Former KPMG Partner Exposes Flaws in State-Owned Rail Corporation

A former partner at KPMG has revealed serious flaws in a state-owned rail corporation established to manipulate the budget of New South Wales (NSW). Brendan Lyon, appearing before an inquiry into the government’s use of consultants, stated that there were minimal consequences for KPMG’s conflicted advice on the Transport Asset Holding Entity (TAHE), besides damage to the consulting firm’s reputation. Lyon faced internal reprisals from KPMG for his work advising Transport for NSW on TAHE, lost his job, and incurred costs of $2 million. Despite this, he insisted that he would do it all again because certain issues are more important than a partnership at a consulting firm.

TAHE has faced scrutiny since it was exposed in 2015 as a means to shift expenses out of the NSW budget and artificially boost the state’s revenue. Lyon’s reports revealed significant problems with Treasury’s modeling of TAHE’s costs and benefits, as well as safety risks.

Lyon also called into question KPMG’s dual advice on TAHE and suggested that the firm should refund the government for its work. KPMG, however, disputed Lyon’s claim of being sacked, stating that his exit from the firm could be considered “constructive dismissal.” The firm has expressed commitment to addressing any inappropriate behavior.

The Minns government has committed to abolishing the state-owned rail corporation and seeking expert advice on the dismantling process and returning the rail assets to Transport for NSW and its agencies. TAHE’s CEO has resigned, and her last day in the role could be as late as January, given contractual and notice requirements.