KPMG CEO Andrew Yates resigns amid whistleblower scandal
Updated ,first published
KPMG Australia boss Andrew Yates and senior partner Julian McPherson have resigned abruptly after the group confirmed confidential client data was being shared and potentially used to win new business with other clients.
KPMG said in a statement on Friday morning that its handling of the whistleblower complaint that triggered the scandal and subsequent investigation into the allegations “failed to meet the expectations of the firm, the whistleblower and the wider community”.
The anonymous tipster first filed a complaint with dozens of allegations in 2024; these include that KPMG partners illegally accessed board documents of their client Lendlease, which were used to win lucrative audit work at Westpac and Dexus.
The whistleblower also alleges that confidential information was used to win Macquarie’s lucrative audit contract.
The issue became public in March this year when Labor MP Deborah O’Neill raised whistleblower allegations in her Senate speech, citing “misuse of confidential information, corruption in ASX audit tender processes” and retaliation against whistleblowers for raising these concerns.
“There are clear allegations here of deeply unprofessional and unethical behavior,” he said.
Accessing and sharing confidential client data is a serious allegation for consulting groups that need access to their clients’ most sensitive data to complete lucrative audit work and consulting services.
KPMG recently won Macquarie Group’s audit contract worth approximately $75 million per year.
On Friday, KMPG said the initial internal investigation, which did not substantiate the allegations made by the whistleblower, was not conducted “with due diligence.”
The first whistleblower complaint in 2024 triggered an internal investigation.
KPMG subsequently appointed an external law firm, Ashurst, to review the internal investigation after the whistleblower refused to co-operate with the internal investigation.
Another law firm – Allens – was subsequently appointed to conduct a new external investigation when the whistleblower raised the allegations to the board, which included former NSW premier and current Cricket Australia chairman Mike Baird.
“Allens continues to dispute the conclusions reached in previous investigations,” KPMG said in a statement Friday.
KPMG chairman Martin Sheppard said he accepted the resignations of Yates and McPherson with immediate effect because they had ultimate responsibility for handling whistleblower complaints and internal investigations.
“We apologize unreservedly to the whistleblower. We are committed to learning from this process to ensure we create an environment where it is safe and easy to raise concerns that will be taken into account. KPMG apologizes to clients whose information was not treated with the care and respect they expected from us,” Sheppard said.
The firm said appropriate disciplinary action will continue to be taken if investigations identify further matters.
As recently as May 14, two years after the whistleblower made the allegations, KPMG said “the allegations are not substantiated based on the evidence identified to date.”
However, KPMG had acknowledged two “relevant conduct issues” at the time it made this statement.
One of these concerned the improper sharing of client documents among KPMG staff, while the other was described as an “inappropriate informal disclosure”.
On Friday, KPMG said its “ongoing investigation recently uncovered a separate incident in which internal documents containing client information were also improperly shared internally.”
It was stated that investigations regarding all three issues continue.
A letter from Lendlease chief executive Tony Lombardo to the parliamentary joint committee (PJC) chaired by O’Neill in late April confirmed that the construction giant was the victim of the earlier data breach, which KPMG described as a matter of “concerning conduct”.
Lendlease said it first became aware of KPMG’s whistleblower allegations in May last year – that sensitive board documents were accessed by audit partners to win business with other clients – but that KPMG was satisfied there were “no issues”.
After O’Neill published the whistleblower allegations in March, KPMG told Lendlease that one of its audit partners had indeed accessed board documents but that the consultancy group considered the documents to be of “low sensitivity”, giving it “zero competitive advantage”.
“Lendlease has informed KPMG that its employees’ actions are unacceptable and is consulting with KPMG on further action,” Lombardo said in a letter to the parliamentary committee.
KPMG said it had reported these matters to professional bodies and regulators such as the Australian Securities and Investments Commission.
The alleged use of confidential information is reminiscent of the PwC tax leak scandal, in which the firm’s partners allegedly used secret government tax plans to help multinationals evade the new scheme.
PwC was forced to spin off its government business for $1 in 2024 when it was barred from doing further business with federal agencies following the tax leak scandal. It was still forced to lay off hundreds of employees while clients fled to other consulting groups such as KPMG.
The scandal led to strict procurement rules governing the acceptable behavior of consultants.
During Senate estimates this week, Department of Finance officials told KPMG Australia they had told KPMG Australia it could be banned from bidding on contracts after the firm repeatedly failed to notify authorities about wide-ranging allegations of misuse of customer data.
The Business Briefing newsletter delivers big stories, exclusive news and expert insights. Sign up to receive it every weekday morning.
Colin Kruger is senior business correspondent for the Sydney Morning Herald and The Age newspapers.Connect via email.
