Macquarie KPMG audit review|2 directors cleared, conflict rules under review?

Chapter 1: What the review cleared

Macquarie Group has cleared two of its directors over their contact with KPMG during the bank's 2025 audit tender. Yet the same review says the rules those directors were judged against will now be reviewed. The two directors are Michelle Hinchliffe, who chairs Macquarie's audit committee, and Susan Lloyd-Hurwitz. Macquarie says neither broke the rules, and calls their skills highly valuable.

But the tender rules on personal contact with bidding firms are under review. So is the board's conflicts of interest policy, and that review will be external. Macquarie's message is that its directors are in the clear. That is best read more narrowly. The review shows Macquarie's rules were followed. It does not show those rules were good enough.

On that question, the board's own promised policy review is the verdict that matters. Start with what the review actually found. Hinchliffe is a former partner of KPMG. The review found she met KPMG staff before and during the tender. Those meetings were in both a professional and a personal capacity. Macquarie says that was consistent with its policies and tender protocols. She dealt with all three bidding firms.

But she stepped aside from scoring them, and from the final decision. Lloyd-Hurwitz emailed a KPMG partner while the tender was running. She was seeking career advice for one of her children. The meeting never happened, and similar emails went to other companies. The review was led by a fellow director, Rebecca McGrath, who chairs the board's governance and compliance committee.

The board also sought independent advice from former New South Wales chief justice Tom Bathurst. His conclusion was that neither director breached their fiduciary duties, their statutory duties, or Macquarie's own policies and rules. So the contact happened. What was cleared is that the contact was allowed. That moves the question away from two people and onto the rules that permitted them.

Advice on whether rules were breached is not a judgement on whether the rules were adequate.

Chapter 2: The board's defence

None of this concern is new. At Macquarie's 2025 annual meeting, shareholders were already questioning Hinchliffe's independence. Capital Brief described the issue as a decision to award 75 million dollars a year in business to her former employer. Chairman Glenn Stevens dismissed that discussion as "silly talk". In November 2025, Macquarie named KPMG as its recommended auditor.

The board's recommendation was unanimous. KPMG was to start in the 2028 financial year, subject to regulators and a shareholder vote. Then, in March 2026, a whistleblower's allegations against KPMG went public. Senior partners were alleged to have misused confidential client information to win work. At Macquarie's July 2026 annual meeting, activist shareholder Stephen Mayne went after the tender's design.

His premise was that PwC, auditor for over 30 years, could not be reappointed. Mayne said the mistake was to "give Deloitte and EY the punt too early in the tender process". That, he said, left "the final choice between the incumbent and KPMG". Stevens rejected that. He said: "So, I don't agree that we could not have chosen PwC." He defended the balance the board had struck.

In his words, that meant "managing her potential conflicts, which she fully disclosed". Put the two voices side by side. Mayne attacked the shape of the shortlist. Stevens defended disclosure and recusal. He noted Hinchliffe attended an equal number of presentations for each firm, and stayed out of scoring.

Neither voice dealt with her contact with KPMG staff outside the scoring room, professional and personal, while the tender ran. Recusal decides who scores and who chooses. It does not limit who talks to a bidder. The rules Macquarie now says it will review are exactly those on personal contact with bidding firms during a tender. That is the part of the board's defence that its own review has reopened.

Chapter 3: Whose fault

Macquarie is not the only big client to walk away from KPMG. ANZ is ending a 57-year audit relationship, just weeks after Macquarie did the same. Insurer IAG is cutting ties after 26 years. The Financial Review reports KPMG Australia is seeking up to 100 million dollars in emergency loans from its global network. The scandal has hurt its revenue and partner earnings. But look at the reasons given.

ANZ cited the length of the relationship. A tenure of that length, it said, "is no longer considered appropriate". Its spokesman did not mention the whistleblower scandal. ANZ paid KPMG 29.6 million dollars in total fees for 2024/25. On Capital Brief's figure of 75 million dollars a year, Macquarie's mandate was about two and a half times that. The bigger difference is how each relationship began.

ANZ and IAG had kept KPMG for decades. Macquarie chose KPMG fresh, through its own tender, while its audit committee chair was a former KPMG partner. So the wider exodus explains why KPMG is losing clients. It does not explain how Macquarie came to pick it. Here the story turns. Macquarie's review does name a problem, but at KPMG. Law firm Allens examined KPMG's electronic communications.

Macquarie says they raised additional questions about KPMG's use of Macquarie's confidential information. That use went beyond the agreed protocols of the tender. Macquarie says this was evidence of the culture issues it cited in August 2026, when it stopped recommending KPMG. The Weekly Times described Macquarie as forced to abandon the deal.

That echoes the wider allegation against KPMG: partners using confidential client information to win work. Read that way, the failure belongs to the bidder, not to Macquarie's rules. But the Financial Review adds a detail. It reports that the communications raising those questions involved the two directors, Hinchliffe and Lloyd-Hurwitz. Nothing in the review says either director passed on anything improper.

Bathurst found no breach by either of them. Still, the three findings sit together. Macquarie cleared its directors. It blamed KPMG's culture. And it reopened its rules on personal contact. Taken together, that suggests the board sees its exposure in the channels between directors and bidders. The rules, not the directors, now carry the question.

Chapter 4: What settles it

The policy review has no published finish date, and its results are not yet out. Macquarie says it seeks to apply learnings, and to keep its approach consistent with evolving best practice. The board is not stepping back from its directors. It calls their skills highly valuable, much as Stevens spoke of using Hinchliffe's global expertise.

Any new rule has to balance experienced directors with industry ties against limits on their contact with bidders. On balance, the weight falls on the policy review as the real answer. The clearance settles the legal question for two directors. It does not settle whether Macquarie's rules protected shareholders when a director's former firm was bidding.

By reopening the contact rules, Macquarie itself points to a gap it has not yet closed. So the tension at the start resolves this way. Two directors were cleared because the rules allowed what they did. The board is now asking whether the rules should have. The thing to watch is the outcome of the external review. Specifically, whether it restricts directors' personal contact with bidding firms during a tender period.

If that contact is left unrestricted, the board's long-held defence of disclosure and recusal stands, and this reading is wrong. Directors keep their freedom to deal with bidders. Shareholders keep relying on recusal alone to guard choices like the auditor.

Informational only, not investment advice. Figures and quotes come from the linked reports.