PwC scandal: KPMG accused of inflating Defence invoices, billing ...

Paul Brereton is the first head of the National Anti-Corruption Commission. Edwina Pickles

He also made reference to “ongoing revelations concerning the conduct of firms retained as consultants to government” as forming his thinking as the commission filters through the 541 complaints it has so far received. Only 12.8 per cent of the referrals related to “well-publicised” matters, such as the PwC tax scandal and revelations from the robo-debt royal commission.

“In the light of the extent to which government has in recent years retained external consultants, and the extent to which the delivery of many Commonwealth services is outsourced to contracted service providers, this is a large field, which I expect will attract considerable interest from the Commission,” Mr Brereton said at the 2023 Australian Dialogue on Bribery and Corruption held in Sydney last month.

The Four Corners program features an unnamed former Defence worker alleging they repeatedly found financial errors in KPMG invoices that favoured the firm.

“We discovered that every KPMG invoice reviewed was incorrect … Defence had been consistently overcharged,” the individual told the program

This included KPMG charging for work that was never completed, the whistleblower alleged. The firm “wasted a significant amount of public funds, enabled by Defence personnel who had been complicit in blindly awarding multiple contact extensions to KPMG … with little or no scrutiny,” the person told the program.

The whistleblower said that in one case, KPMG proposed $1 million worth of new work already covered by existing contracts. In another, KPMG allegedly won a $14 million contract for a defence logistics project thanks to the personal relationships of the individuals involved. This was despite the firm being the most expensive tender option.

Defence said the allegations made by the first whistleblower had been investigated in 2016 and dismissed. This was despite the whistleblower, who said they were eventually forced to leave Defence, providing “substantial written documentation” outlining their concerns.

Four Corners calculated that KPMG has consistently won more work than its big four rivals out of the Commonwealth, thanks mainly to its strong relationship with Defence. The program stated that KPMG has entered into contracts with Defence worth $1.8 billion over the past decade, far more than its big four rivals.

The second whistleblower, an unnamed former KPMG staff member, told the program he was “instructed to record time spent on internal [KPMG] projects against defence codes”.

He also said KPMG did work for Defence that ultimately wasn’t needed. “KPMG was simply happy, in my view, to propose these new works, get them signed off, and reap the financial benefits,” he told the program.

“I think KPMG, in my experience, are absolutely prepared to break the rules … to work in ways that would be unacceptable in normal business, to win more business from the Commonwealth. And ultimately, it’s taxpayers who are paying for this.”

The second whistleblower, who worked for KPMG on Defence contracts for two years until 2020, has no connection with the first whistleblower. He said his contract was not renewed by the firm after he made a formal complaint about the firm’s invoicing of Defence.

KPMG told the program it could not find evidence to support his claims that Defence was improperly billed.

“Before invoices are issued or paid on individual projects, there is a formal process of extensive checks and balances involving both parties,” a KPMG spokeswoman said.

“If there were any errors in invoicing – whether for fixed price or time-based work – they would be identified in the review process and corrected before payment.”

The firm also said that his formal complaint to the firm had nothing to do with his contract not being renewed.

KPMG director Peter Corcoran also denied an allegation on the program that he breached a 12-month cooling-off period preventing him from working for Defence in his first year at the firm and out of the department.

Four Corners cited an email that stated: “Peter has a further 6-month ban from working directly within Defence”, but a later email noted, “Peter continues to meet Defence personnel on the ‘side’, maintaining relationships and building new relationships”.

A spokesperson for KPMG said: “We have reviewed this matter and it is clear there was no breach of the contractual cooling-off period.”