By Christine Chen
SYDNEY, June 23 (Reuters) – KPMG Australia said on Tuesday its chairman and two senior partners will leave the firm as it moves to contain a growing scandal over whistleblower allegations that staff misused confidential client information to win audit work.
The departures of Chairman Martin Sheppard, and audit partners Paul Rogers and Eileen Hoggett, mark the latest fallout from the controversy that has engulfed the firm and has already claimed its CEO and audit chief.
“The decisions announced today are necessary and immediate,” interim CEO Stan Stavros said in a statement.
“We did not meet the standards expected of us, and we recognise the impact this has had on the whistleblower, our people, our clients and the community.”
KPMG has been under fire after the whistleblower alleged it misused confidential board papers from real estate company Lendlease to support bids for major audit tenders.
KPMG has admitted it has mishandled the complaint and has launched a fourth investigation after the previous ones failed to substantiate any wrongdoing.
Rogers and Hoggett were directly named by the whistleblower as the lead partners on the Lendlease auditing team involved in the misconduct, according to the whistleblower’s allegations that were made public in March.
Both Rogers and Hoggett are under investigation by Australia’s corporate regulator.
Earlier this month, KPMG said Hoggett had stepped down as chief operating officer but would remain a partner pending investigations into the allegations.
KPMG said Sheppard would leave the firm after a short transition period and retire from his regional board responsibilities.
He would be replaced with an independent chair, and independent members would be added to the Australian board as part of measures announced to “overhaul governance and rebuild trust” that also include a review into sanctions for staff misconduct.
The announcement comes after Sheppard appeared on Friday at a parliamentary committee that examined the scandal. He disclosed at the hearing that KPMG Australia staff shared sensitive information about telecom firm Optus with another internal team bidding for an audit contract for its rival Telstra in a breach of ethics.
Sheppard faced criticism for invoking legal professional privilege to prevent the committee accessing internal documents, before later reversing his decision. The committee also heard how the firm mismanaged the whistleblower’s complaint as a “workplace issue” rather than one of audit quality.
“The parliamentary committee’s enquiries highlighted issues, including unethical behaviour by senior personnel and the human impact of KPMG’s handling of the whistleblower. KPMG Australia is focused on ensuring those failings are understood, addressed and not repeated,” Stavros said.
(Reporting by Christine Chen in Sydney; Editing by Alasdair Pal and Muralikumar Anantharaman)
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