Friday, June 19, 2026

Ashurst denies investigating KPMG allegations, contradicting firm Edmund Tadros

Ashurst denies investigating KPMG allegations, contradicting firm


Professional services editor

Ashurst has denied investigating allegations made by a former KPMG executive, despite the accounting and audit giant telling parliamentarians, independent directors and the public it had engaged the law firm.

The firm’s handling of the allegations – including that partners used confidential information from clients to win audit work at other companies including Westpac – is under scrutiny after KPMG ultimately admitted to some the claims despite previously clearing itself of wrongdoing.

Ashurst partner Jane Harvey appears at the parliamentary inquiry on Friday. Getty Images

KPMG said that Ashurst had been called in to investigate the allegations, first formally made in May 2024, and had not found wrongdoing. The Ashurst investigation came after the firm’s own internal probe and was followed by another probe, according to KPMG, run by Allens last year.

However, Ashurst partner Jane Harvey told a Senate inquiry into the scandal on Friday the law firm had never been asked to investigate the whistleblower’s allegations. “We were not engaged to undertake an investigation and we did not conduct one,” she said.

Senator Deborah O’Neill, who is chairing the parliamentary inquiry into the matter, asked whether the lawyers were concerned that their company’s name “has been used to present erroneous information”.


Ashurst global managing partner Paul Jenkins said KPMG may have made a mistake before conceding that the information was simply untrue.

Former NSW premier Mike Baird quit the KPMG board after becoming dissatisfied with how accounting giant had handled the matter. He and two other independent directors who remain at the firm – Jane Hemstritch and Patty Akopiantz – demanded the review by Allens which ultimately substantiated some of the claims and led to the current crisis.

Those findings – and the commissioning of yet another review of the allegations – have upended the firm and led to the resignations of KPMG chief executive Andrew Yates and head of audit Julian McPherson.

Ashurst told the Senate inquiry that it had been brought in to advise on an employment matter connected to the allegations, but not the claims themselves. Between June and August last year, the law firm reviewed KPMG’s own investigation into the allegations before Allens was ultimately called in to revisit the claims made by the former employee.

Despite this, KPMG told Hemstritch that Ashurst was itself investigating the claims. Hemstritch went on to inform the former employee that Ashurst had “commenced an external investigation into your concerns”.

“So this email was sent to the whistleblower just before they signed a deed of release saying that an external investigation ... had already been commenced by Ashurst. That was not correct, is it?” asked Coalition senator Paul Scarr. “No, that was not correct,” Harvey said in response.

The first two investigations did not interview the whistleblower or request evidence from him, and he refused to participate in the third, which he described as a “sham” and “choreographed” to cover up the issues.

Allens is KPMG’s law firm of choice for partner litigation and audit negligence work, and its investigation found most of the allegations were unsubstantiated or lacked evidence. The investigations involved partners Christopher Kerrigan and Ross Drinnan. KPMG is also Allens’ auditor.

There is no suggestion Allens have not carried out their roles professionally.

The new Allens investigation will be overseen by a subcommittee of KPMG’s regional board led by deputy chairwoman Carmel Mortell, along with Hemstritch, Akopiantz and former SBS chief executive Michael Ebeid.

Last month, KPMG said that the earlier three investigations – by the firm itself, Ashurst and Allens – had “shortcomings” in their “rigour”.

“Has KPMG sought damages for botched investigations? Because basically they’re blaming you,” O’Neill asked Allens partners. “I actually don’t accept that they’re blaming us,” Allens managing partner Richard Spurio said.

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Find out the inside scoop about Accenture, Deloitte, EY, KPMG, PwC and McKinsey. Sign up to our weekly Professional Life newsletter.

 leads our coverage of the professional services sector. He is based in our Sydney newsroom.Email Edmund at edmundtadros@afr.com.au

KPMG in freefall as major client and directors lose trust
KPMG’s own independent directors said they have lost trust in the firm for misusing confidential client information on a devastating day for the professional services firm whose reputation was repeatedly questioned by clients, politicians and even a law firm that disputed KPMG’s long-standing claims it had investigated whistleblower allegations.
A joint parliamentary committee conducting an inquiry into the scandal engulfing the firm on Friday urged KPMG chairman Martin Sheppard to resign and threatened tougher regulations of the entire professional services sector that are likely to have serious repercussions for KPMG’s lucrative Australian business.
Lendlease chairman John Gillam and chief executive Tony Lombardo say KPMG abused access privileges. AAP
Labor senator Deborah O’Neill said evidence given by KPMG’s top brass was “truly shocking” and suggested an untrustworthiness that could undermine confidence in company audits and markets more broadly. This in turn would harm “every Australian who has ever worked and has super”.
The chairman of Lendlease, John Gillam, blasted the behaviour of KPMG – its auditor for almost 70 years – in sharing confidential board documents to win audit work at Westpac and Dexus, as a “fundamental breach of trust”.
“How can we trust them if they can’t [do that]?” a clearly furious Gillam told the inquiry. “Whenever you have a fundamental breach of trust, you then have these other doubts creep in.
Our capital markets, our debt markets, all of our investing is based upon trust, that the financial information we put forward can be trusted because of the audit we have. So it’s right at the heart of how we transact,” Gillam said.
The firm has been in crisis since March when a whistleblower’s claims were made public in the Senate by O’Neill. They include allegations that audit partners misused client data at Lendlease and other clients, and claims of unethical conduct such as cheating on tests and utilising conflicted relationships to secure work.
KPMG employs roughly 9000 people including almost 700 partners and last year earned more than $2 billion in fees. Insiders fear a chunk of this revenue could be at risk because of the scandal.
The firm initially denied most of the allegations but has now conceded to three cases of wrongdoing and apologised to the whistleblower. It has also launched a fourth investigation into the allegations. For months KPMG has referred to the first of those inquiries as being conducted by major law firm Ashurst. On Friday, an Ashurst partner said the firm had conducted no such investigation.

Directors undermine firm

Four of KPMG’s current and former independent directors – Mike Baird, Jane Hemstritch, Patty Akopiantz and Michael Ebeid – blasted KPMG’s decision to claim legal professional privilege over all the documents requested of it by the committee, a move which O’Neill separately described as “insulting”.
“We should have provided you with the documents that you’ve requested,” Akopiantz said.
In a major U-turn ate on Friday, KPMG agreed to provide the documents to the committee.
Baird, who left the board last year, said the independent directors lost trust in KPMG’s leadership in April, when it was revealed some of the whistleblower’s allegations had been substantiated.
A restructure means Akopiantz, Hemstritch and Ebeid are now part of the KPMG Asia-Pacific board rather than Australian board. Despite being on the regional board, the three, along with KPMG partner Carmel Mortell, are also on a board subcommittee overseeing the current Allens investigation.
Independent KPMG directors Patty Akopiantz and Michael Ebeid, along with former director Mike Baird, pushed KPMG to appoint an external investigator. AAP
Earlier in the day, former KPMG chief executive Andrew Yates had characterised the whistleblower’s claims as a human resources issue in an email he sent to directors in late 2024. Yates also told them that the matter was resolved.
“The presentation from management was that ‘we don’t think there’s any substance to what’s been raised’. Now, were we too trusting in that position? Clearly, we were. [And] that trust stayed until we got to April,” Baird said.
He said once directors heard from the whistleblower, “every independent director was determined to act on behalf” of them and “we were no longer in a position that we were trusting”.
He says the firm hadn’t acted with enough urgency and transparency in its dealings with the whistleblower.
Former head of audit Julian McPherson told the hearing that KPMG searched the whistleblower’s computer after he made his disclosure out of concern he might share details of the allegations with people outside the firm.
“The search, which occurred early in the day, on the 30th of May ... was authorised by me and it was in the context of us being concerned that the individual might be seeking other employment, and we were concerned about whether information from KPMG might have been shared outside of the [firm],” McPherson said.
Parliament also heard evidence that KPMG publicly misled groups including the independent directors, the whistleblower and parliament about the scope of external investigations.
ASIC chair Sarah Court said KPMG’s behaviour was an “egregious and serious breach of trust” that goes to the heart of audit quality and market confidence, and also called for wider industry reform.

Firm’s culture, exit payouts

The hearing heard the whistleblower’s claims about the firm’s “toxic culture”, including a focus on “retaliation” and revenue at all costs.
In a combative performance before the inquiry, KPMG chairman Sheppard insisted that the data misuse claims do not show there is a problem with the firm’s culture.
“Are we not looking at a repetitive pattern of behaviour?” Senator Barbara Pocock asked.
Sheppard: “I think it’s three instances.”
The chairman was questioned about his close ties with Westpac director and audit committee head Peter Nash, confirming he “definitely” stayed at his house while KPMG was pitching for the bank’s audit tender.
Nash is a former KPMG partner and chairman and was supposed to recuse himself from the tender process because of the potential for conflicts of interest. As this publication revealed last week, though, he actually sat in on meetings when KPMG, EY and Deloitte pitched for the work.
KPMG chairman Martin Sheppard. Getty 
Sheppard defended Nash staying at his house during this process. “Peter is a very longstanding friend of mine … but I don’t believe any probity measures were breached.” Audit partner Suzanne Bell confirms she was also at Sheppard’s house (the pair are in a relationship) when Nash stayed there.
Sheppard confirmed he met with former KPMG partner and current Macquarie director Michelle Hinchliffe who has been under scrutiny for her involvement in that bank’s audit tender process last year, despite her KPMG links. KPMG won the contract.
“I think my recollection is I met with Michelle Hinchliffe, not in relation to Macquarie, in the context of BHP,” Sheppard says. It was a couple of years ago when he worked on the resources giant’s audit.

Snowballing crisis

Former KPMG chief Andrew Yates revealed his resignation was triggered by learning that a third allegation of misconduct by the whistleblower was true.
That allegation was that KPMG auditors shared confidential information from audit client Optus with colleagues who were pitching for a similar contract from Telstra. KPMG originally wrongly found this was unsubstantiated.
“It was that evidence – and recognition that there was evidence to support some of the whistleblower allegations that had I overseen things differently, we could have found earlier – and it was that day that I realised that I felt I needed to [resign],” Yates says.
On Yates’ final payments from the firm, he says he will be paid roughly $2.2 million for this financial year, about $1 million less than last year. But he will still get a hefty payout for his notice period, despite the fact the resignation was triggered by his own poor management of the misconduct at the centre of the KPMG scandal.
“As a CEO, a large proportion of my remuneration is incentive-based, the vast majority of that for the year has been withheld ... you’ll see that my remuneration this year is, is about, I don’t know the exact numbers, is about $1 million less than last year.”
He also said that other amounts have been withheld, subject to unspecified future events.
“This has been very costly,” Yates says. “The board exercised its judgment around my salary for this year and withheld amounts.”

Lendlease audit disruption

Lendlease’s Gillam said it is unclear how quickly the company would move to a new auditor, given the complexity of its operations.
“I doubt we’ll be able to change before the half-year audit for the next financial year is completed,” he said.
“So it’s very likely that KPMG will do that work as well ... we don’t feel that we should be disadvantaging our security holders because of what’s occurred, but equally, as stated in my opening statement, this is a grave misuse of their access privileges, and we’re deeply discontented with this behaviour.”
Lendlease chief executive Tony Lombardo said KPMG should not have accessed the information on rival audit tenders that it took from the company’s board papers. Nor should it have used it to pitch for other audit work, as it did with Westpac.
“Ultimately, in terms of the audit papers, the auditors do have access to our full papers and records. In terms of accessing this document ... they did have access to the file but shouldn’t have been using it,” said Lombardo.
Text message thread between Lendlease chairman 
John Gillam and KPMG chairman Martin Sheppard 
on the day before Andrew Yates resigned. 
Martin
Hi John
Martin Sheppard, Chairman
at KPMG here. I wonder if
you could please call me re
the Whistleblower matter I 
am dealing with. No change
or update from LL
perspective but l am
(confidentially) going
to take some action re
accountability for where we
find ourselves which may
raid [sic] the noise a little and I
wanted you to be aware
ahead of time.
Regards
Martin
Thu 28 May at 11:50am
SOURCE: DOCUMENTS PROVIDED TO PARLIAMENT
JohnThanks Martin
I've been in a board meeting
all day & am about fly home.
I can talk tomorrow morning
if that suits?
regards John
Thu 28 May at 4:37 pm
Lombardo wrote to acting KPMG chief executive Stan Stavros in early June, saying he was “disappointed in the absence of transparency” from the firm and its “sporadic and piecemeal” approach to answering questions and sharing information.
He told the committee that when the then-KPMG chief executive, Andrew Yates, told him of the whistleblower’s allegations for the first time last May, he mentioned only one claim that some confidential board documents of Lendlease’s may have been stored in a staff locker. He said KPMG had investigated this and found it unsubstantiated.
He did not mention the far larger (and since substantiated) allegation that KPMG had accessed confidential information from those board papers and used it to help win audit contracts from other companies.
“All I had was board papers that were assumed to be printed and stored in someone’s locker,” said Lombardo.
Yates told him KPMG had received a whistleblower complaint and had investigated it, but had got no further information.
Quote visual
KPMG public hearing: What they said

“What’s apparent is a few very senior 
people have had a grave misuse of the 
access privilege they had, and 
that’s a fundamental breach of trust

Asked about a text exchange between himself and KPMG chairman Martin Sheppard, Gillam made it clear he had stopped responding to the leader of the big four firm.
Labor MP Tania Lawrence asked: “When did you become aware of the resignation of the CEO?”
Gillam: “When I read it in the newspaper.”
Also appearing before the inquiry, Ainslie van Onselen, the chief executive of the main professional body for auditors, Chartered Accountants ANZ, said she was “disgusted” by the misconduct allegedly committed by KPMG’s auditors.
“What I think it says in relation to the individuals involved who were partners of KPMG, is [this is] extremely serious conduct, and I’m disgusted by it. It’s basic 101 stuff. So, in terms of ethics principles, confidentiality of documents is 101.”
KPMG has not provided its investigation reports on the allegations to Chartered Accountants ANZ.
However, Liberal senator Paul Scarr accused CA ANZ of failing in its fundamental job of ensuring auditors complied with their professional obligations.
Scarr pointed out that, once again, a slew of executives at one of the largest accounting firms had lost their jobs because their staff breached professional obligations.
“This is systemic failure in terms of regulating this important profession. Do you agree?” he says.
Van Onselen disagreed.
Find out the inside scoop about Accenture, Deloitte, EY, KPMG, PwC and McKinsey. Sign up to our weekly Professional Life newsletter.
 leads our coverage of the professional services sector. He is based in our Sydney newsroom.Email Edmund at edmundtadros@afr.com.au
 is a Rear Window columnist, based in Melbourne. Connect with Hannah on Twitter. Email Hannah at hannah.wootton@afr.com


KPMG and Allens open the ‘legal privilege’ playbook

If anyone needed further proof the beleaguered firm has learnt nothing from PwC’s tax leaks scandal, Martin Sheppard has delivered.

Columnist

It takes bravado to look Labor senator Deborah O’Neill in the eye and tell her that her parliamentary committee’s constitutional powers are cute, but ultimately unconvincing.

Yet that’s what KPMG and Allens plan to try at Friday’s audit leaks hearing.

Former KPMG CEO Andrew Yates, current chairman Martin Sheppard and former chief operating officer Eileen Hoggett will all face parliament’s questions on Friday. Bethany Rae

They plan to claim legal professional privilegeover essentially every requested document, according to a letter KPMG’s miraculously-still-employed chairman, Martin Sheppard, sent O’Neill this week. Even though privilege doesn’t apply in parliamentary hearings, and PwC’s identical strategy failed spectacularly.

In a five-page missive, Allens’ Andrew Maherand James Campbell assert that “substantially all of the documents” requested – relating to investigations into a whistleblower’s misconduct allegations at KPMG – are privileged.

It’s “not self-evident to us” that the committee’s order to produce them overrides Allens’ obligations to KPMG, they continue, and the Senate should join it in seeking clarity from a judge.


The committee doesn’t need any such clarity. Senate clerk Richard Pye has advised it that the Constitution and common law grant them this power.

Why rely on a judge to dismantle the law firm’s claims when it can just read Maher’s own marketing material instead?

In 2023, the Federal Court rejected an attempt by Ashurst (also caught up in the KPMG saga) to claim privilege over a Deloitte review into the Optus breach.

Maher promptly penned an Allens website column calling it “the latest in a line” of decisions exposing “the significant challenges in making legal privilege claims over investigation reports” following “alleged corporate wrongdoing”.

It is exactly what KPMG, Ashurst and Allens now seek to shield: the firms’ investigations and communications regarding the whistleblower’s auditor misconduct allegations.

Maher noted the Optus case reiterates that an investigation’s “dominant purpose” must be providing legal advice to attract privilege.

Justice Jonathan Beach ruled Optus failed this because the review was for “management purposes”. Beach gave “significant weight” to an Optus press release stating the board engaged it for this purpose.

If only he’d thought to tell KPMG! Sheppard and recently ousted CEO Andrew Yates issued press releases in March and mid-May declaring the lawyers’ inquiries were to “review our firm’s investigation”. No mention of legal advice.

In late May, Sheppard even pledged to report Allens’ findings to “clients, the committee, regulators and professional bodies”, echoing the client-sharing promises that Beach used as proof that Optus lacked legal purpose.

Senate clerk’s neat solution

KPMG’s months of denying wrongdoing doesn’t help its case. To prove a legal purpose, KPMG must show that the lawyers’ work was for legal advice or in anticipation of legal proceedings. Good luck coming up with a palatable way of saying “these documents are strictly secret because we actually anticipated being sued for wrongdoing, even if were insisting we were innocent”. Oh, and don’t forget we’re trustworthy.

While Allens and KPMG fairly note that releasing requested information could prejudice other inquiries, the Senate clerk has a neat solution: submit it to the committee in confidence, to be published only if and when any risk passes.

But these privilege claims aren’t just legal strategies. They’re a business model. One that the likes of Allens need to stay in place.

Maher writes of “privilege claim optimisation measures” in the Optus article. His colleague Christopher Kerrigan (who is appearing before the inquiry on Friday) advises in a separate article that investigations are conducted “in a manner that maximises the prospects of claiming legal professional privilege”.

KPMG is well aware of this, too. Part of the reason the big four made their (failed) attempt to open legal divisions in the 2010s was because of the apparent appeal to clients of being able to claim legal privilege over more advice.

The legal industry is already shitting itself at the prospect that its work may now be fair game for parliamentary questioning. It can’t afford for clients to be doing the same.

But at what cost? Over at Barangaroo, KPMG’s rank and file are thoroughly unimpressed with this attempt to shield the investigations.

It won’t end well for KPMG, if PwC’s example is anything to go by. Some staff believe the executives are dragging out the firm’s reputational pain to protect themselves.

As one auditor said, the firm’s clients are already grilling them about confidentiality. Now, they will just ask why KPMG cares enough about its own confidentiality to fight the Senate over it, but not enough about theirs to stop their data being misused in a bid to get new clients.

Meanwhile, Ashurst apparently knows a lost case (or a toxic client) when it sees one. Partner Lea Constantine sent a 200-word letter to O’Neill saying it was legally required to produce the documents (no arguing from them whether it had the power to do this) and to follow KPMG’s orders that they are privileged. It sounds like Ashurst even got a thinly veiled threat from KPMG about its professional duties!

So Ashurst would hand over its documents in a “password-protected container”, she said, and the committee and KPMG could work out what to do about it.

She’s up before the committee on Friday. As are Yates, Sheppard and other KPMG and Allens partners. Place your bets on how many times they repeat “privilege” before O’Neill combusts.

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 is a Rear Window columnist, based in Melbourne. Connect with Hannah on Twitter. Email Hannah at hannah.wootton@afr.com

Ashurst, Allens partners called to appear at parliamentary hearing on KPMG audit leaks scandal

Ashurst and Allens partners have been called to appear at a federal parliamentary inquiry examining claims of data misuse at KPMG, reported The Australian Financial Review.

Lea Constantine and Jane Harvey of Ashurst are set to attend the 19 June hearing along with Richard Spurio, Christopher Kerrigan and Ross Drinnan of Allens. They will be joined by Lendlease chief executive Tony Lombardo and chairman John Gillam as well as ASIC officials.

The parliamentary joint committee on corporations and financial services also called former KPMG chief executive Andrew Yates, ex-audit head Julian McPherson, former COO Eileen Hoggett, national chairman Martin Sheppard, ex-Australian CEO and incoming global chairman Gary Wingrove, and global general counsel Anne Collins. These KPMG partners join interim chief executive Stan Stavros, audit head Scott Guse, general counsel Louise Capon, executive director James McClelland, and human resources head Dorothy Hisgrove.

Yates and McPherson departed the firm as a result of the matter while Hoggett vacated her role, the AFR reported.

The committee is also set to call audit partners Paul Rogers and Suzanne Bell as well as senior employees who supervised internal KPMG investigations into the allegations. Moreover, ex-NSW premier and once-independent board member Mike Baird will attend the hearing alongside independent board members Jane Hemstritch and Patty Akopiantz.

The audit leaks issue arose when a former audit director presented the firm with a formal report in May 2024 that claimed the misuse of confidential client data. According to the whistleblower, private Lendlease board papers were utilised in the pitch for Westpac and Dexus audit contracts; moreover, Macquarie Group and Westpac audit work was supposedly won with the help of inside information.

The whistleblower was reportedly denied legal protections; moreover, the firm did not conduct a proper investigation for two years. Allens also conducted a review that concluded with the dismissal of the majority of the claims.

The director escalated the issue to KPMG International, independent directors, Chartered Accountants ANZ and ASIC before taking the matter to Labour senator Deborah O’Neill, who publicised the misuse in March. O’Neill presently chairs the parliamentary joint committee.


KPMG issued an apology to the whistleblower at the end of last month and said it was launching a new inquiry to be conducted by Allens.

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