
In a statement last week, KPMG confirmed the departures and conceded its handling of the matter had failed.
Yates said the firm had "let ourselves down" and that he took accountability. McPherson said matters had arisen for which he was responsible and that he also accepted accountability.
KPMG chairman Martin Sheppard said the firm had fallen short in its management of the whistleblower, the rigour of its investigations and the response of its leadership.
"We apologise unreservedly to the whistleblower," he said in a statement.
The board has appointed Stan Stavros as interim chief executive while it searches for a permanent successor to Yates.
The whistleblower's allegations, first formally lodged in May 2024, claimed KPMG partners had misused Lendlease board papers to win audit work at Westpac and Dexus, and had drawn on confidential information from Macquarie and Westpac to pursue other contracts, the AFR reported.
In its statement, KPMG said it had previously sanctioned three partners over the inappropriate internal sharing of client documents, and had taken disciplinary action over an inappropriate remark made in a team setting.
The firm said its continuing investigation had since uncovered a third incident in which internal documents containing client information were shared inappropriately, and that the inquiry into that matter remained ongoing.
The AFR reported that the third breach involved auditors who had worked on the audit of Singtel-owned Optus assisting a team bidding for the Telstra audit, which Deloitte won in 2024.
Lendlease, a client of 68 years, has already signalled it may end its audit relationship with KPMG after learning an auditor had improperly accessed its boardroom documents, the masthead reported.
A parliamentary hearing is scheduled for June 19, and the Finance Department has threatened to bar the firm from further government work.
The Australian Securities and Investments Commission and the Tax Practitioners Board are also investigating.
Sheppard said KPMG had engaged ethical-culture specialist Principia Advisory to review its speak-up processes and would publish the findings.
"We acknowledge we have work to do to rebuild trust. That's why we are not asking anyone to take our word for it, and we are inviting scrutiny and challenge on our remedial actions," he said.
