KPMG Australia Faces Senate Hearing Over Misuse of Client Data Allegations

Proceedings are underway now in Canberra for the Senate hearing investigating allegations against KPMG Australia.

To start things off are two senior leaders from Lendlease.

Lendlease CEO Tony Lombardo and its chairman John Gillam are the first of around 30 witnesses to appear at today's hearing.

The construction giant has been at the heart of the damaging allegations against KPMG.

Mr Gillam says Lendlease won't use KPMG for its future audits.

"We've already taken a formal decision to change auditors. and we've advised our security holders of that via an ASX release. We've advised ASIC, we've advised KPMG," Mr Gillam said.

In 2024, a KPMG whistleblower raised concerns with the firm's senior leadership team hat confidential board papers from Lendlease were used to pitch for and win audit contracts from other firms, including Westpac and Dexus.

Is it possible to offer some sort of explanation or comment as to why the ASX would point to a reduction on the opening when overseas influences point to an increase in the ASX. Futures traders seem to see something that others may not.

- Colin

Good morning Colin, thanks for the question.

My take is that the US rally wasn't as broad-based as the headline numbers might suggest. The Dow, which is made up of a wider mix of industrial and consumer companies, was only modestly higher, while the bigger gains came from the tech-heavy Nasdaq and, to a lesser extent, the S & P 500.

The ASX simply doesn't have the same exposure to those large technology/chipmaker names that drove Wall Street higher. Instead, Australia's market is much more heavily weighted towards banks, miners and energy companies.

With commodities such as oil and gold softer, and no equivalent tech sector to drive gains, that might be one contributing factor as to why ASX futures are pointing lower this morning.

Morningstar's market strategist Lochlan Halloway said in his note that the buzz around SpaceX’s market debut has echoes of Guzman y Gomez in 2024, perhaps the highest-profile IPO on Australian shores in recent memory.

The Mexican fast-food chain surged after listing in 2024, but the share price has since fallen sharply from its highs, as sales momentum slowed and investors reassessed its growth story.

He noted that the lesson is that a successful IPO does not always make a good long-term investment.

The Guzman float had all the ingredients to make it pop: a compelling founder with skin in the game, scarcity, retail excitement, and evidence of growth. SpaceX had all this too, and enjoyed a similarly stellar start to life as a listed company.

But what makes a successful IPO does not necessarily make a good long-term investment.

His analysis of 650 Australian IPOs over the past decade found newly listed companies often enjoy strong first-day gains, but that enthusiasm can fade quickly. By six months after listing, the median IPO was down almost 20 per cent from its offer price.

When it comes to SpaceX, they are focused on valuation based on the fundamental analysis of the business, rather than some function of momentum, liquidity or sentiment.

We think the stock is worth US$63, and if we’re right, then at today’s price of roughly US$200, your money is better invested elsewhere. And looking through our numbers, I’d hardly call us “pessimistic” on SpaceX’s prospects. Maybe we don’t value it as richly as Elon and the market, but our fair value estimate still implies a forward price-to-revenue multiple of 30 times. Price-to-revenue!

Who ever said the life of an accountant was a boring one, only about numbers?

The Senate hearing into explosive allegations against KPMG Australia certainly blows that premise out of the water.

The ABC's Chief Business Correspondent Ian Verrender references Monty Python as he digs deeper into the claims against one of the Big Four consultancy firms.

Read more here, ahead of today's Senate hearing, which is due to begin very soon:

The Senate hearing into allegations that KPMG Australia misused confidential client information will begin in a few minutes time, but already there's been a dramatic development.

Ahead of the hearing, KPMG has decided not to comply with a parliamentary committee order to hand over documents related to its data misuse allegations.

"We appreciate that this is not the response the committee was seeking," KPMG chairman Martin Sheppard wrote in a letter tabled by Labor's committee chair. Deborah O'Neill.

The committee will hear from 13 current and former KPMG partners along with executives from Lendlease, Ashurst, Allens and the Australian Securities and Investments Commission after explosive allegations from a whistleblower.

The firm initially denied most of the allegations but has apologised to the whistleblower and is now conducting a fourth investigation. It has conceded three occasions where client data was misused but claims the material accessed was insignificant.

The allegations have forced out KPMG Australia chief executive Andrew Yates and former head of audit Julian McPherson, while chief operating officer Eileen Hoggett stepped down from her leadership role.

This is shaping as a dramatic day in Canberra.

Big Four consulting firm KPMG Australia is facing a public grilling in Canberra today, as parliamentarians examine allegations around the misuse of confidential client information.

More than 30 people are expected to give evidence, including current and former senior KPMG personnel, clients, lawyers and board members.

The hearing follows allegations KPMG misused confidential information from property developer Lendlease to help win work with other major corporate clients.

KPMG has acknowledged its handling of a whistleblower and its own investigation into the allegations fell short of the firm’s standards.

The hearing is scheduled to run 8:15am-6:30pm AEST.

Key KPMG witnesses are scheduled for 9:45am-1:15pm.

My colleagues at the ABC business team will be keeping across the developments throughout the day on the blog and across ABC platforms.

Good morning, and welcome to the ABC’s daily business and finance blog.

I'm Lin Lin, taking you through the news overnight and into the morning.

Wall Street rebounded after yesterday's losses, with chip stocks leading the gains. The S & P 500 added 1.08%, Nasdaq Composite climbed 1.9% an the Dow Jones rose by 0.14%.

Despite that, ASX futures are pointing to a weaker start, suggesting the local share market will open 0.5% lower this morning.

Brent crude futures are holding below $US80 a barrel.

Meanwhile, Elon Musk's SpaceX slipped for a second consecutive session after surging in its first few days of trading following last week's debut.

Starting soon, my colleagues Jason and Emilia will be live blogging the Senate's grilling of KPMG's leadership.

Grab your coffee or tea and settle in, we'll bring you the latest market moves and business news throughout the day.

Loading