By Christine Chen
SYDNEY, June 3 (Reuters) – KPMG Australia said its chief operating officer stepped down on Wednesday, as the scandal grew over a whistleblower’s allegations that the accounting firm misused client information to win lucrative audit contracts.
Eileen Hoggett, one of the people directly named by the whistleblower, will remain as an audit partner after relinquishing the executive role while investigations are pending, according to an internal email from KPMG Australia interim CEO Stan Stavros that the firm shared with Reuters.
Hoggett’s withdrawal from the COO role she took on in 2023 comes days after the resignations of the firm’s CEO and head of audit over the mishandling of an internal investigation into the allegations.
KPMG had previously said the investigation failed to substantiate the whistleblower’s claims, which were also shared with a senator from Australia’s ruling Labor party.
Hoggett did not immediately respond to a request for comment via LinkedIn.
In March, Senator Deborah O’Neill told parliament the whistleblower’s allegations included that confidential board papers from real estate company Lendlease were used to support bids for major audit tenders of Westpac and Dexus.
“Documents were taken from Lendlease by the (KPMG) lead partners on the account, Eileen Hoggett and Paul Rogers, and were physically secured in Ms Hoggett’s locker,” O’Neill said.
The allegations have brought new scrutiny to Australia’s professional services sector, which was rocked by revelations in 2023 that PwC shared confidential government information with prospective clients.
That scandal triggered parliamentary hearings and resulted in a spinoff of the firm’s government consulting arm, multiple employee departures and tighter laws to regulate the sector.
In the email to staff on Wednesday, Stavros said it was clear the firm should have handled the whistleblower’s complaints differently. KPMG has since engaged law firm Allens to conduct a new external investigation.
“I am 100% committed and will ensure we approach the issues in the right way,” Stavros said.
“I want to be open that we should all expect the heightened public scrutiny to continue for some time.”
STATE GOVERNMENTS WANT ANSWERS
The New South Wales (NSW) government said in a statement it sought assurances from KPMG on its management of confidential information and whether any staff under investigation were working on state contracts.
In a letter to the firm shared with Reuters, NSW Treasury Secretary Michael Coutts-Trotter also requested a list of active contracts with state agencies and asked what it would do to “address issues revealed by these ethical lapses”.
The Victorian government was also reviewing KPMG contracts to ensure confidential data has not been misused, the Australian Financial Review reported on Tuesday.The Australian Securities and Investments Commission has started a preliminary investigation into the conduct of three KPMG registered company auditors.
A parliamentary hearing into the whistleblower allegations is also scheduled for June 19.
(Reporting by Christine Chen in Sydney; Editing by Jamie Freed and Muralikumar Anantharaman)
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