KPMG Partners Claim Forgetfulness as Parliamentary Inquiry Exposes Client Leak Scandal

The hearing room fell quiet when Kim Lawry, a partner at KPMG, was asked to explain how a confidential Lendlease board document ended up as a photograph on her phone, shared with colleagues pursuing Westpac's lucrative audit contract. She couldn't recall taking the photo. She couldn't recall knowing it was confidential. She couldn't recall why anyone would have wanted it in the first place. It was, she insisted, not useful or relevant to the Westpac tender anyway.

This was the opening act of a parliamentary inquiry that would expose something far more damaging than a single lapse in judgment. Over two days of testimony in August 2026, KPMG's own leadership would accuse two of its partners of misleading internal investigators. A whistleblower who had raised concerns for nearly two years would be vindicated. And a parade of blue-chip clients—Westpac, Optus, Dexus, Macquarie—would describe a firm that had drip-fed them information about breaches so slowly that they couldn't make basic business decisions.

Lawry's memory gaps were matched by those of Eileen Hoggett, KPMG's former chief operating officer. Hoggett acknowledged that confidential Lendlease documents had been printed and stored in her locker. But she said she didn't recall printing them herself, didn't recall showing them to anyone, and didn't recall using them to win contracts. Then she was read an email from 2023 in which she had suggested showing a colleague "the printed version in my locker … without letting too many people know" followed by a smiley emoji. The contradiction was stark enough that KPMG's deputy chair, Carmel Mortell, would later testify bluntly: "There's two people that … did not tell the truth in their interviews and that is Ms Hoggett and it is Ms Lawry."

Hoggett was expelled in July after the email surfaced. She described learning of her termination during a phone call from the new chief executive, John Sams, while she was out walking—with no chance to respond or defend herself. Lawry, by contrast, had $19,000 docked from her bonus but remained employed, a disparity that underscored the firm's inconsistent handling of the scandal.

The most damning testimony came from James McLelland, KPMG's deputy counsel, who had conducted an initial investigation in late December 2024. He told the committee that his colleagues' answers had been "misleading if not directly deceptive," fundamentally undermining his ability to get to the truth. In emotional testimony, he suggested that if people had simply told him what actually happened, the entire sequence of events might have unfolded differently. The firm's own lawyer had been stonewalled by its own partners.

Meanwhile, the clients who had been harmed were learning about the breaches in fragments. Westpac's board audit committee chair, Michael Ullmer, accused KPMG leadership of "drip feeding" information. Stephen Rue, chief executive of Optus, said he was told about confirmed leaks only on May 29 in "vague" terms during a phone call. Warwick Negus, chair of Dexus, described a frustrating pattern where KPMG executives revealed "a little more" at each meeting, leaving his company unable to make informed decisions about whether to keep the firm as auditor. Glenn Stevens, chair of Macquarie Group and a former Reserve Bank governor, warned that his bank might have to drop KPMG as its incoming auditor partly because so many staff had departed in the scandal's wake.

The inquiry also revealed that this was not an isolated incident. Senator Deborah O'Neill, who had first raised the allegations publicly in March 2026, told the committee that "many, many more" whistleblowers were now coming forward with similar stories. Another senator, Barbara Pocock, raised a separate case from KPMG's tax division in which a whistleblower had been silenced in an apparent attempt to contain allegations of wrongdoing. That claim was settled in late 2024 for roughly $500,000, though the firm's former chief executive, Andrew Yates, said KPMG couldn't find enough information to investigate because most allegations dated back 25 years.

The hearings have crystallized calls for sweeping reform. Stevens pointed out that Macquarie's only auditor options were the big four firms—KPMG, PwC, EY, or Deloitte—a concentration of power that leaves large companies with almost no meaningful choice. Negus noted that Dexus had contracts with all four simultaneously, meaning a change in auditor would force changes across the board. Westpac's Ullmer called for mandatory audit rotation every 20 years and mandatory tendering every 10 years, along with stronger regulation and higher standards for partnerships. The Albanese government is considering regulatory options, though it has yet to implement dozens of bipartisan reform recommendations that emerged from the 2023 PwC scandal. The question now is whether this inquiry will finally move those recommendations from paper to law.