How the KPMG inquiry tested surprising photo evidence

Upon Hoggett’s instructions, Rogers brought a scorecard that showed how KPMG’s client Lendlease assessed and scored the firm’s tendering for a major Westpac external audit contract, she explained.

This included Lendlease’s numeric ratings of EY and PwC tenders against specified criteria, along with comments about EY and PwC’s respective team members and understanding of the Lendlease business.

The Australian Financial Review reported that Lawry took a screenshot of these confidential papers on her phone. This photo was found by lawyers from Allens during a search of Lawry’s phone in July as part of an expanded investigation into the allegations of misconduct by the audit division. 

The photo was discovered as Lawry was negotiating her exit from KPMG, according to the media report.

Lawry repeats line scorecard gave no competitive advantage

At the hearing, Lawry initially said she had no recollection of that component of the meeting with Rogers and Hoggett. However, she answered in the affirmative when asked by O’Neill if it was normal practice to photograph a confidential document.

Incredibly, she added that she did not recall being aware that the documents were confidential.

Earlier this year, a letter from Lendlease to O’Neill revealed that KPMG allegedly informed it that the accounting firm’s audit partner accessed and displayed Lendlease board papers while bidding for the Westpac audit contract.

KPMG advised that those documents were displayed on a screen while its audit team was present.

Despite this, in the conversation, KPMG allegedly deemed the documents to be of “low sensitivity”, giving it “zero competitive advantage”.

Lawry repeated this argument during the hearing that it provided no competitive advantage and said: “The scorecard was not of use or particular relevance to me, and it wasn’t used in the Westpac audit tender.”

Senator Paul Scarr rejected this justification and said: “It reminds me of the burglar who goes into the house, steals a jewellery box, comes outside, and finds, ‘Oh, there’s only 50 cents in it.’ It’s still burglary.”

He pressed Lawry further and asked her if she would take responsibility for the photograph “that you took on your phone”.

Lawry acknowledged that those photos were on her phone, but Scarr hit back that “you’re trying to divorce yourself from your phone”. He reiterated that Lawry took the photos on her phone and asked if she accepts that.

Lawry said she was not aware whether she took the photo or it was sent to her, but said: “I’ve taken full accountability for that.”

Lawry doesn’t accept her conduct was ‘egregious breach’

Noting that Lawry “engaged in an egregious breach of confidentiality”, Scarr accused her of trying to minimise this breach before the committee.

He said: “This was an egregious breach which led to Westpac wanting your removal as the lead audit partner. Do you recognise the seriousness of this and your responsibility in this?”

Lawry said: “I recognise the seriousness of this in its totality. As I said, Senator, I believe I’ve taken accountability for that. I’ve always sought to hold myself to a very high standard. I acknowledge my involvement in these matters. I have not met those standards, and I’ve taken accountability.”

Scarr said: “As a senior member of KPMG, you committed an egregious breach of professional standards, didn’t you?”

Lawry said: “I did not, Senator.”

Scarr asked how Lawry would characterise her sharing private client information from another client, to which she repeated that she “wasn’t aware at the time the information was confidential”.

However, Scarr remained unconvinced and asked Lawry how she could not be aware that the information was confidential given her experience as an audit partner.

Lawry replied that the tender scorecards are specific to clients, and “they are shared generally as part of an RFP [request for proposal] process”.

When asked by O’Neill if Lawry would be the other woman who would lose her job for her alleged conduct (besides Hoggett, who was expelled for her role in the alleged misconduct in audit practices), Lawry said she does not believe so.

“I recognise the seriousness of this information in the context of Lendlease from a Westpac audit tender perspective. As I said, the information wasn’t used; it wasn’t relevant for us,” she said.

O’Neill said regardless of the value of the scorecard, the capturing and sharing of a confidential document that was a part of the board papers from a company Lawry had a “special relationship” with is a breach of her professional duties.

“But it seems to have been a normalised behaviour,” she said.

Lawry left the firm in July after Westpac demanded she be removed from her roles in the alleged audit misconduct being investigated at KPMG Australia.

Closing remarks

Towards the end of the hearing, Lawry was given the opportunity to provide closing remarks. She said she had “nothing to gain” by not disclosing the information related to the photographs and that she “genuinely did not recall it”.

“I’ve always approached every interview, every investigation with honesty and openness. No one wishes more than me that I remembered or recalled earlier the screenshot,” she said.

She concluded by repeating her argument that the scorecards did not provide any competitive advantage.

“It’s been well established that the information wasn’t used for any commercial gain,” she said.