Corporate camouflage: KPMG’s insider army guy

Consulting giant KPMG’s lead partner responsible for defence and space industry work has a second job as an army reserve brigadier that grants him insider access to Defence information.

Army director-general of reserves Mike Kalms in 2021 when he presented a medal at an event hosted by the University of NSW Regiment.

Consulting giant KPMG’s lead partner responsible for defence and space industry work has a second job as an army reserve brigadier that grants him insider access to Defence information and ­decision-makers.

The Australian can reveal that KPMG’s Mike Kalms is, as Brigadier Kalms, the army’s director-general of reserves, and has his own office inside Defence’s Canberra headquarters.

He works for the army for up to 100 days a year, juggling the role with his KPMG position that is focused on securing new Defence contracts for the firm.

The revelation comes as the consulting industry faces multiple reviews and investigations, sparked by the PwC tax advice scandal, into the sector’s business model and cosy relations with government.

Mr Kalms does not disclose his army role on his LinkedIn page, or on his KPMG partner’s page.

The latter suggests his only direct employment link to Defence was when he worked for the department in his “now distant youth … investing several years in understanding how that agency works”.

His biography on “The Cove” – the army’s online military education platform – is more extensive, confirming he is a “30-year member of the ADF”.

Mr Kalms is one of many employees of the “Big Four” consulting firms who undertake reserve service, but the most senior identified by The Australian.

Defence is KPMG’s biggest client, with the consulting firm booking more than $1.8bn in work from the department over the past decade, according to the ABC’s Four Corners, which this week reported claims by multiple whistleblowers of serial overcharging by the firm in its Defence engagements.

A KPMG spokesman said the firm was “proud of Mike” and others at the business who were Australian Defence Force reservists, and had probity arrangements in place to handle any conflicts.

“Both Defence and professional services firms have robust systems and processes to capture and manage any potential or perceived conflicts of interest,” he said. “As a part of this process, employees are reminded that information received in outside roles should be kept confidential from KPMG.”

He said Mr Kalms had “made appropriate disclosures to Defence and KPMG and complied with all relevant requirements and standards in this regard”.

Defence said all of its personnel, suppliers and contractors were required “to act transparently when making work-related ­decisions, reflecting the probity and ethical standards of the ­commonwealth and Defence”.

“Defence’s integrity policy provides guidance to all personnel to manage conflicts of interest and maintain public confidence in the integrity of Defence,” a spokeswoman said.

It’s understood Mr Kalms, in his army capacity, does not oversee any consulting contracts.

Greens senator Barbara Pocock, who pushed for the wider consulting scandal to be examined by a parliamentary committee, said Mr Kalms’s dual roles raised conflict-of-interest questions. “It’s a really clear example of someone (who is) holding down a position which gives them insider information at the same time as being an active consultant,” she told The Australian.

“It’s something that should not be permitted, and I would think this is an ethical breach.”

She said the government should impose clear protocols for departments and individuals, including penalties for those “who do not declare a conflict of interest or behave unethically in their role”.

“We know KPMG and the other three of the ‘Big Four’ are aggressive harvesters of opportunity. That is their business model,” Senator Pocock said.

“They land inside an organisation and look for every possible opportunity, and then take it back to the mothership.”

The Albanese government on Sunday announced tough new fin­ancial penalties with fines of up to $780m for consultancy firms caught exploiting tax loopholes.

Four Corners, in its latest report posted online on Monday, quoted a KPMG whistleblower who worked on Defence contracts for two years.

The source told the program that “rule-breaking had been normalised”, with the firm charging Defence for work that wasn’t undertaken.

A second whistleblower, a former senior Defence official, told the program that in a seven-month period, KPMG tried to overcharge the department by $1m.

“We discovered that every KPMG invoice reviewed was incorrect … Defence had been consistently overcharged,” the source said in a statutory declaration.

The Australian is not suggesting Mr Kalms was involved in any alleged wrongdoing reported by Four Corners. KPMG and Defence denied the allegations raised by the ABC.