Big money, client secrets, and a silenced whistleblower: Inside the KPMG scandal
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What is the KPMG scandal about?
I'm Daniel James and you're listening to 7am. KPMG is one of the biggest, wealthiest and most powerful consulting firms in the country, auditing and advising everything from major companies to governments. It's trusted with some of the most sensitive information in Australia. Now that trust is at the centre of a major scandal. A whistleblower has raised concerns that confidential client information was being used to chase new work. What followed has forced out senior executives, exposed the treatment of the person who spoke up, and raised bigger questions about the firms governments have come to rely on to do the work once done inside the public service. Today, ABC business reporter Daniel Ziffer on KPMG, the scandal inside one of the big four consulting firms, and why the fallout reaches far beyond one company.
It's Monday, June 29. So let's talk about the scandal that's befallen KPMG. There's been a string of senior exits at KPMG, including the CEO. What have we seen? Where did all this begin?
So all this began about two years ago when a senior member of KPMG who worked in audit noticed some issues about the misuse of confidential data. There's essentially three separate instances. You would describe this person as a model whistleblower.
What led to the whistleblower's actions at KPMG?
They went to their boss They went to their boss's boss. They used the internal whistleblowing service. They went to the CEO. They went to the board. They went to independent members of the board. They had independent directors like New South Wales Premier Mike Baird who were there, and they were being told by the chair, oh, if you get an email from this whistleblower, just send it to HR. It's not important. Don't worry about it. When all of that failed, when after two years they'd been essentially treated as a minor workplace grievance, they'd left the firm under sufferance, forced to sign a deed of release under very unfavourable terms, when they couldn't get anywhere, they finally lobbed up at a Senate committee where they gave that information and Labor Senator Deborah O'Neill read it into Parliament under the protection of parliamentary privilege, which is how we know about it.
I've taken great care to verify via documentation the authenticity of the matters I'm putting on record here in the Senate of the Australian Parliament tonight. In the words of the whistleblower. On the 30th of May 2024, I provided information to an eligible recipient within KPMG Australia.
And what was it that the whistleblower was first alleging? Essentially the misuse of confidential information.
How did KPMG respond to the whistleblower's claims?
So they took information from Lendlease, who they ordered the books of and who then ordered it for 68 years. They took information from that to try and win the audits at other companies, including Dexus and Westpac.
The matters concern audit independence failures, misuse of confidential client information, corruption of ASX audit tender processes, knowingly misleading a Senate inquiry.
They also left open a laptop in a room and joked to another team that, hey, there's some information there you can use. That's probably the least bad of the three things we're talking about. The one that probably crystallises it is this. The team that did the audit for telecommunications company Optus, information from that audit was taken to try and win the vastly more lucrative contract for Optus' rival Telstra.
These massive consultancy partnerships had put profit before professionalism. and use their privileged access to both business and government to grow their own wealth.
So they're taking information that they are only privy to because they are auditors, because they have this trusted position where they need to know, where they need to be able to get in and interrogate the numbers, and they're using that in an underhanded way to try and win more business.
Why does it all matter? Well, I'll leave it to the last words here from the actual whistleblower. If tender processes are compromised, competing firms are disadvantaged and audit committee decisions are distorted.
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Chapters
8 chapters
1
What is the KPMG scandal about?
0:01–1:34
2
What led to the whistleblower's actions at KPMG?
1:34–2:49
3
How did KPMG respond to the whistleblower's claims?
2:49–4:30
4
What are the allegations against KPMG regarding client information?
4:30–6:14
5
What consequences has KPMG faced from the scandal?
6:14–8:41
6
How does the KPMG scandal reflect on the consulting industry?
8:41–10:12
7
What parallels exist between KPMG and the PwC scandal?
10:12–11:05
8
What are the implications for government reliance on consulting firms?
11:05–15:26
Speakers
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