Acting Deputy President. If I may begin by observing your role in relation to the PwC examination, I acknowledge the service you have provided through your committee memberships in exposing that egregious conduct. Unfortunately, we now have another instance of egregious conduct—this time involving senior members of KPMG. It must be emphasised: senior members.
At the outset, I would also like to acknowledge Senator Barbara Pocock’s passionate pursuit of these issues and her forensic examination at last Friday’s committee hearing. Senator Pocock has provided great service—great service—to the people of Australia in pursuing these matters, and I commend her for it.
I also acknowledge Senator O’Neill, who has provided outstanding leadership of the Parliamentary Joint Standing Committee on Corporations and Financial Services. This must be emphasised: but for the fact that Senator O’Neill took seriously the disclosure made by the whistleblower, and brought it to the attention of the Committee, this matter would not have come to light.
But for the fact that a senator in this place delivered a speech in the Australian Parliament, KPMG would not have taken appropriate action. The Chief Executive Officer would still be in his position. The Chief Operating Officer would still be in her position. The Head of Audit would still be in his position. The relevant audit partners would still be in their positions. The Chair of the Board of KPMG Australia would still be in his position.
But for the whistleblower making those disclosures, and Senator O’Neill giving that speech earlier this year, ASIC would not be undertaking the investigations it is now conducting. Chartered Accountants Australia and New Zealand would not be undertaking their investigations. A whole raft of responses would not have been set in train.
We therefore have to ask ourselves a fundamental question: what is wrong with the system when someone who is doing the right thing—seeking to have their concerns taken seriously within KPMG Australia, and through appropriate channels to KPMG International—has to endure this outcome? Why did it take a speech in the Australian Parliament for this matter to come to light?
That is precisely why reform is necessary—and why it is urgently required. The whistleblower has told us that, had they known at the outset what they would go through over the past 12 months—the personal toll, the financial toll, the toll on their career—they would not have blown the whistle. That is simply not good enough. There are systemic failures here that must be addressed.
As Senator O’Neill has repeatedly noted, the audit function is integral to trust in our financial system—from large superannuation funds to listed public companies to government-owned entities. Audit is absolutely crucial. It is a key check and balance in our system and provides investors, shareholders, creditors, and others with confidence.
Once that confidence is undermined, trust in the entire system is weakened.
We have already seen the seriousness of this reflected in the comments of the Chair of Lendlease, who in essence said—these are my words, not his—that given the way KPMG used their information, in breach of the terms on which it was provided, how can they trust KPMG?
Indeed, Lendlease has moved to terminate KPMG as its auditor after more than 60 years. That alone underlines the gravity of these issues.
A second point: it is clear there are significant gaps in our regulatory system. KPMG is a large partnership, and our corporations law is simply not fit for purpose when it comes to regulating large partnerships or holding individuals within them to account for misconduct.
Reform is therefore necessary—there can be no doubt about that. That reform must also extend to the whistleblower provisions in the Corporations Act. In a situation like this, where a whistleblower is employed by a service company that forms part of a larger partnership structure, there are serious questions about how those protections apply.
I personally believe there are strong arguments that the protections did apply, given the employment structure—but there should be no ambiguity about this.
There should be no ambiguity.
Finally, it was absolutely shameful—and I repeat, shameful—that KPMG sought to present the situation as if the whistleblower was at fault for not providing information when requested, without acknowledging that it could not, or would not, provide the necessary comfort or protections.
