NSW Treasury wanted me fired, says consultant

Brendan Lyon has levelled allegations of bullying against NSW Treasury Secretary Mike Pratt during a parliamentary hearing.

NSW Treasury Secretary Mike Pratt. Picture: Richard Dobson

NSW Treasury secretary Mike Pratt allegedly bullied a former KPMG partner out of his job and demanded “action” be taken against him after the consultant refused to rewrite an independent report questioning Treasury’s ­advice to the government.

 The evidence of Brendan Lyon, who stopped working for the accounting firm in June, has placed pressure on Mr Pratt’s position after a series of emails ­revealed he expected senior KPMG officials to discipline Mr Lyon, whom he described as “out of control”.

On Monday Mr Lyon gave evidence to a parliamentary ­inquiry examining the establishment and operations of the Transport Asset Holding Entity, which controls $40 billion worth of NSW public rail assets, including trains and tracks.

Mr Lyon told the committee that Mr Pratt and two other officials subjected him to “unprofessional and ongoing personal attacks” after he submitted a report contradicting Treasury’s estimated cost of the TAHE project.

The report suggested Treasury’s modelling was flawed, could pose safety risks to rail passengers, and could leave the state’s budget more than $10bn worse off. Mr Lyon said he found himself in a situation of a “good, old-fashioned stuff-up followed by a conspiracy to make it true”.

State Auditor-General Margaret Crawford confirmed to a budget estimates hearing last week that her office was unable to sign off on its audit of the state’s accounts due to “outstanding ­issues” with the TAHE, including asset valuations.

Mr Lyon and his team at KPMG were engaged by Transport for NSW to develop an operating model for the TAHE, which was created last year for the purpose of owning and running the state’s rail infrastructure.

By classifying the entity as a public non-financial corporation, the TAHE was said to also have the benefit of “creat(ing) a positive budget impact” by moving millions of dollars off the state’s budget expenses, according to a cabinet submission.

In response to Mr Lyon’s ­report, Treasury officials, including Mr Pratt, deputy secretary San Midha and executive director Cassandra Wilkinson, allegedly embarked on a campaign against him and ordered him to change his findings, the committee was told.

“I finalised my report despite the pressure to change or remove the results, and this saw continuing pressure by Mike Pratt, and when I asked him directly to stop bullying me, he called for me to be sacked and also asked for KPMG to prohibit me from doing work for the NSW government,” Mr Lyon said.

“It was made untenable for me to stay with repeated attempts to discredit me personally and to discredit me professionally, because I had exposed the failures of those senior Treasury personnel.”

Emails read out during the hearing included one in which Mr Pratt wrote to Mr Lyon last ­November, saying: “You either correct the errors or remove all references to Treasury modelling, which is not for you to comment upon.”

Mr Lyon responded to Mr Pratt by saying he was “sick of being bullied” and told him to “grow up or tell the truth”.

It prompted a further email from Mr Pratt to Mr Lyon and several KPMG senior partners, emailed a few minutes later, saying: “You obviously have a partner who refuses to take counsel and is out of control … I expect you to take action.”

Mr Lyon said he inferred from this email that Mr Pratt was ­attempting to have him dismissed. He told the committee that his decision to leave KPMG was motivated by these experiences as it became untenable for him to remain at the firm.

Labor Treasury spokesman Daniel Mookhey said Premier Dominic Perrottet had “serious questions to answer” about the behaviour of Mr Pratt and other Treasury officials.

“It’s clear that Treasury went to extraordinary lengths to prop up the TAHE budget con,” Mr Mookhey said, calling the TAHE a “balance sheet disaster”.

Inquiry chairman Greens MP David Shoebridge echoed these concerns.

“It is utterly unacceptable to see senior Treasury officials ­demanding a rewrite of what was meant to be an independent ­report,” he said.

Treasurer Matt Kean did not respond to requests for comment but a NSW Treasury spokesman said the agency noted the evidence provided by Mr Lyon, but disagreed with “a number of the propositions made in evidence”.