Documents say former KPMG partner made unwanted sexual advances to clients and staff

Topic:Financial Services

Philip Henry has been named in documents tabled in federal parliament. (ABC News: Lindsay Dunbar)

Former KPMG partner Philip Henry allegedly treated "female members of staff and clients inappropriately", including making "unwanted sexual advances" during his tenure, according to allegations from a whistleblower detailed in a letter tabled in federal parliament.

Philip Henry worked at the firm until his publicly reported departure in 2004 and is also accused in the document of allegedly receiving "secret commissions" that were paid "in cash" by a client after he devised tax schemes for them.

In other instances, the document alleges, he received personal gifts from some clients instead of being paid in fees, or to reduce the fees.

The allegations have surfaced as part of a parliamentary inquiry looking at the KPMG audit leaks scandal engulfing the firm.

The latest allegations are detailed in a letter from a whistleblower to KPMG on August 30 2023, which was tabled in redacted form earlier this month by the inquiry.

In the wake of the KPMG audit leak scandal, executives from Macquarie, Westpac, Optus and Dexus cast doubt on their faith in the auditor.

The inquiry is investigating how KPMG audit partners allegedly misused client data and then mishandled a whistleblower's complaint about it.

The inquiry has since heard from other whistleblowers at KPMG and other big four firms.

ABC News has also reported on separate allegations against Chris Jordan, a former KPMG partner who went on to lead the Australian Taxation Office (ATO) for more than a decade. A 2021 document from a whistleblower alleged that Mr Jordan avoided paying tax during his time at the firm and that it was "corruption at the highest level" that he was appointed to lead the ATO.

A redacted version of the KPMG whistleblower documents tabled in parliament. (ABC News: Parliament of Australia)

Documents allege secret cash payments

The 2023 whistleblower letter largely focuses on allegations against Mr Henry that date back to his time at the firm.

The letter alleges that during his time at the firm Mr Henry received secret commissions in cash "for facilitating clients' participation in a taxation arrangement".

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In the letter, the whistleblower blames Mr Henry for wrongdoing for which she was held responsible, including being pursued by tax authorities.

Former tax commissioner Chris Jordan is accused of receiving "secret commissions" during his time at KPMG in the 1990s, according to documents seen by the ABC.

The letter also refers to a recording that the whistleblower claimed contained references to "destruction of evidence" in an ATO investigation that targeted the whistleblower.

The ABC is not suggesting the claims in the whistleblower's letter are true, only that they have been made.

Mr Henry has been contacted for comment.

KPMG later paid a whistleblower a settlement of more than $500,000 for legal costs.

Allegations in letter Mr Henry 'made unwanted sexual advances'

The whistleblower's letter alleges Mr Henry, "whilst a partner of KPMG, conducted himself in an unacceptable and reprehensible manner towards female members of staff and clients"

A junior female employee turned whistleblower alleges she suffered repeated sexual harassment at the hands of two men at the company.

It went on to claim that his behaviour included "making inappropriate remarks to female members of staff and clients of an unacceptable sexual nature".

It also included "bullying and intimidating" a whistleblower to "act outside the scope of her employment contract"

This was a matter "regarding a significant legal action against KPMG by the Attorney General" at the time "which could have made the firm insolvent"

The document tabled suggests Mr Henry also allegedly made "unwanted sexual advances to female members of staff and clients" and borrowed "significant amounts of money from staff"

Allegations of 'misappropriation of funds' in document

The document alleges Mr Henry and several others named in the letter that have been redacted "used significant KPMG firm resources for personal matters and the affairs of associates for no financial benefit to the firm"

Accounting firms could be asked to split their lucrative consulting services from their audit functions, under a shake up of the industry being consulted on by the federal government.

The letter also alleges Mr Henry was "offsetting client fees for personal benefits and gifts" that he received from clients.

This included a new garage door in February 1994, painting of his private residence in 1989, as well as a Maxima sedan.

The car was allegedly gifted "in lieu of professional fees".

It also alleges "misuse" of a "client trust account administered by KPMG for personal tax benefit without client consent", and "misappropriation of funds from client trust accounts"

This includes one case where "Philip Henry arranged for the funds to be used for the purchase of a jet ski" for personal use.

Whistleblower alleges she was 'wrongfully' implicated

The letter alleges "Philip Henry lied to the Australian Taxation Office and the Australian Federal Police in relation to matters undertaken by him whilst a partner of KPMG", with the "intention of diverting attention away from his own actions"

KPMG chair Martin Sheppard and two audit partners are leaving the accounting and consulting giant in the wake of a scandal over misuse of confidential client information and the alleged mistreatment of a whistleblower.

This was allegedly done to "wrongfully implicate" a whistleblower and was "both unconscionable and criminal", the letter said.

The letter also refers to a recording that the whistleblower claimed contained references to "destruction of evidence" in an ATO investigation that targeted the whistleblower.

An ATO spokesman told ABC News the agency was "unable to comment due to our obligations under taxpayer confidentiality laws".

Letter claims 'falsified election results' at KPMG

The letter also alleges "falsified KPMG election results" of the NSW managing partner decision in 1997.

It also claims there was "accumulated earnings in a foreign jurisdiction of an Australian resident client of KPMG" and money was "illegally" transported in cash across international borders to avoid the ATO knowing.

The names are then redacted but it notes that the funds were "physically carried from Singapore to Australia in hand luggage of the spouse of a KPMG partner to avoid Australian taxation".

KPMG declined to comment.

Former KPMG chairman Martin Sheppard (left) and CEO Andrew Yates (right) at a KPMG hearing in Canberra. (ABC News: Matt Roberts)

At a recent parliamentary hearing relating to the KPMG audit leaks scandal, KPMG's former chairman Martin Sheppard and former chief executive Andrew Yates were asked about the $500,000 settlement.

KPMG investigated the allegations made in the whistleblower's letter but was unable to substantiate them as they were "very historic".

The inquiry is expected to hold its next public hearing on September 4 in Sydney.

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