Former Lendlease chair and current Westpac board member Michael Ullmer has told a parliamentary committee how the only warning of the KPMG whistleblower allegations relating to the bank was made to fellow director Peter Nash, who did not tell the rest of the bank’s board.
The board did not hear of the allegations until Labor Senator Deborah O’Neill read them out in parliament in March this year. Nash, a former KPMG partner, resigned due to perceived conflicts last month. He stayed at the home of KPMG chairman Martin Sheppard as the firm was preparing its pitch for the $25 million-a-year audit contract. KPMG had told Nash there was no issue to be concerned about.
“He resigned because of the fact of those social contacts that we became aware of, when at the beginning of the process we made it very clear to members of the subcommittee and to people involved that there should be no form of social contact during the tender process,” Ullmer told the committee.
“I believe he did fail because that was clearly something that should not have occurred during the process.”
Ullmer told O’Neill that is was not until May 13 that “our general counsel at Westpac got the first comprehensive explanation of what the allegations were at that time. But it was conveyed again as something that had been fully investigated, and they were not substantiated.”
Former RBA governor and Macquarie chairman Glenn Stevens is also being called before the hearing. Optus chairman John Arthur and chief executive Stephen Rue are also due to appear at the probe into the spiralling scandal that has purged the most senior ranks at KPMG over the misuse of confidential clients’ information for commercial gain.
Ullmer revealed the frustration over the drip feed of information which slowly revealed just how serious the matter was.
“That has been one of the most challenging aspects of this matter because you think you have your arms around it, and then more information is revealed,” Ullmer said.
Ullmer was chairman of Lendlease when senior KPMG executives accessed sensitive board documents about the tender of its lucrative audit business. KPMG was later awarded the audit work for Westpac.
He ridiculed a statement O’Neill read out from internal KPMG communications on the matter stating that there was no such thing as “Chinese walls”, the so-called ethical walls meant to protect sensitive client information from wrongful exploitation.
“I think that’s a ridiculous statement to make because there obviously have to be Chinese walls or ethical walls,” he said.
“You expect that the confidential information, the secrets that they gain access to, will remain confidential.”
Stevens is expected to be grilled over how the firm won its $70 million a year audit contract, the biggest in Australia.
Last month, Stevens dropped a bombshell on the KPMG scandal, telling shareholders the group is reviewing the embattled firm’s capability to deliver on the lucrative Macquarie audit tender it won last year, due to the exodus of senior staff over the scandal.
Macquarie has also instigated an external review of KPMG’s pursuit of the contract, which was valued at $69 million last year.
More to come
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Colin Kruger is a senior business reporter for the Sydney Morning Herald and The Age.Connect via email.
