‘Give up investigations’: Firms forced to defend KPMG work

Their appearance at the inquiry followed the release of six of the 10 legal documents previously protected under claims of legal professional privilege, including three pieces of advice produced by Ashurst and Allens’ December 2025 final investigation report.

Greens Senator Barbara Pocock said a December 2025 report prepared by Allens, which did not substantiate a single allegation, was “very, very poor” and they should “give up investigations”.

Pocock also accused the firm of working in a “conflict of interest” and allowing itself to be used as “delay and cover” for KPMG.

Allens partner Ross Drinnan refuted this characterisation.

“We are lawyers with legal and ethical obligations, we were given a set of instructions; we carefully, thoroughly worked through those instructions; we delivered a report; we consider that report appropriately reflects our professional judgement in December 2025, and we stand by it,” Drinnan insisted in his reply.

Lea Constantine, partner for Ashurst – which also fielded criticisms of its own work, said she did not accept Pocock’s proposition.

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Liberal Senator Dave Sharma said Allens’ name was used to assuage concerns by Parliament and regulators, despite there being “pretty clear, manifest inadequacies” in at least their initial investigation.

“What assurances can we have that we should ever accept an Allens investigation of this sort again as credible and trustworthy?” he said.

Drinnan said he regarded the comments as “unfair”.

Managing partner Marc Kemp said: “Our clients come to us when they have serious issues, and they expect us to take those issues very seriously. In this case, we provided legal advice to our clients … with the benefit of the information we had at the time.”

Sharma doubled down, questioning why Allens declined to take further steps in their investigation, which he attributed to a “failure to use the reasonable scrutiny and scepticism that any investigator should bring”.

Inquiry chair and senator Deborah O’Neill said the firms had been engaged similarly to “Mr Wolf in Pulp Fiction, who is the cleaner when there is a big mishap in the middle of that film”.

“It feels an awful lot like that to me from where I sit and I don’t know how this system upon which we rely, the proper law of the land, allows lawyers to be paid to come in and allow their names to be used as investigators, declared as investigators, when what you are being asked to do is totally at odds with what ordinary Australians would think of an investigation,” O’Neill said.

“I think you have been positioned terribly in this, very terribly.”

In the first piece of advice provided by Ashurst, partner Jane Harvey informed the firm that conclusions reached in an internal legal investigation were “reasonable”. Those internal findings, made by deputy counsel James McClelland, have since been upended.

Included in that first piece of advice was a “caveat” that Harvey had found there to be a “risk in circumstances where there had been a misuse” of confidential information regarding Lendlease.

Despite this caveat, Senator Paul Scarr said former KPMG chair of partners, Martin Sheppard, told a committee that Harvey’s external legal review “supported the internal investigation”.

Questioned on whether she agreed, Harvey said: “I don’t know if it necessarily, accurately reflects what I concluded in my advice.”

Scarr questioned Harvey on the material she had before delivering her two and a half pages of advice, particularly whether she interviewed employees below partner level or conducted a forensic examination of emails. Harvey did not do either.

The lack of a forensic examination was a sticking point for Scarr, who questioned both firms on why this was not conducted earlier. When it was eventually done, the examination uncovered “an absolute mess”.

“In the context when it was entirely within the control of KPMG to conduct that examination, that forensic investigation, of its own email system to test what was extraordinarily serious allegations, how could you possibly come to the view that relevant and reasonable inquiries had been made when that basic evidentiary search was not performed?” Scarr asked of Harvey.

She said she did not believe it would have been necessary.

Asked whether she still held that view, Harvey said: “I find it hard to answer that question. I think now, obviously given the material that has been discovered, an examination of emails could have uncovered that material.”

Lawyers for Allens said the examination would have been a disproportionate response to their scope of inquiry.

‘I am sorry’: KPMG deputy general counsel

McClelland expressed regret over the June 2024 internal report that first dismissed the allegations made by the whistleblower.

In a frank admission on Friday afternoon, McClelland said the work he undertook “was fundamentally undermined by the answers” given by senior employees of KPMG, which were “misleading, if not directly deceptive, to the questions that I asked”.

He added that he was “angry, frustrated and hugely disappointed” and the entire engagement and sequence of events for KPMG “would have been fundamentally different if those individuals, to my mind, had answered those questions honestly”.

McClelland also reflected on the “nature and tenure” of the emails sent to the whistleblower, on instruction from the firm.

“I want to take this opportunity to say I am sorry, I am sorry I have been a part of this, I am sorry,” McClelland said.

McClelland also apologised for file notes that were critical of the whistleblower, including one that claimed he was “seeking to throw mud at people” and “we want to be strong and firm”.

His superior, the now-resigned general counsel Louise Capon, told the inquiry she did not oversee any investigation undertaken by McClelland and had no oversight of the whistleblower policy.

More from the inquiry:

There are ‘many, many’ more whistleblowers out there

During the hearing, Labor Senator Deborah O’Neill said there are “many, many” more whistleblowers who have contacted the parliamentary committee to raise concerns about misconduct at KPMG, and a repeat of similar behaviour. This is in addition to the whistleblower in the tax division raised earlier by Pocock.

She slammed the manner in which KPMG treats whistleblowers, stating that the standard of treatment has no “currency with what people think is a whistleblower speak-up culture”.

“There is no connection between what people think you’re doing and what the PR is and what all the lovely glossy documents are and what the whistleblower’s testimony to us has represented,” she said.

“You weren’t paid to look after whistleblowers. It’s not identified as part of your salary as a special role. It’s just part of what you do when you get to the top of the food chain.”

Former partners asked point blank if they failed in their obligations

Labor MP Tania Lawrence asked every former partner whether they had failed in their partner and professional obligations. She referred to the partners’ agreement, in which partners acknowledge that they have important legal, fiduciary, and ethical obligations to each other and to the firm.

“Amongst different obligations, some include not to undertake any activity which is detrimental to or could put at risk the financial, property, or reputational interests of the firms. If I can just go through one by one, just a yes or no,” Lawrence said.

KPMG’s former head of audit, Julian McPherson, said he “should have and could have done things differently”, while former CEO Andrew Yates said he has “taken accountability for all the things that I feel failed under my watch”. Kim Lawry, former audit and assurance partner, said that “in respect to my involvement in the matters that I’m involved in, I haven’t”.

Sheppard said he believes that “I continue to meet my professional standards”, to which Lawrence said: “You do, but you fail the obligations as set out in your partner obligations to KPMG because you have put at risk the financial, the property, or the reputational interests of the firm, have you not?”

Sheppard replied: “In the broader sense of my involvement in this matter, yes. No in terms of the activity which you described, and I’ve not been sanctioned in any way by the firm yet”.

Eileen Hoggett, former chief operating officer, responded that she “self-reported my conduct” and added that “I don’t feel like I failed that obligation … I made a mistake, and I’m very sorry for it.”

Chairman’s independence under fire

KPMG’s latest chairman, Michael Ebeid, joined the inquiry after stepping into his role yesterday (13 August).

Ebeid told the committee that he has sought to establish an election system for the chairperson in line with ASX companies, in which the board and independent directors would vote for the position, as opposed to the former system, in which partners would vote on the totality.

He added that he wanted to bring his “corps experience” to the chairman role.

“I think I have a lot to be able to provide,” Ebeid said.

Ebeid won the role under the previous election system, which KPMG deputy chair Carmel Mortell said was after a partnership vote by a significant majority. During the inquiry, it was revealed that Ebeid was the singular candidate put forward, whereas the prior election saw three.

Committee chair O’Neill said: “No more cosplaying corporations.”

When asked about his independence, Ebeid revealed that his previous work on the KPMG subcommittee was not remunerated.

“I don’t know how this made you independent. It would make you pretty powerless,” O’Neill said.

It was revealed that Ebeid is now paid around $1 million as the firm’s independent chairman.

“A million dollars [to be] independent. Why is it worth a million dollars now when the ‘independent tag’ [was] worth zero … last August?” O’Neill said.

“There’s something really, really lost about the power structure there.”