Feature
Heads roll at KPMG over whistleblower scandal
Auditing and consulting giant KPMG Australia faces continuing fallout from a series of related scandals brought to light in federal parliament in March. KPMG Australia CEO Andrew Yates resigned in May citing the mismanagement of the scandal, and chair Martin Sheppard is now also leaving the firm. Former COO Eileen Hoggett and audit partner Paul Rogers will resign, and both are being investigated by ASIC.
The misconduct. KPMG Australia allegedly misused confidential client documents to secure other contracts. The alleged misconduct primarily related to KPMG’s longstanding client Lendlease, whose confidential information was allegedly shared through the organisation without the knowledge or consent of the Lendlease chair and in breach of independence rules. Lendlease has now parted ways with KPMG over an “irreparable breach of trust”. Subsequent inquiries have uncovered similar practices relating to confidential Optus information, deliberately leaked to another KPMG team as it worked to secure work with Telstra. Sensitive documents relating to Macquarie Group, Westpac and Dexus were also allegedly mishandled, and a new investigation has revealed that KPMG accessed pitch documents submitted to Lendlease by competitors EY and PwC.
The whistleblower. A corporate whistleblower, a former staff member of KPMG Australia, made a series of internal complaints about the misconduct. He contacted executives and board members of both KPMG Australia and KPMG International but was not given a hearing. Subsequent inquiries have revealed that the whistleblower was surveilled at work, and that his computer was covertly accessed and searched by KPMG over concerns he might raise the matter externally. He emailed former head of audit Julian McPherson to raise his concerns and said he faced a “culture of fear, retribution and revenue” which punished him for raising them. The whistleblower was allegedly encouraged to depart the firm. McPherson has since apologised to him.
Reviews and investigations. After concerns were raised in early 2024, KPMG conducted an internal investigation, followed by two further reviews by major law firms Ashurst and Allens. KPMG claims those reviews found no evidence of wrongdoing. Ashurst disputed the characterisation of its engagement and advice, saying it was not engaged to conduct an investigation and could offer no conclusion on the alleged wrongdoing. A fourth review, by Allens, now challenges the findings of its own prior review. A parliamentary committee inquiry was established in May. Having initially indicated it would cooperate, KPMG made claims of legal professional privilege to shield its internal and legal investigations from scrutiny; those claims have now been dropped. Former chair Martin Sheppard appeared before the committee, but questions have arisen over the accuracy and completeness of his evidence, as subsequent investigations have revealed a broader scope of wrongdoing than he admitted in parliament.
What now? Chartered Accountants Australia and New Zealand is investigating former CEO Andrew Yates and eleven others. KPMG will not bid for new federal government work until mid-September while the firm’s governance, culture, ethics and integrity are investigated, and the Finance Department will examine whether KPMG breached the standards expected of government suppliers and whether taxpayers were charged for unsatisfactory work.
In the news
Domestic
IBAC powers sharpened to pursue corruption
The Victorian Government announced plans to amend IBAC’s powers, broadening the definition of corruption and introducing “follow the money” powers. IBAC is currently empowered to investigate only criminal corruption, a high threshold which leaves out non-criminal corruption, influence and misconduct that erodes public confidence. Follow-the-money powers would allow IBAC to trace public money through private and third-party contracts, and the Government intends them to operate retrospectively. These changes are welcome and necessary, particularly for alleged corruption on major infrastructure projects, though the working-group process means a report is not expected for almost twelve months.
Melbourne brothel owner sues Bendigo Bank
Franco Puleo, owner of a South Melbourne brothel, is suing Bendigo Bank for discrimination after the bank closed his accounts. The bank says it acted to meet its AML/CTF obligations; Mr Puleo argues the closure was contrary to the Equal Opportunity Act’s prohibition on discrimination on the grounds of a profession, trade or occupation.
HSBC to pay $35 million penalty for failing to prevent scams
HSBC has admitted failing to protect customers from scams and having inadequate controls to prevent unauthorised payments, with investigation delays averaging 144 days placing it in breach of its licence obligations. The bank has paid about $21.5 million in compensation, with the $35 million penalty jointly submitted with ASIC and subject to Court approval. A timely reminder: be suspicious of communications from your bank, and if unsure, hang up and call the bank back directly.
ASIC warns super trustees to better protect retirement savings
ASIC has identified deficiencies in trustees’ monitoring of advice fees, unusual investment activity and high-risk account switching, in a review of platform trustees managing around $300 billion. The report follows the collapse of the Shield and First Guardian schemes, estimated to have cost more than 11,000 Australians around $1 billion.
Ben Roberts-Smith prosecutors refer media leaks to the NACC
The presence of news media at Sydney Airport in anticipation of the arrest has raised questions about unauthorised disclosure; the matter has been referred to the National Anti-Corruption Commission.
WiseTech billionaire under investigation
WiseTech executive chairman Richard White is under investigation by the AFP’s human exploitation taskforce over claims he exploited a woman’s immigration status and financial insecurity, and allegedly provided false information to immigration authorities for her visa application. Mr White unequivocally denies the claims.
In the news
International
Questions over the "Board of Peace" fund
With USD $17 billion pledged for the rebuilding of Gaza, the Board’s World Bank fund remains empty, with funds instead channelled to a JPMorgan account with no independent transparency requirements. The Board’s unwillingness to answer questions about long-term governance, legal responsibility and transfer of power raises serious questions.
Police AI use threatens convictions
Several UK rape convictions are under review after a detective used AI software with biased prompts to generate impact statements and briefings to prosecutors. The use of such tools by police has the potential to pervert the course of justice, and raises serious questions about the appropriateness of AI for tasks requiring human insight, experience and judgment.
Project Agorá presents prototype cross-border payment system
The Bank for International Settlements and Institute of International Finance have collaborated on a blockchain-based cross-border payment platform, a rival to USD-backed stablecoins and to China’s Project mBridge. Its architects say the technology can be integrated with existing privacy and anti-money-laundering safeguards without changes to the legal framework.
Mexican mayor accused of faking her own kidnapping
Prosecutors allege the scheme was orchestrated to claim public money that had already been embezzled, creating a justification for the lost funds.
Wise faces Belgian money laundering investigation
The Belgian prosecutor is investigating whether Wise accounts are being used by international criminal groups to launder proceeds of drug trafficking and corruption, in transactions totalling around EUR 500 million.
Police raid in Vietnam disrupts would-be scam centre
Police seized hundreds of devices from properties comprising a large-scale transnational scam centre that was almost operational. International scammers view Australia as an easy target; the ACCC estimates Australians lose more than $2 billion annually to scams.
Law reform
Cases of interest
SBF's FTX fraud conviction upheld on appeal: United States v Bankman-Fried , No. 24-961-cr (2d Cir. 2026)
The Second Circuit dismissed Sam Bankman-Fried’s appeal against his 2023 conviction on seven felony charges, remarking that the government’s evidence against him was “conservatively stated, robust”. His 25-year sentence and USD $11 billion forfeiture stand; he is eligible for release in 2044.
High Court brings crypto yield products within the AFSL net: ASIC v Web3 Ventures Pty Ltd [2026] HCA 21
The High Court held that Block Earner’s fixed-interest crypto product was a financial product under s 763A(1)(a) of the Corporations Act and a derivative within s 761D. The decision has ramifications for crypto exchanges and investment products in Australia, and ensures AFSL obligations protecting consumers will apply. Before investing, check the ASIC professional register to confirm a platform holds an AFSL.
Sentence for obtaining financial advantage by deception: DPP v Payet [2026] VCC 769
Trevor Payet pleaded guilty after misappropriating approximately $177,000 from his employer, manipulating a junior employee in a scheme to steal expensive wines and sell them online. He was sentenced to four months’ imprisonment and a two-year CCO.
$71 million share-trading fraud, 12-year sentence survives totality challenge: Silvey v Western Australia [2026] WASCA 84
Bret Silvey persuaded two experienced businessmen to advance $71 million on the strength of a warranty that each investment was insured against non-repayment. No such insurance existed; to maintain the deception he forged letters in the names of real solicitors, impersonated a law firm partner, created fake email domains and doctored bank guarantees. The Court of Appeal dismissed his totality challenge: the benefit obtained was “extraordinary” and integral to the seriousness of the offending, general deterrence dominates white-collar sentencing, and the victims’ sophistication did not save them, since their vulnerability flowed from the years of trust the appellant exploited. The decision is a marker on fraud sentencing: quantum of benefit, not merely loss suffered, drives gravity, and diligence is no defence against a sufficiently elaborate deception.
"Mere embarrassment" not enough for pseudonyms: XY (a pseudonym) v IBAC [2026] VSCA 139
The Court of Appeal held that the inherent jurisdiction to order pseudonyms does not flow from a power to protect reputation: “mere embarrassment, distress or invasion of privacy is insufficient to warrant the making of a pseudonym order.” It must be necessary for the administration of justice. The parties were revealed as Peter Marshall and the United Firefighters’ Union of Australia.
Trust appointment to son stands: McLennan v McLennan [2026] NSWCA 102
The NSW Court of Appeal declined to set aside a deed of appointment as unconscionable, holding that the father had received legal advice, had the cognitive ability to comprehend it, and must have appreciated the appointment would permanently deprive him of control of the discretionary trust.
Misleading conduct without reliance: Converging Momentum Pty Ltd v Birse [2026] QSC 146
A company accountant who paid $7 million for a 10% stake in the lending business he worked for failed in his misleading-conduct claim despite the Court finding the conduct misleading and the shares overpriced by roughly $3.7 million. The claim failed on reliance: as the company’s own accountant, he knew the loan book had not been properly impaired, had been warned he was paying “an unknown premium”, and had commissioned his own due diligence. A reminder that misleading conduct alone does not open the door to recovery.
Three versions of every loan: ELEM Investments Pty Ltd v Starling [2026] NSWSC 721
A $9 million family trust debt claim collapsed where every loan agreement relied on existed in three materially different versions, with different guarantors, amounts, execution pages and signatures. The Court recorded “grave concerns that several criminal offences may have been committed in connection with these proceedings” and listed the matter for the parties to show cause why a referral to authorities should not be made. A salutary lesson in the burden of proof: a civil claim pressed on shaky documents can end not merely in dismissal with costs, but in a referral to the authorities.
The firm
News from the Hill
Duxton Hill is proud to have joined the Bribery Prevention Network’s Impact Committee. BPN is a public-private partnership with the primary aims of preventing, detecting and addressing bribery and corruption in Australian business, supporting a culture of compliance. Read more
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