KPMG: Former CEO Andrew Yates admits to parliamentary committee that whistleblower felt uncomfortable

Former KPMG chief executive Andrew Yates has admitted a whistleblower was made to feel uncomfortable for raising allegations about confidential information from corporate clients being used to win lucrative contracts.

The embattled ex-corporate leader, who until three weeks ago was still in charge of close to 10,000 staff, also admitted to MPs and senators during a two-hour grilling that he didn’t understand the legal responsibilities of the firm’s 600-plus partners, despite joining the organisation in 1989, and repeatedly insisted he wasn’t a bad apple.

His admission about a whistleblower feeling intimidated was contrary to the “speak up” culture he had claimed to champion within the big four auditing and financial services firm.

Former NSW Liberal Premier Mike Baird, a former independent KPMG board member, also spoke out against the auditing firm using legal privilege to avoid providing all documents to a parliamentary inquiry on the misuse of confidential information.

KPMG Australia is accused of using confidential board papers from construction company Lendlease, whose headquarters are in the same Sydney office tower, to secure work with the Westpac bank and asset and property management group Dexus.

The whistleblower had first raised allegations in 2024, but it took a year for Mr Yates to even raise the issue with Lendlease.

KPMG’s IT department meanwhile looked through the whistleblower’s work computer, thinking this staff member was searching for another job.

“I don’t think we made the whistleblower feel comfortable through the process in terms of that whole concept of speaking up,” Mr Yates told the Federal parliamentary inquiry in Canberra on Friday on the three-week anniversary of his resignation.

“As I think about the individual themselves, I feel that we could have made the process easier and I also feel, probably, we could have made it a more humanistic approach.”

Liberal senator Paul Scarr slammed Mr Yates for saying the whistleblower felt uncomfortable.

“Do you think that’s an appropriate description of the personal, mental, financial and career toll suffered by the whistleblower?”

Mr Yates replied: “Senator, I’m deeply distressed to hear that that has been the impact on the individual, absolutely and so that choice of words, it may not be adequate in terms of the context of the impact on the individual.

“I’m very regretful that has been the impact on the individual.”

The exchange about the whistleblower was made minutes after Labor senator Deborah O’Neill, as chair of the Parliamentary Joint Committee on Corporations and Financial Services, warned KPMG’s former executives that revealing the identity of the whistleblower in their evidence would constitute a contempt of Parliament.

“The whistleblower’s identity has been protected at every point. The whistleblower’s identity must not be revealed inadvertently, so think very carefully about the language choices with regard to the whistleblower and be fully truthful in your responses to our questions,” Senator O’Neill said.

Julian McPherson, who resigned last month as KPMG’s national managing partner of audit and assurance, told the committee he took responsibility for its failings.

“I do,” he said in response to a question from Senator O’Neill.

But Mr Yates declined to admit he was a bad apple.

“In respect to that statement, Senator, I’ve not been reading the media for the last three weeks,” he said.

In frustration, Senator O’Neill replied: “Are you the bad apples or is the whole barrel rotten? What’s going on Mr Yates?”

“I don’t see myself as a bad apple, Senator. I see someone who took accountability for things that went wrong and nor do I see the firm to be full of bad apples,” Mr Yates said.

“We are a large, complex organisation and we’re fallible.”

Mr Yates also admitted he didn’t understand the legal responsibility KPMG partners had when it came to wrongdoing.

“I don’t know the answer to that, Senator,” he said.

Senator O’Neill gasped: “Really?”

“Don’t play with me here, Mr Yates. ‘I don’t know the answer to what a partnership means’ when you lead one of the biggest partnerships in the country, designed and organised in such a way to allow up to a thousand partners and you’ve come in here and said, ‘We’re not bad apples’ and in addition to not being bad apples, everybody else at KPMG is pretty well clear.”

Mr Yates became more defiant during the late morning hearing.

“Senator, with respect, you asked me if I’m a bad apple. I don’t believe, across my career of 36 years, I was a bad apple. Nor do I feel that KPMG is full of bad apples,” he said.

“I’m incredibly proud of the 9000 people that work at KPMG and it’s been a big thing for me to resign and leave an organisation that I joined in 1989.”

Senator O’Neill told the committee the whistleblower’s computer had been searched in May, June and November 2024.

“I can tell you, from your documents, that you provided to the committee, that either your HR department or your office of general counsel directed a search of the computer of the whistleblower,” she said.

Mr McPherson confirmed he authorised the IT department to carry out a search in May 2024, but didn’t advise the KPMG board or Mr Yates.

“It was in the context of us being concerned that the individual might be seeking other employment and we were concerned about whether information from KPMG might have been shared outside of the organisation,” he said.

Lendlease chief executive Tony Lombardo earlier told the committee he had met with Mr Yates in May 2025 regarding a whistleblower’s allegation confidential board papers from Lendlease were being used to secure audit contracts with other companies.

“I had a face-to-face meeting with the then CEO of KPMG — it was an update on a number of different matters but the whistleblower matter was raised at the end of that meeting,” he said.

“It was alleged that the whistleblower had information about the use of Lendlease board papers and the allegation was around those documents being stored in an individual’s locker at the time.

“KPMG had informed myself at the time that they had investigated the matter and had not substantiated the matter.”

Senator O’Neill, who aired allegations from the whistleblower in the Senate on March 24, asked Mr Lombardo if this was a formal meeting.

“It was a catch-up that I had scheduled with the then CEO at the time, Andrew Yates; it was a general business catch-up and at that meeting, the whistleblower matter that had arisen, I’d been informed about that and the use of Lendlease documentation,” Mr Lombardo said.

“At that time, all I understood was there was an allegation around a document or board papers that were assumed to be printed and stored in someone’s locker.”

Mr Lombardo said it appeared Mr Yates was aware of the whistleblower allegations.

“He was aware there was a whistleblower allegation, which had been raised with KPMG,” he said.

Senator O’Neill also told the committee that KPMG was blocking access to documents from law firms Ashurst and Allens, arguing it was privileged.

“One of the challenges that we face is that KPMG have claimed legal, professional privilege,” she said.

Mr Baird, also a former independent board member of KPMG, spoke out against the tactic of using legal privilege to withhold documents from the parliamentary committee.

“On the matter of privilege, Senator, the position’s pretty clear: I don’t think it should apply,” he said.

Allens managing partner Richard Spurio confirmed his law firm was engaged in September 2025 to provide legal advice.

Ashurst global chief executive Paul Jenkins confirmed his firm was hired in January 2025 and said KPMG decided whether to release their legal advice to the parliamentary inquiry.

“We were then asked to provide a piece of advice to KPMG in respect of an internal investigation,” Mr Jenkins said.

“They own the privilege and we’ve got competing obligations - we’ve got an obligation to you as a committee, we’ve got an obligation to the court to honour legal, professional privilege.

“As you say, it will be up to KPMG to release that privilege and it’s not for their lawyers to release.”

KPMG chairman Martin Sheppard issued an apology.

“To the whistleblower, to our clients, I do want to sincerely apologise and also to our people,” he said.

But he disagreed with a suggestion from Greens senator Barbara Pocock there was a pattern of bad behaviour.

“I think it’s three instances, Senator,” he said.