MELBOURNE (Business Emerge East Asia Desk): KPMG Australia is facing mounting scrutiny after a parliamentary inquiry heard that a growing number of whistleblowers have reported alleged misconduct within the firm, raising concerns that the issues extend beyond the client data leak scandal that first emerged earlier this year.
The controversy began in March after an anonymous whistleblower alleged that confidential client information had been improperly used to strengthen bids for audit contracts. While KPMG initially dismissed the allegations as unsubstantiated, the firm has since acknowledged that internal documents were misused. The fallout has already led to the resignations of the firm’s chief executive, audit head and chairman.
Speaking during a parliamentary committee hearing in Canberra on Friday, committee chair and Labor Senator Deborah O’Neill said additional individuals had contacted lawmakers with accounts describing similar behaviour.
“There are many, many more who are contacting us and they are talking about a repeat of the same behaviour,” O’Neill told the inquiry.
KPMG has admitted it failed to properly manage the original whistleblower complaint and has now launched a fourth internal investigation after three earlier reviews did not identify wrongdoing.
Newly appointed Chief Executive John Sams acknowledged the seriousness of the firm’s failures, telling the committee that KPMG could not dismiss the controversy as the actions of only a few individuals.
“We have committed major failings here that we have to reflect on, and I’m not going to try and defend any of those because they’re indefensible,” Sams said.
“We can’t go with the ‘few bad apples’ line here, we absolutely have to look at our culture.”
Former chairman Martin Sheppard also confirmed reports that another whistleblower who raised concerns about misconduct within KPMG’s tax division reached a settlement with the firm at the end of 2024.
The hearing marked the second parliamentary examination into allegations that KPMG used confidential information relating to clients Lendlease and Optus while pursuing audit work with Westpac, Dexus and Telstra. Current and former partners, company representatives, clients and legal advisers appeared before the committee to give evidence.
Former audit partner Eileen Hoggett, who had been accused by the original whistleblower of storing Lendlease board papers in her office locker, said she could not recall placing the documents there and questioned why she had been removed from the partnership.
However, the committee reviewed a May 2023 email in which Hoggett authorised a colleague to access documents kept in her locker to assist with another business proposal.
“I think we confidentially allow him to look at the printed version in my locker … he needs to do it sensitively without letting too many people know,” the email stated.
Responding to the correspondence, O’Neill challenged Hoggett’s inability to remember the incident, saying it was difficult to reconcile the contents of the email with her testimony.
Hoggett replied: “There is no one more disappointed in me than myself.”
Several of KPMG’s clients also criticised the firm’s conduct during the hearing.
Optus, owned by Singapore Telecommunications, described the sharing of its confidential information with another internal team pursuing work for rival Telstra as an “egregious” and “flagrant” breach of professional obligations.
“They need to remind themselves that they are first and foremost professionals, and that business issues are secondary to those professional responsibilities,” Optus Chairman John Arthur said.
The inquiry also revisited governance concerns involving Westpac. Director Peter Nash resigned from the bank’s board because of his links to KPMG, while lead auditor Lawry also stepped down after Westpac requested her removal. Westpac audit committee chairman Michael Ullmer told lawmakers Nash should not have contacted former colleagues at KPMG during the tender process.
Earlier evidence presented to the committee revealed that Nash stayed at former KPMG chairman Martin Sheppard’s home while the audit bidding process was underway because the two were long-time friends.
Macquarie Group Chairman Glenn Stevens told the inquiry the bank could reconsider KPMG’s appointment as its auditor. Although KPMG was selected in 2025, the appointment still requires shareholder approval.
Stevens said Macquarie has requested evidence demonstrating that KPMG did not rely on confidential information from other audit clients when competing for the bank’s business.
Following the hearing, Greens Senator Barbara Pocock said the evidence reinforced concerns about what she described as a “toxic culture” within the firm and strengthened the case for reforms across Australia’s audit sector.
The inquiry comes as the Australian government considers significant changes to the regulation and structure of the country’s Big Four accounting firms. An options paper released in July outlines proposals including separating audit and consulting operations and imposing limits on partnership structures. KPMG has opposed the most far-reaching reforms in its submission to the government.
