If there was another census failure, both ABS and KPMG would face scrutiny.

KPMG also had big dollars at stake in keeping its client happy, having entered into 15 contracts with the ABS since 2015, with a value of $11.4 million.

But from the start, associate director James Eldridge sensed something was wrong.

Director 'lost it'

At the centre of his concerns was what Eldridge saw as a huge conflict of interest.

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KPMG had been charged to review the very IT transformation program whose direction and future it had been separately advising on as part of a $2.7 million assurance contract.

Further, the firm had allegedly placed a member of its assurance team within the review team and emails showed a director was ensuring the review "aligned" with views of the assurers.


KPMG partner, Paul Coromandel, had also allegedly told Eldridge that ABS head David Kalisch had "made it clear to him" he expected the review to find Census 2021 could use all, if not most, of the technology from the transformation program and so invest in it accordingly. The ABS has denied guiding KPMG to any conclusion.

There were also changes to the draft report, Eldridge claimed, including "burying" widespread internal criticism of the program and removing a table showing just 2 per cent of the now three-year program aligned with Census 2021's requirements.

When Eldridge refused further changes proposed by review leader, director Andrew Peel, on the eve of the final report and flagged raising his independence concerns with partners, Peel allegedly "lost it".

He allegedly banned Eldridge from contacting the partners, insisting this was a "direction" and following it up with an email, instant messages and five missed phone calls.

After lengthy consideration, on March 9, Eldridge emailed his concerns to three senior partners dealing with the ABS, the federal government and Census 2021.

'Not acceptable at KPMG'

KPMG's actions were swift.


The ABS announced the census was back online days after its official date.

Immediately, Peel removed Eldridge from the project and told him not to contact any members of the Census, the ABS or the IT transformation program.

Eldridge then met with Peel and performance manager, Melanie Holmes, expecting to discuss his concerns over KPMG's independence.

But Peel and Holmes allegedly told Eldridge he "lacked professional judgment" and that his escalation of his independence concerns to partner level was "inappropriate".

In an email the next day, Holmes accused him of being "confrontational and this is not acceptable at KPMG" and that he should "consult appropriately before escalating".

He was subsequently told to attend a meeting with human resources to discuss his performance.

But before that, on March 23, Eldridge met with KPMG's Canberra office chair Cath Ingram and Paul Coromandel.

'KPMG will be scrutinised'


Ahead of the meeting, he wrote up a summary of his concerns for KPMG's brand and the public interest.

He warned the firm that "an informed third party" looking at the review and how he had been treated after raising independence concerns "may – at worst – hypothesise that KPMG suggested to ABS that they engage KPMG to produce a review that supports the flow of the Census budget into the [ABS IT transformation program]".

"And – at best – hypothesise that the KPMG review team has produced a compromised report to ensure a level of consistency with observations from the existing KPMG [assurance] teams working within ABS."

He described the ABS' $257 million transformation project as a "big IT-risk program, which was slipping on budget, time and scope" and "looking increasingly unlikely to realise its benefits".

There was also the broader context, he warned. The bungled 2016 census had had political implications for the Turnbull government.

"If there is another census failure, and an enquiry is undertaken, KPMG's report and independence will be scrutinised," he wrote.

At the meeting, Eldridge told Ingram and Coromandel his previous employers Deloitte and the Department of Prime Minister and Cabinet had a "much lower appetite" for risk and conflicts of interest.

Ingram responded, "Deloitte do f--- all assurance work so they don't have this problem", according to Eldridge.


Ingram allegedly told him "it is not your role to identify or raise issues of independence", saying "you are not an auditor from the ANAO [Australian National Audit Office] James".

At one point in the meeting, Coromandel allegedly told Eldridge "a journalist from The Canberra Times might have a problem with it, but I don't".

'Failed to take feedback'

Three days later, to the "complete surprise" of Eldridge and with no forewarning, KPMG national partner Michael Smart fired him effective immediately.

According to Eldridge, Smart told him it was because he had "failed to build a working relationship with his colleagues", specifically "you have steamed up Cath and Paul with your memo".

Eldridge had also "failed in his ability to seek different view points", specifically, "your viewpoint on the independence issue was incorrect".

He also "failed to take on feedback", with Smart saying "you have not let go of this independence issue".

Smart then issued him a letter of termination dated March 23, the date of his meeting with Ingram and Coromandel, making his dismissal effective March 26.


Less than two weeks before his complaint, Peel had messaged Eldridge saying "I have every confidence in you!" and "you are doing a great job".

Just prior to his complaint, Eldridge said KPMG had even asked him to interview potential employees as part of a large recruitment drive by the firm.

KPMG says claims 'entirely false'

Three months later, he would engage Harmers Workplace Lawyers to sue KPMG, Peel, Smart and Holmes for taking alleged adverse action against him because he had exercised his workplace right to make a complaint.

KPMG says Eldridge's claim had "multiple allegations that are entirely false, do not accurately reflect KPMG's work and had no bearing on the decision to end the employment relationship".

It argues that it fired Eldridge for "appropriate reasons during his probation period".

However, the Fair Work Act protects any employee from unlawful adverse action regardless of whether they are on probation or not.

The big four firm, its partners, directors and chair of the ACT now face the prospect of a gruelling series of public court hearings, with the potential for large damages and individual penalties.

As Eldridge warned the firm in his controversial memo, the implications could be broad – for KPMG, the ABS, and third-party consulting generally.

For KPMG, it may wish it heeded its own internal assessment. Its "high risk" rating has proven right.

david.marin-guzman@fairfaxmedia.com.au | ed.tadros@fairfaxmedia.com.au