‘I take accountability’: top advisory firm leader quits
The Australian head of a top consultancy firm at the center of a whistleblower’s data mishandling allegations has fallen on his sword, forcing the firm to apologize to clients including the federal government.
KPMG, one of the Big Four accountancy firms, made the shock announcement on Friday as it was targeted by a federal parliamentary joint committee questioning the corporate regulator.
Australian Securities and Investments Commission officials confirmed in real time that the regulator had been investigating since April, under pressure from committee chair and Labor senator Deborah O’Neill.
While this was happening, KPMG announced that its Australia chairman, Andrew Yates, had resigned, along with head of audit Julian McPherson.
Mr Yates took responsibility for the treatment of a whistleblower after an internal investigation into the allegations found the firm had failed to meet its expectations.
“I am committed to a culture of speaking out at our firm, it is clear we have let ourselves down in this situation and I take responsibility,” Mr Yates said in a statement.
An ongoing internal investigation revealed a separate incident in which documents containing customer information were improperly shared internally.
There were also allegations of inappropriate disclosure regarding the sharing of customer information in a team environment.
“Issues have come up for which I am responsible and for which I take responsibility,” Mr. McPherson said.
All three conduct-related issues were raised by 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 lead to action,” KPMG chairman Martin Sheppard said.
“KPMG apologizes to customers whose information was not treated with the care and respect they expected from us.”
Before the statement, Senator O’Neill referred to a letter received by the committee, under parliamentary privilege, from Lendlease CEO Tony Lombardo: then that laid out on the table.
He said KPMG staff on the audit team raised allegations that the major developer “hidden and exploited access to audit tender images from Lendlease board documents to inform its bids for the audit of Westpac”.
“Lendlease has advised KPMG that its employees’ actions are unacceptable and is in discussions with KPMG regarding action to be taken,” Mr Lombardo said in the document dated April 30.
Asked for his response, ASIC chief executive Joe Longo said the breach occurred which would normally occur between an auditor and a client.
He told the committee: “As the letter itself states, this is something for Lendlease and KPMG to work out between themselves.”
Senator O’Neill suggested the allegations would cause alarm among users of KPMG’s registered company auditor services.
Commissioner Kate O’Rourke later told the hearing that ASIC had launched a preliminary investigation into the conduct of at least three KPMG-registered company auditors.
He emphasized that the investigation was about the auditors rather than the company.
“We initiated these investigations following a meeting with KPMG on April 14, and then after receiving further anonymised information in writing from KPMG on April 29.”
Regarding KPMG’s own investigation, deputy chairman Sarah Court said the regulator had made a number of submissions to KPMG for the production of information.
“We have been informed by KPMG that they intend to seek legal professional privilege,” he said, noting that this was the firm’s legal right.
Senator O’Neill took umbrage at this, arguing that it was “the duty of those who remain at KPMG to co-operate fully with ASIC and not seek to abuse the privileges of the legal profession in a way that we have viewed in the past (by others) as a technique”.
Ms Court said ASIC was “dealing with it” and would use its statutory powers in relation to auditors.
It was an eventful hearing for Mr Longo, who wrapped up his presidency of ASIC on Sunday and will be succeeded by Ms Court.
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