KPMG fines staff up to $180,000 over Optus data misuse in Telstra audit bid

KPMG has imposed fines of up to $180,000 on seven staff and partners for misusing confidential information from Optus during the firm's unsuccessful bid to secure Telstra's external audit contract, in its strongest disciplinary action yet over the ongoing audit leaks scandal.

According to the Australian Financial Review, the sanctions range from first-and-final warnings and restrictions on career progression to reduced performance ratings, salary banding and financial penalties exceeding $100,000 for several individuals. Among those sanctioned are former audit head Julian McPherson, who resigned in May, and another partner who has since retired.

Several individuals received multiple disciplinary measures, reflecting a significant escalation in both the severity and scope of KPMG's internal response. The latest action comes as the firm continues to deal with the fallout from allegations that confidential client information was misused to gain a competitive advantage in securing audit work.

Stronger disciplinary action

The latest penalties are substantially higher than those previously imposed during the scandal. 

Earlier sanctions saw audit partners Kim Lawry, Paul Rogers and Eileen Hoggett fined $19,000, $22,000 and $40,000 respectively for accessing confidential Lendlease board papers before bidding for audit contracts with Westpac and Dexus.

"The conduct is unacceptable and inconsistent with our values, policies and obligations to protect client information," a KPMG spokesman said in relation to the latest penalties.

"We continue to review information relevant to this matter and will provide updates on any additional sanctions as appropriate when the process is completed."

Whistleblower allegations substantiated

The controversy stems from whistleblower allegations that members of KPMG's Optus audit team shared confidential information about the telecommunications company with colleagues pursuing Telstra's external audit contract, despite assurances to Optus that such information would remain confidential.

The allegations were initially dismissed following an internal review by law firm Allens. However, KPMG later acknowledged shortcomings in that investigation and commissioned a second review, which substantiated the claims relating to the Telstra and Optus matter, along with several other instances of misconduct.

The investigation has already led to the departures of former chief executive Andrew Yates, chairman Martin Sheppard and several senior audit partners. KPMG was also temporarily barred from bidding for new government work.

Regulatory pressure intensifies

The sanctioned individuals may face further action from Chartered Accountants ANZ and the Australian Securities and Investments Commission, both of which are investigating aspects of the broader audit leaks scandal.

The developments also come as the Australian government considers stronger oversight of the major accounting firms. Treasurer Jim Chalmers has asked the Treasury to examine reforms that could give ASIC greater enforcement powers, including the ability to impose significant financial penalties and introduce structural changes to large accounting partnerships.

KPMG is expected to appoint a permanent chief executive in the coming days as it seeks to close one of the most damaging chapters in the firm's recent history and restore confidence in its governance and audit practices.