Senator Barbara Pocock accuses KPMG CEO Andrew Yates of misleading inquiry

KPMG has been accused in a fiery Senate inquiry of ‘power mapping’ relationships held with senior bureaucrats at Transport for NSW, where it held lucrative contracts for years.

KPMG has been accused in a fiery Senate inquiry of “power mapping” relationships held with 72 senior bureaucrats at Transport for NSW, where it held lucrative contracts over many years.

Greens Senator Barbara Pocock accused KPMG chief executive Andrew Yates of “contempt” and misleading the inquiry into consulting services after tabling documentation from 2020 suggesting that partners at the firm ranked public servants and the level of relationships they had with the firm.

Senator Pocock, part of the Finance and Public Administration References Committee, said the document contradicted the response Mr Yates gave the inquiry on July 18 that KPMG Australia did not engage in power mapping or a similar practice.

“This is contradicting your comment very directly that you do not do this practice. Are you not in contempt of the Senate? You have lied to us, have you not?” Ms Pocock told Mr Yates.

Titled “TfNSW latest organisation structure and strength of relationships”, the report produced by KPMG’s head of NSW government account for transport and the state chairman for KPMG, appears to describe the strength of relationships between the firm and public servants alongside names and photos.

Senior public servants were put into five categories – sponsor being the strongest relationship, followed by good, ambient, poor, no relationship or unknown. Senator Pocock said five officials were designated sponsor, two were poor and 30 were good.

Power mapping is considered to be a visual tool to help identify the best individuals to target. The inquiry heard that KPMG was the largest holder of government contracts at both a federal level and also in NSW and Victoria.

Senator Barbara Pocock accused the leader of KPMG of misleading the inquiry into consulting services. Picture: NCA NewsWire / Martin Ollman

Mr Yates stood by his statement made on July 18, which said it was typical in business to understand who works on the other side of a relationship and how strong they were.

He added that he had not seen the document submitted by Senator Pocock and would not been drawn into speculating what labels meant.

“This is an example of a very inconsistent approach we would have across our firm to try and understand who was working at any point in time in an organisation and where those relationships sit from our perspective, and we need to do that to know how to deliver our work,” Mr Yates said.

“Without that, in many situations, we are unable to actually perform the work that we need to do. Having seen (the document) now for two minutes, that’s the essence of this document.”

Remarks made by Mr Yates and the KPMG delegation did not go down well with Senator Pocock who said the document was a breach of trust

“You were asked whether you did this. You said you did not do it, and you were asked in general terms about what you did,” she said. “We are sick of cover-ups in here. You are a multibillion-dollar operation for the public sector, and you come here and tell us you do not do it, and then you do it.”

The inquiry also heard the first public remarks from Mr Yates about claims that KPMG submitted inflated invoices and billed the Defence Department for hours never worked, according to allegations aired on ABC’s Four Corners program last month. KPMG held $1.8bn in defence contracts over the past decade.

Mr Yates said an investigation by Defence concluded the claims made on Four Corners were unsubstantiated, and that the evidence he had seen “confirmed in my mind that there was no evidence of us overbilling Defence”.

Mr Yates said that billing practices had evolved within the firm over the past decade from what was called time and materials where it billed for the actual time and expenses incurred.

“Over 70 per cent of our work now is done on a fixed-fee basis, where you agree the fee upfront,” he said.