Federal government warns consultancies on standards
· Michael West
Consultancy firms working with federal government departments must uphold the highest ethical standards, a minister says, as departmental review into the conduct of a top four supplier gets underway.
Finance Minister Katy Gallagher issued the warning after her department placed a moratorium on KPMG bidding for any new contracts until September 30.
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The temporary ban is in place while the department commissions an independent review into KPMG’s governance, culture, ethics and integrity frameworks.
Katy Gallagher says the highest ethical standards are expected of firms working for the government. (Lukas Coch/AAP PHOTOS)“We expect suppliers who earn the privilege of working for the public service should have the highest ethical standards,” Senator Gallaher told ABC radio on Tuesday.
“We’re concerned about issues and allegations that have been raised and are responding in a very strong way.”
The issues surrounding KPMG fully erupted on May 29 during a hearing before the Joint Committee on Corporations and Financial Services in Canberra, where allegations made by a whistleblower were raised.
Committee chair Deborah O’Neill revealed and tabled the contents of a letter from Lendlease chief executive Tony Lombardo.
It raised allegations that in 2023, KPMG personnel on an audit team for major developer Lend Lease were accused of “retaining and utilising access to audit tender pictures in Lendlease board papers to inform their tender for Westpac’s audit”, Senator O’Neill said.
On the day, KPMG announced that its Australian head, Andrew Yates, had resigned, along with audit head Julian McPherson.
Mr Yates took the fall over the treatment of a whistleblower, after a KPMG internal investigation into their allegations was found to have fallen short of the firm’s expectations.
The committee hearing also revealed that the corporate regulator had begun a preliminary investigation into the conduct of at least three KPMG-registered company auditors in April.
Australian Securities and Investments Commission officials stressed the investigation related to the auditors rather than the firm itself.
Andrew Yates fell on his sword after the KPMG whistleblower scandal was exposed. (Lukas Coch/AAP PHOTOS)Mr Lombardo will be a key witness when the committee sits again on Friday to hear more about the KPMG allegations, alongside 14 of the firm’s leaders, including chair Martin Sheppard, interim Australian boss Stan Stavros and a yet-to-be-confirmed “senior employee who oversaw internal KPMG investigation”.
KPMG on Monday described the moratorium on new Department of Finance contracts as a “voluntary” agreement.
“We welcome the independent review” by the department, Mr Stavros said in a statement.
“We understand that supporting the work of the public service is a privilege that carries important additional transparency obligations, including those under the Commonwealth Supplier Code of Conduct and equivalent codes in the states and territories.”
Earlier this month, the NSW government said it was seeking assurances from KPMG about its management of confidential information, while the Victorian government said it would review its contracts with the firm.
The federal government has up to 300 active contracts with KPMG valued at $653 million, according to parliamentary library data first reported last week by the ABC.