KPMG's appointment of new chair draws flak for alleged 'clear conflict of interest'
KPMG has named Michael Ebeid as the company's newest Independent Chairman amid its audit leaks scandal, a move that critics describe as "performative" after the official's previous dismissal of the whistleblower's accusations in a newly published email.
Ebeid's appointment as new Independent Chairman is KPMG's first major governance step under its newly released Action Plan to recover from the scandal that saw the departure of top executives, including previous board chair Martin Sheppard and CEO Andrew Yates.
Part of Ebeid's mandate is to "strengthen independent oversight" and "drive cultural and governance reforms" within the organisation.
"My first priority is to restore the governance and effectiveness of the Board. We will reshape the KPMG Australia Board with equal independent and partner representation," Ebeid said.
A 'performative' appointment
But The Greens called the appointment "performative" after the Parliamentary Joint Committee on Corporations and Financial Services published an email sent by Ebeid in March when the controversies against KPMG were first made public.
In the email, Ebeid told other KPMG executives that Senator Deborah O'Neill was "very inappropriate and unfair" for not contacting KPMG before speaking in the Senate about the issue.
"As we know well, many of the statements she makes are completely false, including the timeline of events, and that he had raises [sic] all these whistleblower issues before he entered the HR process to exit the firm, which falsely makes it look like retaliation," he added in the email.
Senator Barbara Pocock, Greens finance and public service spokesperson, said the letter shows Ebeid's lack of respect for whistleblowers and the Parliament.
"Mr Ebeid has firm and dismissive views about the whistleblower and the nature and legitimacy of concerns about ethics and integrity failures within KPMG - failures that have since been admitted by KPMG," Pocock said.
She added that there was a "clear conflict of interest" in Ebeid's appointment as independent chair, stressing that it was hard to take seriously.
"His appointment is a performative rather than a substantive 'clean up' of KPMG. This is a firm that has failed to meet its obligations in handling a whistleblower and it appears he was involved in that," she stated.
"This is not the fresh start for KPMG that it attempts to be. Mr Ebeid is a part of the culture and leadership team where things have gone seriously wrong in KPMG."
The same email from Ebeid claims that he knew O'Neill and that he would be "very happy" to meet with her about the issue.
But the Parliamentary Joint Committee on Corporations and Financial Services, which is chaired by O'Neill, denied the connection.
"The committee notes that no member of the committee, including the Chair, knows Mr Ebeid nor have they met with him since the whistleblower allegations were raised by the Chair in the Senate," it said in a statement.
Ebeid 'sorry' for the email
Ebeid defended that he was "not aware of the full range of facts" when he sent the email, the Australian Financial Review reported.
"From what I now know and the information I have been provided since that time, I would not have written that email and am sorry for sending it," he said in a statement quoted by the news outlet.
"I respect the work of the [parliamentary committee] and Senator O'Neill and will continue to engage constructively with them as we work through these serious integrity matters."
KPMG has taken major steps over the past months to clean up its reputation after the audit leaks scandal, which alleged that it misused confidential client documents to win and pursue audit work.
The Big Four firm has since acknowledged that Lendlease and Optus board papers had been leaked by some staff to pursue other audit contracts.
The scandal has led to the departure of top executives, including its CEO, in the Big Four firm, as well as the suspension of new contracts with the Federal government.
New CEO by end of July
Ebeid said the firm is accelerating the CEO appointment process, which will now have additional independent involvement.
"We are adding an independent selection panel, and working with external agencies, including Riverstone Associates and Korn Ferry, on executive succession," Ebeid said.
"I expect the Board to confirm the new CEO before the end of July."
According to Ebeid, the new CEO will have a clear mandate to refresh the executive team where required and "put in place the leadership needed to deliver sustained change."
"The new CEO appointment is a critical next step," he said. "KPMG Australia needs leadership with the judgement, courage and integrity to restore confidence and deliver lasting change."
