KPMG faces big setback in Australia amid allegations of mishandling confidential data

KPMG Australia will not bid for new work from the Victorian state government pending review of business amid a crisis emerging from reports of staff mishandling confidential information about clients.

KPMG Australia will not bid for new projects until September 30. It will also withdraw from all current work unless the tender necessitates delivery of an urgent requirement, specific unique capability or continuity of services previously delivered, Bloomberg reported.

Also Read: KPMG Australia weighs 1,000 job cuts amid audit scandal


“This is a serious matter,” the Victorian government spokesperson said about charges KPMG is facing about misusing data.

“KPMG has agreed not to participate in new Victorian government tender processes while the show-cause process is under way, and to withdraw from current tender processes,” the government spokesman said.

A KPMG spokesperson said the audit and consulting giant's local unit has agreed not to take part in bidding for new contracts with the government of the Australian state.

KPMG has millions of dollars in contracts with the Victorian government.

Also Read: KPMG Australia fines staff up to $126,000 for 'unacceptable' misconduct in audit scandal

Australia's Financial Review also reported that KPMG has been barred from bidding for Victorian government contracts until at least October. The firm has also been asked to withdraw from ongoing contract discussions as a widening scandal over the misuse of confidential client documents to win business continues to hurt its finances.

Financial Review said, KPMG had admitted on Friday that its former operations chief, Eileen Hoggett, kept printed copies of confidential Lendlease board documents in her locker, shared them inappropriately with colleagues, and repeatedly lied about it. The admission relates to one of the most serious allegations made by a former employee, which the firm had denied for months.

In response to Bloomberg's queries on Monday, the firm said its newly appointed Chief Executive Officer, John Sams, had expelled a partner after new evidence showed confidential customer data had been kept in a locker at its Sydney office.

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 latest move is a major setback for KPMG's public sector business. The firm has already agreed not to bid for federal government contracts, as well as contracts from the ACT, Western Australia, New South Wales and Queensland, until at least September 30. Financial Review said KPMG is also expected to cut jobs to offset the loss of public and private sector work, after already reducing partner pay by 20% for the last financial year.

KPMG employed about 9,000 people, including nearly 700 partners, in Australia in the financial year ended June 30 last year. The firm reported revenue of more than A$2 billion (US$1.4 billion). As the scandal continues to affect its business, KPMG is preparing to cut hundreds of jobs and reduce partner pay by up to 20%, the *Australian Financial Review* reported earlier.