KPMG stops new Australia state government work, sacks partner

KPMG Australia will halt bids for new work from the Victorian state government pending a review of the business, as new revelations about staff mishandling confidential client information deepen the crisis engulfing the scandal-hit firm.

The local arm of the audit and consulting giant has agreed not to take part in bidding for new contracts with the government of the Australian state, according to a KPMG spokesperson. 

"This is a serious matter," a Victorian government spokesperson said, referring to the allegations KPMG faces about data misuse. The firm will not bid for any new projects until Sept. 30, and will withdraw from all current work unless the tender relates to the delivery of an urgent requirement, specific unique capability or continuity of services previously delivered.  

The latest development comes after KPMG agreed last month to step back from bidding for federal government contracts, widening the fallout over allegations it improperly accessed confidential client information when bidding for new business. The firm's newly appointed Chief Executive Officer John Sams expelled a partner from the firm in relation to new evidence that private customer data was kept in a locker at its Sydney office, the company said on Monday in response to Bloomberg queries.  

Sams had told partners the conduct was "totally unacceptable and it was unacceptable that it took so long for the truth to come out," KPMG said in the statement. The firm has updated impacted clients and relevant regulatory and professional bodies, according to the spokesperson.   

The Australian Financial Review reported on Friday that the partner sacked is former Chief Operating Officer Eileen Hoggett. Hoggett did not respond to a Bloomberg request for comment.

KPMG has been in crisis mode in the last few months over the allegations and its handling of a whistleblower who initially brought forward the claims.

A parliamentary inquiry into the claims lasted more than 10 hours last month, and another session is scheduled for the middle of next month. Australia's corporate watchdog is investigating the firm. Clients including Macquarie Group Ltd. are making formal inquiries about KPMG's capacity to deliver its services. The firm said investigations into the whistleblower allegations are ongoing. 

KPMG announced on June 23 that Hoggett was leaving the firm, along with its chair and another audit partner. At the same time, it had pledged a broader "action plan" aimed at rebuilding trust, tightening controls and preventing unethical behavior. 

Hoggett has been at the firm for more than 30 years, according to her LinkedIn account, which cites her extensive experience in the property, construction and funds management industries. Her profile on KPMG's website is no longer available. 

KPMG's new CEO Sams has been at the helm for just about a week. He said when he was appointed that he didn't "underestimate the task ahead but commit to our clients and people that I am prepared to be courageous, take the tough decisions and lead the changes we need to set us on the right path." 

The firm employed about 9,000 people including close to 700 partners in Australia in the financial year ended June 30 last year. It had posted revenue of more than A$2 billion ($1.4 billion). As the scandal roils the business, KPMG is preparing to cut hundreds of jobs and slash partner pay by up to 20% in the country, the AFR reported earlier.