KPMG directors flee as whistleblower scandal worsens

KPMG’s newly installed chairman Michael Ebeid will have to find multiple new board members willing to help reform the embattled consultancy after one independent director quietly quit and another signalled her intention to resign within months.

KPMG director Patty Akopiantz quietly left the firm’s regional board last month, following former NSW premier Mike Baird’s exit in September, and fellow independent director Jane Hemstritch is expected to resign once replacements have been found.

The departures will give KPMG a chance to refresh its leadership in the wake of its whistleblower scandal, but also show the challenge it faces in attracting credentialled professionals as the saga gets worse over time.

KPMG has been in crisis since Labor Senator Deborah O’Neill revealed allegations from a whistleblower that the firm had misused confidential client information in an attempt to win work. Many of the whistleblower’s most serious claims have since been confirmed despite KPMG initially repeatedly downplaying them.

Akopiantz’s departure was not publicly announced, but documents released by parliament on Tuesday show she advised the investigating committee that she had left the embattled consultancy’s board in June.

“I would like to advise that at the end of June I resigned as a board member of KPMG’s South Asia Pacific Board and have no ongoing role with KPMG,” Akopiantz wrote. Her departure follows the exit of NSW premier Mike Baird in September last year.

Other recent departures from the board include former chief executive Andrew Yates, chairman Martin Sheppard, and a senior partner at the firm Kim Lawry. Lawry resigned from the KPMG board and partnership this month after Westpac requested that she be removed from its audit “to ensure there is no distraction”.

KPMG sources said Hemstritch, the independent board member, planned to leave the board later this year when Ebeid finds fresh recruits to preside over the embattled firm.

“My first priority is to restore the governance and effectiveness of the board,” Ebeid said when he was first appointed acting chairman in early July. “We will reshape the KPMG Australia Board with equal independent and partner representation.”

Before Baird and Akopiantz left, the independent directors raised concerns about KPMG’s handling of the whistleblower’s claims. She and Hemstritch are both accomplished corporate directors, having held roles at companies such as EnergyAustralia, Axa and AMP, and Commonwealth Bank, Telstra and Lendlease respectively.

The news of Akopiantz’s departure comes just days after KPMG’s new boss John Sams sacked former chief operating officer Eileen Hoggett after she lied about accessing sensitive board documents from client Lendlease and stored copies in her work locker.

That was reported on Friday, but the documents released on Tuesday show how KPMG disclosed it to O’Neil’s parliamentary committee.

“New evidence has been identified in relation to one of the whistleblower’s allegations,” KPMG wrote in the documents. “Specifically, the allegation that client information relating to the Lendlease audit was retained in a locker at KPMG’s Sydney office by Eileen Hoggett, KPMG Australia’s former Chief Operating Officer.

“This allegation had previously been denied by Ms Hoggett. However, based on the evidence now obtained, KPMG accepts that the allegation has been substantiated.”

Sams told partners on Friday that he was beyond angry about the development. “The conduct was totally unacceptable, and it is unacceptable that it has taken so long for us to get to this point,” he said.

KPMG declined to comment on Akopiantz’s resignation.

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