Updated ,first published
KPMG chairman Martin Sheppard and two of his senior partners will step down from the firm, becoming the latest leaders to resign as the firm deals with whistleblower allegations that it misused confidential client information.
Sheppard will be replaced by an independent chairman, with two other senior KPMG partners, Paul Rogers and former chief operating officer Eileen Hoggett, also leaving the partnership.
KPMG Australia interim chief executive Stan Stavros said “the decisions announced today are important and urgent”.
“We did not meet the standards expected of us, and we recognize the impact this has had on the whistleblower, our people, our customers and the community.”
Sheppard’s appearance before a public Senate committee hearing on Friday proved to be the latest setback for KPMG partners who had watched the firm’s poor response to the scandal unfold.
This includes Sheppard being forced to waive KPMG’s use of legal professional privilege to protect documents related to his interactions with law firms Ashurst and Allens over the matter.
Both Rogers and Hoggett were implicated in one of the biggest breaches identified so far: gaining access to confidential Lendlease board documents, including rival bids to audit the company. Lendlease chairman John Gillam described it as a “gross abuse of their access rights” on Friday.
A parliamentary hearing on Friday was told how the company’s staff team had recommended a $78,000 fine for Hoggett but former chief executive Andrew Yates reduced this to just $40,000. Rogers was fined $22,000 for his misconduct. That amounted to a portion of the annual bonus for both.
Late last month, Sheppard accepted the resignation of Yates and head of audit Julian McPherson after KPMG. confirmed the claims that confidential customer data had been shared and could be used to win new business with other customers.
But Sheppard resisted internal and external pressure to take personal responsibility for the company’s years-long delay in publicly dealing with the scandal, until now.
After a parliamentary hearing in which KPMG executives were questioned on Friday, Labor senator Deborah O’Neill, who sparked the scandal in March when she revealed allegations of a whistleblower, questioned whether the firm’s current leadership team could clean up its culture.
On Monday, in ABC interview, O’Neill blasted Sheppard – a former partner of the firm – for continuing to defend the group in Friday’s Senate hearings. He said the company has not yet realized the extent of its failure.
“You will have to look at the performance of the leadership team there the other day and wonder what in the world they think they are doing,” he said. “I don’t think KPMG fully understands the problems they have created, and I don’t know that the team to clean up this mess exists.”
The company spent much of the hearing arguing that it should not provide the investigative committee with documents related to its investigation of the whistleblower and his allegations. KPMG said they were protected by law. But at the end of the day, Sheppard agreed.
Stavros said the committee had highlighted issues that included “the inappropriate behavior of senior staff and the human impact of KPMG’s handling of the whistleblower”.
“KPMG Australia is focused on ensuring these shortcomings are understood, addressed and not repeated,” Stavros said in a statement.
After the hearing, the whistleblower, who has not been named, submitted documents about their experiences and claimed that KPMG made changes to its employment policies in an attempt to fire him within weeks of his complaint in 2024.
“A person who makes a protected disclosure and within two weeks receives a rejection from the eligible recipient and the subsequent threat of suspension will not be invited to cooperate,” the whistleblower said in one of their statements published by the Senate committee after the hearing.
The whistleblower tried to disclose the matter to KPMG International, which he said basically refused to deal with him and referred him back to a local firm.
“I do not say this lightly, but at the level of leadership and governance, I believe KPMG, at home and abroad, is currently an organization that cannot be trusted,” the whistleblower said in his statement to the committee.
Former KPMG Australia CEO Gary Wingrove – who was recently appointed to run the global firm – was among those who appeared at the hearing and defended the role his global office played in handling the whistleblower.
“We took this matter incredibly seriously, and engaged with the whistleblower several times over several months to understand the issues he was raising. The issue was that he refused to give us information that would have allowed us to investigate the matter properly, and in fact he also insisted that we not speak to KPMG Australia about the matter,” Wingrove said.
Lendlease is preparing to drop KPMG as its auditor and the federal government has stopped the company from winning another business for several months.
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Colin Kruger is a senior business reporter for the Sydney Morning Herald and The Age.Connect through email address.
