By Scott Murdoch, Renju Jose and Christine Chen
SYDNEY, Aug 14 (Reuters) - "Many, many more" whistleblowers have come forward with reports of misconduct at KPMG Australia, a parliamentary committee probing alleged client data leaks at the firm heard on Friday, raising concerns about a broader pattern of wrongdoing.
The scandal erupted in March following allegations made by an anonymous whistleblower that KPMG misused confidential client information to bid for audit contracts.
KPMG initially said the claims were unsubstantiated. But the firm's CEO, audit boss and chairman have all since resigned, and it has confirmed the misuse of internal documents by staff.
At a parliamentary hearing in Canberra, Deborah O'Neill, a Labor party senator who chairs the committee, said more people were now reporting similar conduct.
"There are many, many more who are contacting us and they are talking about a repeat of the same behaviour," O'Neill said.
KPMG has acknowledged it mishandled the whistleblower complaint and has launched a fourth internal investigation after previous ones failed to substantiate any wrongdoing.
Former KPMG chairman Martin Sheppard also confirmed to the committee reports in the Australian Financial Review that another whistleblower who alleged misconduct in the firm's tax division had received a settlement at the end of 2024.
The day-long parliamentary hearing was the second to investigate how the firm used data on clients Lendlease and Optus to bid for work with Westpac, Dexus and Telstra.
Several current and former KPMG executives along with the firm's clients and lawyers were summoned to testify.
Former audit partner Eileen Hoggett, who the whistleblower said stored Lendlease board papers in her locker, told the committee she did not recall stashing the files, and did not understand why she was expelled from the partnership.
A May 2023 email presented to the committee showed Hoggett authorised a colleague to view the documents in her locker to help with a bid for another proposal.
"'I think we confidentially allow him to look at the printed version in my locker ... he needs to do it sensitively without letting too many people know'," the email, read out by O'Neill, said.
"I find it hard that if you've written that email, you're struggling to recall the use of this document that was in your locker that your (executive assistant) was providing access to," O'Neill said.
Hoggett replied: "There is no one more disappointed in me than myself."
Singapore Telecommunications-owned Optus, whose data was shared with another internal team bidding for an audit contract for its rival Telstra, called KPMG's conduct an "egregious" and "flagrant" breach of professional duties.
Westpac director Peter Nash has since resigned from the bank's board due to his ties with the auditing firm. KPMG senior partner Kim Lawry also resigned after Westpac requested her removal as its lead auditor.
Westpac's audit committee chair Michael Ullmer told the hearing Nash should not have contacted his former KPMG colleagues during the tender process.
Sheppard told an earlier hearing that Nash had stayed at his house during the pitching process as the pair were long-standing friends.
Macquarie Group Chairman Glenn Stevens said the Australian investment bank could reconsider the appointment of KPMG as its auditor. KPMG was selected in 2025 and still has to be approved by the bank's shareholders.
Macquarie has asked KPMG to deliver evidence the auditing firm did not use confidential information from other audit accounts to win the bank's account, Stevens said.
"If the (KPMG) allegations are true and I'm not here to make a judgement, but if they are, there would appear to have been inappropriate behaviour that we need a high level of confidence that won't happen and didn't happen in the pursuit of our audit," Stevens said.
(Reporting by Scott Murdoch, Renju Jose and Christine Chen in Sydney; Editing by Saad Sayeed and Lincoln Feast)
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