Short of kissing babies, Michael Ebeid’s roadshow campaign to win support for his candidacy for chairman of KPMG reads a lot like a political campaign, including a face-to-face tour of all the firm’s large Australian offices.
The chairman’s whistle-stop whistleblower tour will finish this week with Hobart, Adelaide and Perth. But he will need to pay for the excess baggage he is carrying thanks to his role in the KPMG scandal.
The many miles he has covered is proportional to the level of anger among the KMPG partners he needs to convince that he is the right person for the chair role.
The trouble is Ebeid’s candidacy has been tainted by his membership of a KMPG board that dismissed a whistleblower’s allegations that the firm had shared confidential client information to win new audit contracts, and that it subsequently outsourced a whitewashed legal inquiry.
Plus, he has been on the subcommittee overseeing the investigations.
It didn’t help that Ebeid also accused Labor senator Deborah O’Neill of making false statements to the Senate in March when she aired the whistleblower’s allegations of misconduct at the firm, suggesting her conduct was inappropriate and unfair.
Many of the KPMG partners being love-bombed by Ebeid during his election campaign will understandably argue that a true cleanskin chairman would be a better appointment.
The snowballing of the KPMG scandal is now threatening to hit the partners where it hurts – in the hip pocket – to say nothing about the increased threat of more stringent regulation confronting the firm and its peers.
The partners need to vote in the coming months to change the partnership agreement that will allow for an independent chair to be appointed. They don’t get to vote on who it will be, but a vote against changing the agreement will act as a proxy vote against Ebeid.
Ebeid’s strategy is to drown the partners in a flood of mea culpas. But sorry may not be enough for the legion of partners who could be facing a major pay cut and a cut in the value of their capital.
The second leg of the chair in waiting’s strategy has been to argue that as a board member, he was acting on the advice of the firm’s chief executive and chairman, Andrew Yates and Martin Sheppard, respectively. Both have since departed KPMG following the scandal.
So he was parroting what he was told, and he didn’t know what he didn’t know.
Many of the KPMG partners being love-bombed by Ebeid during his election campaign will understandably argue that a true cleanskin chairman would be a better appointment if the firm is to put the current mess behind it.
It would certainly be a better outcome in terms of optics.
But KPMG argues that expediting the appointment of a new chair is necessary to find and appoint a new chief executive.
Finding a different chairman could take months, and it assumes there are good candidates out there, with the right governance and ethics credentials, and who actually want the job.
It also needs a governance team in place (including a chairman) to implement its belated “action plan” around culture, whistleblowing oversight and integrity.
Someone also has to front for the firm when it is (inevitably) called for another grilling before the Parliamentary Joint Committee on Corporations and Financial Services, which will sit again in September.
But will this be reason enough to win support for Ebeid’s appointment from the firm’s 684 ropeable partners? It will certainly usher in some defacto partnership democracy, given they get to vote on whether to change the partnership agreement, to allow for an independent chair.
Given the depth of partner anger, it would be prudent for KPMG to have a plan B.
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