Major accounting firm freezes Victorian and federal contract tenders until September as investigations intensify over allegations of confidential client data misuse.
SYDNEY : KPMG Australia has frozen new bids for Victorian government contracts as an escalating data misuse scandal threatens millions of dollars in public sector revenue and triggers sweeping leadership changes at the professional services firm.
KPMG will abstain from participating in new Victorian government tender processes until September 30, aligning with similar restrictions already imposed across federal jurisdictions and several other Australian states. The firm is also withdrawing from ongoing tender discussions, excepting projects involving urgent requirements, unique capabilities, or the continuity of previously delivered essential services.
A Victorian government spokesperson described the allegations as a serious matter, confirming that the firm agreed to pause new submissions while a show-cause process proceeds.
The freeze deals a substantial blow to KPMG’s public sector operations. Government tender disclosures indicate the firm holds direct contracts worth approximately A$24 million with the Victorian government, alongside participation in larger consortium arrangements valued at roughly A$195 million. Recent awards include a four-year agreement with the Education Department worth A$173,000 and a three-year A$107,000 contract with Ports Victoria.
Federal and state restrictions previously barred KPMG from bidding for work in the Australian Capital Territory, Western Australia, New South Wales, and Queensland through at least September 30. The Australian Financial Review reported that Victorian authorities have similarly blocked the firm from new contracts until at least October.
Financial pressures are mounting as the company confronts potential job cuts and further partner pay reductions. KPMG Australia previously reduced partner pay by 20 percent for the preceding financial year and is reportedly preparing to eliminate hundreds of positions. The firm employs roughly 9,000 personnel in Australia, including nearly 700 partners, on annual revenues exceeding A$2 billion.
The regulatory and corporate fallout stems from revelations that former chief operating officer Eileen Hoggett stored printed copies of confidential Lendlease board documents in her locker, shared them with colleagues, and repeatedly misled investigators. Newly appointed chief executive John Sams subsequently expelled a partner after uncovering fresh evidence regarding customer data stored in a Sydney office locker. Sams told partners the conduct was totally unacceptable.
Whistleblower claims surfaced in March, alleging staff utilized confidential data from entities such as Lendlease and Optus to secure competitive advantages in audit tenders involving major corporations like Westpac, Dexus, and Telstra. The scandal forced the resignations of former chief executive Andrew Yates, the audit head, the chairman, and multiple senior audit partners. Stan Stavros served briefly as interim leader before Sams assumed the permanent role.
Sams acknowledged the severe challenges facing the organization. He stated that he is prepared to take difficult decisions to rebuild trust, address governance failures, and reform internal culture.
Multiple regulatory bodies are examining the firm, including the Australian Securities and Investments Commission (ASIC), the Tax Practitioners Board, and Chartered Accountants Australia and New Zealand. The federal Department of Finance previously criticized KPMG’s transparency regarding the initial claims, warning that communication failures could jeopardize its eligibility for public sector work.
Corporate clients are also severing ties. Long-standing client Lendlease announced it will replace KPMG as its external auditor.
