Wednesday, August 12, 2026

Neil Chenoweth KPMG paid more than $500,000 to tax division whistleblower

Ashurst - Michael Ebeid’s last-ditch effort to save KPMG, and himself

Investigative journalist
Edward KPMG paid more than $500,000 to a former senior manager who alleged wrongdoing in the firm’s tax division, at the same time as the big four firm faced allegations of data misuse in the audit team.
The payment was arranged by former chairman Martin Sheppard in late 2024 and was subject to confidentiality provisions, in an attempt to ensure the claims of impropriety by tax partners would remain private.
“KPMG have a lot of questions to answer,” said Greens senator Barbara Pocock. “How many whistleblowers have they tried to silence? How much has been spent to pay for their silence?” Michaela Pollock
The big four firm is embroiled in a governance crisis involving the alleged misuse of client data by the audit division. The firm’s leaders face a second parliamentary hearing on Friday.
“If true, this shows a repetitive pattern of behaviour by KPMG to undermine and silence whistleblowers through payments and non-disclosure agreements to cover up allegations of wrongdoing,” said Greens senator Barbara Pocock of the new whistleblower claims.
“KPMG have a lot of questions to answer. How many whistleblowers have they tried to silence? How much has been spent to pay for their silence?”
The parliamentary inquiry was launched in March after Labor senator Deborah O’Neill revealed claims by a former executive that KPMG had used confidential client information from clients Lendlease and Optus in bids to win or retain audit work worth $134 million a year.
Those audits involved Dexus, Macquarie, Westpac and Telstra. KPMG’s bid for the Telstra audit was unsuccessful.

New allegations involve the tax division

KPMG learnt of the second whistleblower’s claims in June 2023. That was when a lawyer acting for the former senior tax manager wrote to then KPMG chairman Alison Kitchen to allege “appalling actions of former senior partners”.
The former senior manager accused the firm of breaching its duty of care, complaining they had been incorrectly blamed for the illegal actions of a KPMG partner.
The manager, who requested anonymity to speak freely, left the firm in 2004, but was later caught up in legal proceedings involving the Tax Office that lasted 14 years, until 2022.
A KPMG spokesperson confirmed that a settlement agreement had been reached “in recognition of the substantial legal expenses incurred by the former employee”.
A month after the letter to Kitchen, the former senior manager, with the support of a former KPMG tax partner, reached out to The Australian Financial Review to discuss the manager’s treatment by the firm.
“As you might expect, KPMG does not accept that it is responsible or liable,” the former partner said in late July 2023. The partner also requested anonymity to speak freely about his former colleagues.
In the course of preparing a possible case against KPMG over its treatment of the former senior manager, the two claimed they had uncovered wider wrongdoing by KPMG partners, relating to the 1990s and early 2000s.
On August 8, 2023, the former partner spelt out these allegations in an email to then KPMG chief executive Andrew Yates.
Yates organised a Teams meeting for the former partner with law firm Allens on August 17 to investigate the claims. (This was entirely separate from the audit whistleblower investigation that Allens would open for KPMG in 2025.)
After that meeting, the former partner sent a further detailed email to Yates, setting out what evidence might support the allegations, some of which dated back to the 1990s.
These historical allegations included that three partners had received secret commissions in cash for facilitating clients’ participation in a taxation arrangement that involved clients claiming tax losses which, it turned out later, did not exist.
This included $40,000 paid to a KPMG partner who described the payment as a birthday present.
The email also detailed how partners misappropriated client funds and diverted clients’ tax losses for their own advantage.
In one case, when a partner wound up a client’s company and the liquidation left surplus funds, the partner allegedly moved the money to his own account instead of paying the remaining money to the client, and used it to buy a jet ski.
The email from the former partner also named three clients who, in lieu of paying fees to KPMG for tax services, instead had provided a KPMG tax partner with, respectively, a Nissan Maxima sedan, a new garage door, and a free paint job for his house.
The email also described incidents where KPMG staff were requested to carry large sums of currency into Australia for clients who held funds in Vanuatu, Singapore and Hong Kong.
As many these matters related to the 1990s, obtaining financial records to prove the allegations is challenging. Accordingly, the Financial Review is not suggesting either set of allegations is true, only that they have been made.
This is an excerpt of the tax whistleblower’s allegations.  

Investigation by Allens

The Financial Review discussed the allegations with KPMG in a meeting with the firm in February 2024, when management was keen to underline how seriously KPMG took corporate governance.
“We are investigating allegations to the best of our ability, noting that the majority date back two or three decades, with some raised anonymously,” a spokeswoman said. “We are taking these matters seriously.”
But it was not until May 7, 2024, that KPMG finally responded to the former partner’s August 2023 emails in a meeting with chairman Sheppard.
Sheppard said Allens was looking to finalise its investigation and report back to KPMG. Allens later dismissed the claims.
A new whistleblower raised concerns in an email on May 25, 2024, that audit partners had accessed confidential client data to win bids for new audit work.
During this period, KPMG was battling to portray a sense of strict governance and unimpeachable propriety as it closed in on new audit contracts, which over time could be worth hundreds of millions of dollars a year to the firm.

Settlement follows media reports

On July 22, 2024, the Financial Review reported the broader (and unrelated) claims of tax partner misbehavior raised the previous year by the former partner and former senior manager, including the allegation that partners had misused client funds.
KPMG’s internal investigation, as well as that of Allens, had dismissed the allegations. However, days after the new media coverage, KPMG changed its strategy.
Sheppard contacted the former partner to renew discussions. Within days, KPMG had offered $500,000 to settle the former senior manager’s claim for legal costs.
Former chairman Martin Sheppard and former chief executive Andrew Yates before a Senate committee in February. Alex Ellinghausen
The former partner – who would receive none of the settlement – and the former senior manager would both have had to sign non-disclosure agreements that would bar them from speaking about the allegations against former partners.
It is known that this offer was rejected – and that the two up to this point did not consider that they were in real negotiations.
Meanwhile, the audit whistleblower was having a tougher time, telling the Senate inquiry this year that KPMG had denied him a pay rise, withdrawn his client work, then threatened to sack him.
Yates told the inquiry that he initially had focused on the whistleblower as a human resources issue and that: “I don’t recall that it was a definitive decision that he would be terminated.”
The audit whistleblower’s computer was searched twice in November 2024. He had left the firm by the end of the month.
What happened with the tax whistleblowers – the former senior manager and partner – is unclear. But by the end of the year, none of them was able to speak further about KPMG – a silence that seemingly confirmed that a deal had been reached.
Under the partnership agreement, the firm’s chief executive has discretion to make decisions involving expenditure up to $5 million without seeking board approval.
It is believed the board discussed the matter but was not aware of the size of the settlement and did not make any final decision.

Other tax allegations

The tax whistleblowers – the former senior manager and the former partner – also made separate allegations in 2023 in reference to an anonymous letter that had been circulating in government circles since July 2021.
The letter claimed that in 1999, former partners Wayne Jones and Chris Jordan (who was later appointed tax commissioner) had received millions of dollars through Dinnans Limited, a company set up by a friend in the Isle of Man.
Jordan denied the allegation at the time. An investigation by the Financial Review focused on Dinnans Limited, the Isle of Man company linked to Jordan, and was able to confirm many of the allegations.
On June 6, 2024, the Financial Review published an article titled “Poacher turned gamekeeper”, which revealed that a friend of Jordan’s confirmed he had been paid $200,000 to administer Dinnans in the Isle of Man, which channelled $3.38 million to New Zealand and Australia, mainly for Jordan and Jones.
Bank records did not show the source of the money paid into Dinnans. So on the face of it, nothing was necessarily improper about the transactions.
Yet, it raised questions about why two KPMG partners were running millions of dollars through a secrecy jurisdiction, which their employer, KPMG, apparently knew nothing about; and why Jordan did not disclose these transactions when he became tax commissioner in 2012.
Jordan did not respond to Financial Review questions in 2024. Last year, he told the ABC’s Four Corners program that the Dinnans allegation “arises from an anonymous malicious letter”.
“I did not have any involvement in the creation, acquisition or operation of Dinnans Ltd,” he said.
The Jordan story was published just as KPMG’s senior management was grappling with its problem in the audit division.
In response to these allegations, a KPMG spokesperson said the settlement deed had had no impact on these investigations.
“We investigated the allegations to the best of our ability, establishing a mechanism through an external law firm for evidence to be gathered,” said the spokesperson.
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 was a senior writer for The Australian Financial Review






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