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Inside the scandal that destroyed KPMG’s reputation · The Front

• 0:03
  Speaker 1: From The Australian, here's what's on the front. I'm Claire Harvey.
• 0:06
  Speaker 2: It's Friday, September 11, 2026. A whistleblower, a secret document,
• 0:14
  Speaker 2: and a self-inflicted scandal that's cost.
• 0:17
  Speaker 1: Hundreds of jobs and shattered reputations.
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  Speaker 2: Today, how KPMG blew itself up with the journo who's
• 0:24
  Speaker 2: been breaking all the scoops, our own Tansy Harcourt.
• 0:28
  Speaker 1: Tansy's here in just a moment.
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  Speaker 3: Well, the Albanese government is considering changes to how it
• 0:40
  Speaker 3: regulates accounting, auditing and consulting firms in the wake of
• 0:43
  Speaker 3: some very high profile scandals.
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  Speaker 1: I can only speak to my own conduct, Senator. What
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  Speaker 1: was going on?
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  Speaker 2: Tansy Harcourt is one of the Australian senior journalists and
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  Speaker 2: she's been breaking incredible stories about the reputational crisis engulfing KPMG. Tansy,
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  Speaker 2: the latest twist in this story is that someone is
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  Speaker 2: walking away from KPMG with a $ 4 million golden handshake.
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  Speaker 1: Who's that and why?
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  Speaker 3: That's Andrew Yates, who was the CEO of KPMG. He
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  Speaker 3: resigned sort of suddenly at the end of May, just
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  Speaker 3: as this scandal was starting to really unfurl. And he
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  Speaker 3: only recently, as in the last week or so, will
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  Speaker 3: have negotiated this payout, which my calculations put at about
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  Speaker 3: $ 4 million to leave the firm. So he's entitled to,
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  Speaker 3: I think it was about 52 weeks pay plus sabbatical,
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  Speaker 3: annual leave, all of those things.
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  Speaker 1: And they just.
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  Speaker 3: Actually add up to that much money. And then on
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  Speaker 3: top of that, because of the way that partnerships are structured,
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  Speaker 3: he doesn't lose anything. most of that to tax because
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  Speaker 3: those guys all are able to put it in trusts
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  Speaker 3: so they don't get hit by the tax man as
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  Speaker 3: hard either.
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  Speaker 2: Andrew Yates was CEO in 2024 when a whistleblower came
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  Speaker 2: forward within KPMG and said confidential documents relating to a client, Lendlease,
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  Speaker 2: were being held in the locker of one of the
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  Speaker 2: firm's biggest names. Chief Operating Officer and Senior Audit Partner
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  Speaker 2: Eileen Hoggart. At the time, KPMG was in the running
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  Speaker 2: to win work from another big client, Westpac. Lendlease and
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  Speaker 2: Westpac shared a board director, Michael Ulmer, and the idea,
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  Speaker 2: according to the whistleblower, was that the Lendlease papers might
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  Speaker 2: give clues that would help KPMG win the Westpac job.
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  Speaker 3: MUSIC This goes to the heart of the problem and
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  Speaker 3: is what has so much of corporate Australia quite worried.
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  Speaker 3: Auditors need access to everything. And so companies need to
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  Speaker 3: have absolute trust that every document that they provide is
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  Speaker 3: going to be kept with integrity. It's not going to
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  Speaker 3: be shared to win work from another client. It's not
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  Speaker 3: going to be shared just for common interest either. There
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  Speaker 3: needs to be trust in the system. Another director, another
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  Speaker 3: senior partner, Kim Laurie, was then found to have taken
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  Speaker 3: a screenshot of a, and again, it was Reid Lendlease,
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  Speaker 3: she'd taken a screenshot of a board paper that showed
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  Speaker 3: their scorecard for how to score all of the companies
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  Speaker 3: that were pitching for the audit work for Lendlease. And
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  Speaker 3: the allegation is that that would have then been helpful
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  Speaker 3: for winning the Westpac contract, which they did win.
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  Speaker 2: So even though it's a lend-lease board document, the value
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  Speaker 2: of it to KPMG was that it gave them insight
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  Speaker 2: into their competitors' behaviour.
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  Speaker 3: Well, both. So as part of the allegations that were
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  Speaker 3: read under parliamentary privilege, it has been revealed that they
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  Speaker 3: had access to how much the other firms, like the
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  Speaker 3: likes of PwC and EY, how much they were going
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  Speaker 3: to charge for the work. So it means you can
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  Speaker 3: undercut the other customers. So that's obviously a big problem.
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  Speaker 3: but it also gives insight into the way that directors
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  Speaker 3: might feel about certain things. But the reason why it
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  Speaker 3: matters is because these audits can be worth massive amounts
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  Speaker 3: of money. So in the case of Westpac, the audit was,
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  Speaker 3: I believe, $ 38 million a year. Another one that's come
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  Speaker 3: up very controversially, which KPMG won, was Macquarie Bank, which
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  Speaker 3: is worth about $ 100 million a year when you add
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  Speaker 3: in all of these other little bits.
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  Speaker 1: So that's a lot of money.
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  Speaker 3: And at a time where the way these big four
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  Speaker 3: firms are set up, they've got consultancy, tax and audit.
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  Speaker 3: And in the good years, the consultants are the ones
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  Speaker 3: that are really earning, bringing in the big bucks, but
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  Speaker 3: that's a very volatile business. And due to a totally
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  Speaker 3: unrelated scandal involving PwC, the consultancy work has really dried up.
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  Speaker 4: Internal PwC emails released by the Senate are show that
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  Speaker 4: inside information was used by the firm to devise ways
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  Speaker 4: to dodge the new laws. Advice which was then sold
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  Speaker 4: to deep-pocketed clients.
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  Speaker 3: And the auditing work, which has always been there, which
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  Speaker 3: is not quite as big a box, has just been
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  Speaker 3: this kind of steady revenue stream for the big four.
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  Speaker 3: And KPMG has just shot itself in the foot on
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  Speaker 3: that front.
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  Speaker 2: So this whistleblower came forward, made the allegations against Arlene Hoggart.
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  Speaker 2: KPMG did a kind of investigation, but it seemed to
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  Speaker 2: clear itself.
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  Speaker 1: Is that right?
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  Speaker 3: They did their own investigation and then they got Ashurst
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  Speaker 3: to review their investigation. And then they also called in
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  Speaker 3: Allens to do another investigation. And then after the claims,
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  Speaker 3: it wasn't just about the locker, but after a series
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  Speaker 3: of claims were aired by Senator Deb O'Neill, they got
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  Speaker 3: Allens in again and Allens did several more investigations, initially
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  Speaker 3: found nothing, and then eventually did find that most of
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  Speaker 3: the allegations were accurate.
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  Speaker 2: Here's what DEXA's CEO Warwick Negus said about that during
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  Speaker 2: the Parliamentary Committee hearing. Dexus is a big real estate
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  Speaker 2: asset manager and one of KPMG's frustrated audit clients.
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  Speaker 5: Mr Negus, what is your sense of the appropriateness of
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  Speaker 5: re-engaging the same law firm that has helped you stay
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  Speaker 5: in hot water and stew for some period of time?
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  Speaker 6: Chair, my instinct would be to use a separate firm.
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  Speaker 6: If the original report has not given you the information
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  Speaker 6: that you were looking for, then engage with a different
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  Speaker 6: set of eyes to review the same situation.
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  Speaker 1: But if the.
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  Speaker 7: Information you've received is what you were looking for, you
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  Speaker 7: would be more inclined to continue with the same?
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  Speaker 6: Perhaps. Yes, please.
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  Speaker 2: So what had changed between the first investigation where it
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  Speaker 2: was like nothing to see here and then suddenly, oh,
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  Speaker 2: actually there is quite a lot to see here and
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  Speaker 2: now people are resigning?
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  Speaker 3: I think, well, look, I don't know, but my guesstimate
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  Speaker 3: is that it was the fact that they decided to
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  Speaker 3: actually look at the emails that were being sent by
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  Speaker 3: the partners in question and check their phones, which hadn't
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  Speaker 3: happened in the first place.
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  Speaker 2: So then there's a parliamentary committee hearing and these things
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  Speaker 2: can be deadly dull, but this one was absolutely spectacular.
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  Speaker 7: Yes, absolutely.
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  Speaker 4: It goes on and on. It does.
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  Speaker 7: All through 25, nearly halfway through 26. And you send
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  Speaker 7: this Senate a document that says, nothing to see here.
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  Speaker 1: That is just unbelievable.
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  Speaker 2: The Joint Parliamentary Committee in charge of these areas and
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  Speaker 2: Labor Senator Deb O'Neill was cross-examining witnesses, including Eileen Hoggart.
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  Speaker 7: Are you like the frog that's been, you know, boiled
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  Speaker 7: to 100 degrees over the years into the cultural practices
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  Speaker 7: that allow this sort of thing to go on? I'm
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  Speaker 7: giving you the chance and I want to say again,
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  Speaker 7: do not mislead the Senate.
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  Speaker 2: And the hearings were themselves very important in the development
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  Speaker 2: of the story because it was at the.
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  Speaker 1: Hearing that Eileen Hoggart admitted.
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  Speaker 2: That, in fact, she had sent an email which referred
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  Speaker 2: to this document being in her locker.
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  Speaker 3: Well, she did have to admit it, but it was
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  Speaker 3: only because they finally bothered to check her emails and
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  Speaker 3: found proof of that in the emails.
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  Speaker 7: You were aware, you were a conscious, living, breathing person,
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  Speaker 7: earning $ 1. 5 million a year when you wrote that email.
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  Speaker 1: So let's just start there.
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  Speaker 7: Yes, Senator, there is no one more disappointed in me
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  Speaker 7: than myself for this email.
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  Speaker 2: I don't mean to.
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  Speaker 3: But the committee was important because Senator O'Neill had aired
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  Speaker 3: those claims under parliamentary privilege. And if she hadn't done that,
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  Speaker 3: then nobody would know about it because KPMG actually exited
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  Speaker 3: that whistleblower in 2024 when he made the allegations. And
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  Speaker 3: it was only when he then shared them with Senator
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  Speaker 3: O'Neill and she aired them that a proper investigation eventually
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  Speaker 3: took place.
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  Speaker 2: So where is KPMG now? Eileen Hoggart has been sacked
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  Speaker 2: and she has now said that she'll take action in
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  Speaker 2: the federal court.
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  Speaker 1: She has, yes.
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  Speaker 2: Against KPMG. That will be the trial of the year
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  Speaker 2: when it eventually comes to court, if it does.
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  Speaker 1: If it does.
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  Speaker 3: I mean, I'm not a betting woman, but if I was,
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  Speaker 3: I would say it probably won't go to court, but
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  Speaker 3: you never know. And the big question now is whether
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  Speaker 3: Kim Laurie, who was the Westpac signing partner, she is
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  Speaker 3: waiting to find out whether she's going to be fired
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  Speaker 3: or whether she gets to resign, which means she gets
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  Speaker 3: to take home a couple of million dollars. If she
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  Speaker 3: gets fired as well, then will she also take legal action?
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  Speaker 3: Who knows?
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  Speaker 7: Ms Lorry, do you think you're going to be the
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  Speaker 7: other woman sitting there who is exited by the end
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  Speaker 7: of this month? With the kind of penalty that's not
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  Speaker 7: happening to the other men.
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  Speaker 1: Who were there with you? I don't believe so, Senator.
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  Speaker 5: This is.
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  Speaker 2: Coming up, how KPMG coped with a reporter chasing down
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  Speaker 2: this scandal. Let's talk about that consulting work. I think
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  Speaker 2: Australians are used to conversations about the ballooning bureaucracy and
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  Speaker 2: the number of people who are actually on taxpayer-funded wages
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  Speaker 2: working for the public service at Commonwealth and state level.
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  Speaker 2: But I think maybe what not so many people know
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  Speaker 2: about is the armies of consultants who are in Parliament
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  Speaker 2: and in every department all the time. It's firms like
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  Speaker 2: KPMG doing this work. as you said, this is a
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  Speaker 2: huge revenue raiser for them.
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  Speaker 3: Yes, it certainly was.
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  Speaker 1: Yeah, well, tell me what's happened and what does that mean?
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  Speaker 3: Well, since the PwC scandal, which came to light about
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  Speaker 3: two or three, probably three years ago now, a lot
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  Speaker 3: of that work for the big four has dried up.
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  Speaker 3: And the Albanese government did make a big kind of
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  Speaker 3: song and dance about bringing all.
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  Speaker 1: Of those skills in-house.
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  Speaker 3: But if you look at Austender, work has reduced, but
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  Speaker 3: it hasn't reduced to the level that you would think.
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  Speaker 3: It's just been spread among different firms. So in the
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  Speaker 3: government's defence, I guess they don't know how to do
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  Speaker 3: a lot of these things, but there's a lot of
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  Speaker 3: second and third tier firms that are now winning a
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  Speaker 3: lot of that work instead. I think that Probably the
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  Speaker 3: government will be looking a lot of very big projects
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  Speaker 3: and maybe considering the current environment, breaking them into smaller
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  Speaker 3: bite-sized pieces. So instead of a $ 50 million project, they
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  Speaker 3: might announce a $ 5 million project and then extend it
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  Speaker 3: on and just do it in chunks. And it could
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  Speaker 3: also mean that they start to kind of separate those jobs.
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  Speaker 3: Instead of giving $ 50 million to KPMG, they might do
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  Speaker 3: a $ 5 million project and give $ 1 million of it
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  Speaker 3: to Korda Menther and $ 1 million of it to Ernst & Young.
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  Speaker 3: They might kind of take that approach for the time being.
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  Speaker 2: What's it been like to interact with KPMG as you've
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  Speaker 2: been reporting this story?
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  Speaker 3: I have had a lot of hung up phone calls.
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  Speaker 3: I have had commentary by some people saying, oh, you're
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  Speaker 3: writing about these job cuts and whatever else, and these
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  Speaker 3: are people too, and that is true. But I think
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  Speaker 3: that a lot of people forget that the person that
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  Speaker 3: started this all was the whistleblower who was treated absolutely
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  Speaker 3: appallingly by KPMG and was kind of basically kicked out
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  Speaker 3: of the firm with a minuscule payout and had to
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  Speaker 3: sign an NDA. So I think that you need to
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  Speaker 3: kind of bear in mind that if he had been
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  Speaker 3: heard and listened to, then they wouldn't be in this
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  Speaker 3: situation at all.
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  Speaker 2: What's your impression from the way things have kind of
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  Speaker 2: shaken out about what their perception was of the whistleblower.
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  Speaker 2: Did they know that he was telling the truth, but
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  Speaker 2: they just didn't want to hear it? Or did they
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  Speaker 2: think he was kind of a vexatious, problematic employee who
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  Speaker 2: had an axe to grind?
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  Speaker 3: From what I've heard from a number of insiders, that
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  Speaker 3: was certainly the story that they told. I'm not sure
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  Speaker 3: that that's what they believed. Given how easy it was
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  Speaker 3: for them to actually find a lot of this information,
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  Speaker 3: I would suspect you'd have to be sceptical about that.
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  Speaker 2: What about the rest of the sector, the competitors to KPMG?
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  Speaker 2: Do you think that we can have faith that auditing
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  Speaker 2: is being done ethically and that business is being played fair?
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  Speaker 2: Or does this give us an insight into perhaps it
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  Speaker 2: being a bit more dirty than we might have thought?
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  Speaker 3: It's never been about the quality of the audit. It's
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  Speaker 3: been about what they're prepared to do to get it.
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  Speaker 3: And yeah, I think that's shocked a lot of people.
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  Speaker 3: And you've got to assume that it's going to lead
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  Speaker 3: to some kind of regulatory change. or at least certain
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  Speaker 3: countries have rules where the auditor needs to be put
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  Speaker 3: out for tender every 10 years. There's things like that
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  Speaker 3: that can be done so that there's a chance of
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  Speaker 3: sharing the work and meaning that one company doesn't just
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  Speaker 3: get all of it, basically.
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  Speaker 2: And do you think heads have finished rolling at KPMG
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  Speaker 2: or is there going to be more? I, gosh, I
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  Speaker 2: think they've finished rolling because they've reduced their headcount by
• 14:41
  Speaker 2: quite a lot.
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  Speaker 3: So unless another scandal emerges, I think they're now just
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  Speaker 3: trying to work out how on earth they're going to
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  Speaker 3: keep feeding all of the hungry mouths in there when
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  Speaker 3: their work is likely to really dramatically dry up. They
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  Speaker 3: need to keep that team there, keep them working until
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  Speaker 3: they can regain the trust of corporate Australia and win
• 15:03
  Speaker 3: work again.
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  Speaker 2: Well, it's been a great example of incredibly tenacious reporting, Tansy.
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  Speaker 2: I'm sure it's been tough. So thank you very much.
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  Speaker 6: Thanks.
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  Speaker 2: Tansy Harcourt is a senior reporter with The Australian. You
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  Speaker 2: can read all her reporting and analysis anytime at theaustralian.com.au.