KPMG appoints chair who claimed leak allegations were ‘completely false’ and called senator’s actions ‘inappropriate’ | Consulting (Australia)

KPMG has appointed a new chairman, who previously claimed the leak allegations were “completely unfounded” and described a senator’s action in exposing the scandal as “grossly inappropriate and unfair”.

Michael Ebeid was appointed to run the embattled firm on Thursday after former chairman Martin Sheppard resigned while under fire over a parliamentary inquiry into the firm’s ethical failings.

Following the appointment, the committee released emails explaining comments Ebeid made in March. Ebeid apologized for the allegations on Thursday and said he would not have made them if he had known the full extent of KPMG’s shortcomings at the time.

Greens senator and committee member Barbara Pocock said Ebeid’s appointment showed KPMG still faced entrenched ethical issues.

“It risks entrenching the culture and leadership that needs to change,” Pocock said.

“This is not a fresh start for KPMG, as it is trying to be. Mr Ebeid is part of the culture and leadership team at KPMG where things have gone seriously wrong.”

Ebeid was one of three independent board members who oversaw a KPMG whistleblower investigation into allegations of leaks and other failures in the firm’s audit division.

Committee chair Senator Deborah O’Neill made the allegations public in a speech on March 24.

Emails released Thursday show KPMG vice president Carmel Mortell warned Ebeid and his colleagues on March 25.

Ebeid replied: “I think Senator O’Neil [sic] “He made no attempt to contact KPMG before speaking… which in itself would have been deeply inappropriate and unfair to him.”

He accused O’Neill of misrepresenting events to give the impression that KPMG was retaliating against the whistleblower for speaking out.

“As we know very well, most of the statements he made are completely false,” Ebeid said.

After the emails were released Thursday afternoon, Ebeid said he was not aware of “all the facts” at the time.

“I am aware of the seriousness of the whistleblower’s allegations and the shortcomings in the firm’s approach at the time,” Ebeid said. “From what I know now… I wouldn’t have written that email, and I’m sorry I did.”

KPMG admitted its own investigations were not rigorous enough, finding no evidence of the allegations.

Following O’Neill’s speech in March, the firm admitted that at least three of its employees had leaked confidential Lendlease and Optus information to colleagues applying for lucrative audit contracts at Westpac, Dexus and Telstra.

Sheppard refused to share the investigative documents with the committee, claiming legal privilege because they contained allegations related to possible criminal investigations.

Ebeid was the only independent director to defend KPMG’s claim to privilege, falling out with two colleagues and his predecessor, former New South Wales premier Mike Baird.

After a heated day of hearings on June 19, Sheppard relented and shared some documents, then resigned on June 23.

The parliamentary committee said on Thursday it would release the emails in response to Ebeid’s promotion because Ebeid would have a “significant role” in addressing KPMG Australia’s integrity issues and rebuilding trust.

It also rejected Ebeid’s suggestion in the emails that he knew O’Neill and could meet with him to explain KPMG’s “extensive process”.

The committee said: “No member of the committee [O’Neill]He knows Mr Ebeid and they have not met with him since the whistleblower allegations were made by Mr Ebeid. [her].”

Pocock went further, claiming that Ebeid was “seeking to exert improper influence over senators and committee processes.”

Ebeid said he respected O’Neill and the committee and would participate constructively in their work.

“I accept that the company did some things wrong, but we are serious about correcting the mistakes that were made,” he said.

In a statement announcing KPMG’s appointment earlier on Thursday, Ebeid said he would expedite the appointment of a new chief executive and suggested more senior staff could be replaced.

KPMG’s former CEO, head of audit and chief operating officer have resigned, but there have been calls for more executives to leave.

“The incoming CEO will have a clear mandate to renew the management team when necessary,” Ebeid said.

The federal government on Wednesday said it would consider splitting up four major consulting and auditing firms and limiting the number of partners in response to the scandal. The government has avoided such sweeping reforms following the PwC tax leaks in 2023.