When the partners are running for the exits, leadership has already failed.
Let me set the scene for you.
It’s 2026. One of the most prestigious professional services firms on the planet is in freefall. The CEO is gone. The COO is gone. The head of audit is gone. Partners — people who spent decades climbing to the top of one of the most coveted career ladders in the world — are frantically calling recruiters, law firms, and old contacts, desperately trying to find a way out before the whole thing collapses further.
Staff are described as being in shock. The word being used internally is ‘chaos’. Clients are spooked — including the federal government, which was forced to apologise. And to top it all off, ASIC confirmed mid-hearing, in real time, during a federal parliamentary committee, that it had been investigating since April. You could not write this.
And the whistleblower who triggered all of it? He formally raised this in May 2024. Two years ago.
This is KPMG Australia. May 2026. And this is what happens when leadership fails — not in one dramatic moment, but in a hundred quiet decisions made over years, in rooms where the wrong thing was allowed to become normal.
This is not just a Big Four story. This is a leadership story. And it is playing out in organisations everywhere — just usually without the AFR headline.
So let’s pull it apart. Because there is so much here to learn from.
TIP 1: CULTURE IS SET AT THE TOP — AND SO IS CORRUPTION.
Let’s start with the allegation at the heart of this: KPMG partners reportedly used confidential client information — board papers obtained through their work with Lendlease — to pitch for and win external audits at Westpac, Dexus, and Macquarie Group. Inside information, used as a competitive weapon.
Now here’s what I want you to sit with: this kind of behaviour does not emerge from nowhere. It doesn’t happen because one rogue partner had a bad idea one afternoon. It happens in organisations where the culture has quietly, incrementally drifted – where winning has become more important than how you win, where performance is celebrated and questions are discouraged, and where “this is just how things work here” has become the accepted answer to ethical discomfort.
Think about Enron. The partners at Arthur Andersen who signed off on fraudulent accounts weren’t all bad people. But they operated in a culture where client relationships and revenue came before integrity — and over time, that became the water they swam in. They stopped seeing it. And then it destroyed them.
Think about Wells Fargo, where front-line staff were opening fake accounts in customers’ names to hit sales targets. Not because they were criminals, but because the culture rewarded numbers and punished questions. The pressure from the top was so relentless that people did things they knew were wrong just to survive another quarter.
The KPMG situation rhymes with both of these.
What you can do: Audit what you actually reward and what you actually tolerate — not what your values statement says. Regularly ask your team: where do you feel pressure to cut corners? Then actually listen without getting defensive. Leaders who catch culture drift early are the ones willing to hear uncomfortable things while there is still time to change them.
TIP 2: WHISTLEBLOWERS ARE NOT YOUR PROBLEM. IGNORING THEM IS.
This one makes me furious every single time. Because it is so preventable.
The whistleblower at the centre of this crisis formally raised his concerns in May 2024. We are now watching the entire senior leadership of KPMG Australia implode. How many warning signs were there between May 2024 and May 2026? How many opportunities were there to get ahead of this, to investigate properly, to act with integrity?
History is littered with organisations brought down not by the original wrongdoing but by what happened after someone spoke up. Theranos. The Catholic Church. Boeing with the 737 MAX — where engineers raised safety concerns that were minimised and dismissed, and 346 people died in two crashes. The Post Office Horizon scandal in the UK, where hundreds of innocent sub-postmasters were prosecuted for errors caused by faulty software – and those who raised concerns were silenced, discredited, and destroyed.
The bold truth: Whistleblowers are not threats to your organisation. They are the last line of defence before your organisation becomes a threat to itself.
What you can do: Build the kind of environment where people can raise concerns without career consequences — not just in policy, but in practice. Amy Edmondson’s research on psychological safety is unambiguous: high-safety teams catch problems faster and perform better. When someone raises something uncomfortable, your response signals to everyone watching. Make it worth sending. Ask honestly: if someone wanted to raise a concern in my organisation today, would they trust the process? If the answer is no, that is your most urgent leadership problem.
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TIP 3: IN A CRISIS, SILENCE IS PETROL ON A FIRE.
Staff at KPMG are not just upset about what happened. They are furious about how leadership communicated — or rather, didn’t. Insiders describe people being blindsided, gripped by chaos, left to speculate because no one in authority was giving them straight information.
In a crisis, the absence of communication does not create calm. It creates the worst possible version of the truth — because humans, when left without information, will always fill the gap with fear.
We saw this with United Airlines in 2017, when a passenger was violently removed from an overbooked flight and the video went viral. The initial CEO response defended staff and called the passenger “disruptive.” Tone-deaf. Defensive. It poured fuel on a fire that one honest statement could have dampened. Brand damage took years to recover.
Compare that to Johnson & Johnson in 1982. When Tylenol capsules laced with cyanide killed seven people, CEO James Burke immediately went public, pulled 31 million bottles from shelves at a cost of $100 million, and communicated openly throughout. Still taught in business schools as the gold standard of crisis communication. Johnson & Johnson recovered its market share within a year because people trusted them.
The bold truth: Your people can handle uncertainty. What they cannot handle is silence followed by a resignation announcement.
What you can do: Develop a crisis communication framework before you need it. Know who speaks, when, through which channels, and with what authority. Commit to this one rule: communicate before you are ready. “We don’t have all the answers yet, but here’s what we know and here’s when we’ll update you” is worth ten polished statements that arrive a week too late.
TIP 4: ACCOUNTABILITY WITHOUT CULTURE CHANGE IS JUST THEATRE.
Three senior leaders are out. CEO Andrew Yates. Head of audit Julian McPherson. COO Eileen Hoggett, who also stepped down as audit signing partner for Dexus. That looks, on the surface, like accountability being served.
But here’s the question that never gets asked loudly enough: what did we build that made this possible?
Because if the incentive structures that rewarded aggressive business development haven’t changed — if the culture that discouraged questions and celebrated results hasn’t shifted — if the people who knew and said nothing are still in their roles — then those three resignations are a sacrifice, not a transformation.
We saw this play out spectacularly with the Australian banking royal commission. The big banks apologised. Executives departed. Fines were paid. And within a few years, multiple institutions were back under scrutiny for strikingly similar behaviours. Because the accountability was performative, not structural. The system that produced the misconduct was largely left intact.
The bold truth: The organisations that survive scandals are the ones that look at the system, not just the individuals. Everything else is window dressing.
What you can do: The next time something goes wrong — even something small — resist the urge to resolve it by finding the culprit and moving on. Ask: what did our system contribute to this? What pressure, incentive, or gap in communication made this more likely? Build that question into your post-incident reviews. The organisations that learn fastest treat every failure as data about their culture, not just a personnel problem to be resolved.
TIP 5: REPUTATION IS A LEADERSHIP PROBLEM, NOT A MARKETING PROBLEM.
KPMG is one of the Big Four. A brand built over more than a century. Trusted by boards, regulators, and investors around the world to provide independent, credible assurance. That brand — that trust — is the entire product.
And right now, that brand is taking damage that no marketing campaign can fix.
Think about Arthur Andersen — a firm that had survived nearly a century, employing 85,000 people globally. Gone in months after Enron, not because every person in that firm had done something wrong, but because the behaviour of a few, enabled by the silence of many, destroyed the one thing professional services firms cannot survive without: trust.
Think about PwC Australia and the tax leaks scandal, where a partner shared confidential government tax policy information with clients. The fallout cost the firm its entire government consulting business — its public-sector arm was sold for $1. The reputational damage is still unfolding. Again: not an organisation full of bad people. An organisation where the wrong behaviour was enabled long enough to become catastrophic.
The bold truth: Reputation management starts with reputation building. That happens in the everyday moments — not the crisis ones.
What you can do: Conduct an honest review of the decisions being made in your organisation that you’d be uncomfortable defending publicly. Not just the big strategic ones — the small, daily ones. The client being oversold. The staff member whose concerns are being dismissed. The partner bending rules because they always have. Your reputation is the sum of those moments. And so is your culture.
THE BOTTOM LINE
KPMG Australia didn’t fail because of one bad decision. It failed because of a culture that allowed bad decisions to accumulate, a response to a whistleblower that escalated rather than resolved, and a communication failure that left its own people in shock and chaos.
None of this is new. None of this is unique to professional services. And none of it is inevitable.
The leaders who build organisations worth working in — and worth trusting — are the ones who ask the hard questions before they become headlines. Who protect the people who speak up. Who communicate even when it’s uncomfortable. Who understand that accountability means looking at the system, not just the individual.
This week, ask yourself the question that KPMG’s leadership apparently didn’t:
Because someone in your organisation already knows the answer.
And sometimes, they blow the whistle.
