L on, Brendan

From: Rodd Staples

Sent: Friday, 3 July 2020 11 :56 AM
To: Linke, David
Cc: Fiona Trussell; Lyon, Brendan; Kirsten Watson
Subject: RE: KPMG TAHE protocols

Follow Up Flag: Follow up

Flag Status: Flagged

Categories: FYI

David

Thank you for the call on Wednesday and the email below. We do appreciate you stepping in and taking action in
relation to this matter. We have reviewed your material and provide the following feedback:

1. Noting specific points raised in 2-7 below, the attachment appears more an internal document. We suggest
you actually turn this into something that is a client facing mitigation plan that outlines your commitments
to us, not to yourselves.
2. We note the attachment is explicit that the Committee's role is to 'Protect the best interests of
KPMG'. While we understand the intent behind this it raises doubts for us as to how this will align with
committee assessing the impact on and the interests of Transport for NSW {TfNSW) or NSW Treasury, your
two clients.
3. It is unclear to us what the references to the 'TAHE Team' means. Is this the team working on the contract
with Treasury, or the contract with TfNSW, or both? We would have thought there are two teams here with
clear lines of delineation. We also have at least one other related contract in Evolving Transport
organisation design, which is the starting point of this entire issue. This contract and the operation of the
team needs to be included in the oversight of the committee.
4. You will be aware that you have a number of other engagements with agencies across the transport cluster.
Noting that a number of these scopes pivot off our overall Evolving Transport strategy, which to date has
been disregarded in KPMG's advice to NSW Treasury, we would ask that you review all engagements across
the transport cluster and assess the need for these to be included in the mitigation plan.
5. Some other specific comments on the attachment include:
a. Clause 6 - refers to "All partners ...... need to prioritise the interest of the State ahead of individual
priorities or demands of individual departments .... " We are not sure what the basis of the
judgement of the prioritisation would be? KPMG have commenced working on a scope of works
that supports the Cabinet outcome regarding risk. Does this mean the current scope of works that
we have both approved stands or do KPMG require to reassess based on this Clause? We are also
interested as to how you will make this assessment on an ongoing basis throughout the period of
your engagements with TfNSW.
b. Clause 11- requires your staff {assuming TAHE team are the KPMG nominated staff) to ensure" no
discussion should be taken by the TAHE team ..... which is contrary to the decisions made a
COGC. .. " Comment: What are your returned protocols with TfNSW once you have made various
internal decisions? What is the risk to each of your engagements as currently approved?
c. Could you also add something in there around TAHE as a separate legal entity? The KPMG work to
date has been on behalf of NSW Treasury and TfNSW, whereas TAHE as a SOC now sits outside that
construct and in the Commercial Conflicts section perhaps something needs to be broadened that if
TAHE as a separate legal entity specifically seeks to engage KPMG for work, we would wish to be
consulted for us to be satisfied over our own conflicts?
6. The rationale for the specific committee members is not clear to us, but should be included in the mitigation
plan. To be clear, we would expect that no member of the committee has a senior ongoing relationship with
either TfNSW or NSW Treasury, or is involved in the day to day work of any of the three contracts referred
1
 to above. The inclusion of Andrew King appears sensible, but I do not know James Hunter or what ongoing
role he has. Therefore, we will reserve any comment on his inclusion until this is clarified.
7. In order to finalise this I suggest you write to us under all of our related contracts to formally confirm and
commit to your conflict of interest mitigation plan. In doing so we would appreciate you taking account of
our feedback above.

Finally, we are yet to understand how this issue first arose. It seems to have been forgotten that the first issue here
was a failure to notify us of a conflict under our Evolving Transport organisational design contract, when you chose
to commence the work with NSW Treasury (or when the progress of this work subsequently created one). We met
with three of your senior people on Monday 16th March and asked for an explanation of how t,his situation could
have arisen and what steps KPMG would take to avoid it happening again. We are yet to get any advice in relation to
this, but will eventually seek it through the contract if necessary. You will note that we have acted in good faith by
expanding the scope of related engagements while this matter remains open.

I am available to discuss this further to assist you in finalising your mitigation plan.

Regards
Rodd

lrom: Linke, David

Sent: Thursday, 2 July 2020 8:04 AM
To: Rodd Staples
Cc: Fiona Trussell ; Lyon, Brendan
Subject: KPMG TAHE protocols

Rodd

Enclosed are the TAHE Commercial Conflicts and Oversight Governance Protocols that I discussed on the phone last
night.

The members of the Committee are James Hunter, Joel Lucas (our Risk Management Partner) and me. This
committee has been established to have oversight and governance of both streams of work to ensure that conflicts
that may emerge are identified early, managed and communicated effectively to all parties involved. It is also
designed to ensure a close working relationship between the teams while ensuring confidentiality protocols are
adhered to. Brendan and Catia's team and Heather's team all report to the Committee.

-Reflecting on the conversation last night I am asking for approval for the members of that committee to obtain
access to the various scopes, documents and other necessary documentation from a Transport perspective such
that the committee can achieve its objectives. This would cover James, Joel and me. I also think, as discussed, we
need technical accounting input on the various Transport matters since the accounting outcomes forTAHE are a key
deliverable. As such I suggest that a partner Andrew King also be added to this Committee. Andrew is the second
partner reviewing all work on the Treasury TAHE project and would, in my view, act as the bridge across both the
Transport objectives and the technical accounting conclusions.

I realise this is unusual as he is the reviewing partner on the Treasury engagement. However, Andrew is a senior
partner trusted by me who I believe can play this role in a manner that both parties can have confidence in .

Below is the revision to the Treasury engagement letter that was issued by Treasury yesterday and I am asking that
Transport have a similar revision in order that we can put these procedures in place:

"KPMG has implemented project governance arrangements aimed at managing actual and potential conflicts of
interest that may arise in respect

2
L on, Brendan

From: Lyon, Brendan

Sent: Sunday, 13 September 2020 7:57 PM
To: Hunter, James (Sydney)
Cc: Linke, David; Low, Paul
Subject: FW: TAHE

This is unacceptable James.

David will ring you now - but this will need to be corrected by you - or I will do it.

This must not happen again.

Regards

Brendan

from: Hunter, James (Sydney)

Sent: Sunday, 13 September 2020 7:33 PM
To: San Midha ; Low, Paul·
Cc: Lyon, Brendan
Subject: TAHE

Hi San,
Good to speak late Friday pm.
As discussed, I have now spoken with Paul who is rescheduling other priorities so he is able to fully support Brendan
over the next 4 weeks, and if necessary longer, as we work closely with Transport, TAHE and Treasury to finalise the
TAHE Op Model and associated review and reports. Paul is our national head of Infrastructure, Healthcare and
Government (IGH) and has been a partner for 10 years, based in QLD - and previously held senior roles at
Transurban, and was Associate Director General and Deputy Director General in the QLD
Government. . Paul is well known to Tim Reardon and has been
EQCR for 2 months and is across the TAHE issues.

encourage vou to connect on Monday.

Paul
San 1

I also spoke with Mike this evening, and discussed as we did on Friday, the necessity for a well-defined, collaborative
approach to discuss, agree and document all the outstanding aspects of the Cabinet Decision dated Monday, 1 June
2020 (2020-0372 Establishment of the Transport Asset Holding Entity and specifically (iv) a-d.
I also indicated Andy King will be continuing to support Heather in all her TAHE work; and Paul support Brendan. He
was appreciative.

I am in 52MP all day tomorrow with TSR and Taskforce meetings; please call or drop down to 26 if you wished to
discuss further,

Regards James

Cabinet-In-Confidence
James Hunter I Partner KPMG
NSW Treasurv
Mobile
EA: Ashlee Moreton

1
L on, Brendan

From: Hunter, James (Sydney)

Sent: Sunday, 13 September 2020 7:47 PM
To: Lyon, Brendan; Low, Paul; Watson, Heather; King, Andrew (AUS); Heathcote, David;
Yates, Andrew J; Linke, David; Lucas, Joel; Davim, Catia
Cc: Moreton, Ashlee
Subject: TAHE I Cabinet-In-Confidence
Attachments: TAHE

To the COGC,
Not for wider distribution

We deferred last Friday's COGC with several matters outstanding and the need for a full COGC to be in
attendance. Ashlee will confirm the dates for this week coming and next week.
I know Brendan ran a number of TAHE Operating Model debrief sessions late last week; with Paul in attendance of
some as well.

1
was working in Treasury on Thursday, and had face to face meetings with San, and Mike -further discussions with
San on Friday, and Mike called this evening as well.
I have also spoken with Joel, David, Andrew and Paul on Friday and over the weekend.

This note outlines summary of key feedback, and recommended steps I have discussed and agreed with David, Paul,
and with Mike and San.

1. Premier meeting
• On Friday a meeting with the Premier, Treasurer, Secretary of DPC (Tim Reardon} and Secretary of
Treasury (Mike Pratt} attending.
• TAHE was discussed. Everyone was well across the challenges but also imperative.
• The Premier was unequivocal that TAHE will go ahead, as was Tim - both wanted to accelerate work
including the ERC Sub.
• This isn't a surprise - we have always expected strong endorsement and resolve to proceed with
Government Policy to implement TAHE.

2. Approach to finalise ERC Submission and TAHE Operating Model

• Mike indicated Bruce Morgan (TAHE Chair} and the TAHE Board will be more involved in the weeks
ahead
• I indicated we needed to change the approach of TfNSW leading and writing - and others reviewing
and criticising File Notes and Reports.
• San had also agreed he would discuss this with Fiona and Anne - San has just sent me a text
indicating he wants to discuss this tomorrow am; I am in TSY 52MP so will be f2f.
• Mike also agreed we needed to change the approach and will discuss with San.
• This is positive. I indicated it was not helpful for Brendan to be holding the pen on these
documents, running consultations, and then having all parties criticise. We need everyone to agree
section by section, and have working groups on each - with joint leads. This approach will be
defined and shared this week.
• Depending on which ERC date confirmed (suggest it will be end third week not beginning second
week Oct} we have limited time to draft, finalise and submit through TSY/DPC processes.

3. KPMG involvement.
• I reinforced to both San and Mike this evening we have the most knowledgeable and experienced
team involved in TAHE.

1
 11 However, we have discussed further last week, and agreed with San that we would provide further
second partner support.
11 I explained EQCR to both San and Mike - they were not aware of this. I indicated we would have
two partners assisting Treasury, and 2 assisting TfNSW / TAHE Op Model work, effective
immediately.
11 Both were fully in favour of this.
11 This means that Paul will support Brendan in all meetings with TAHE and TfNSW, from Monday.
11 I will leave it for you both to discuss tonight/ tomorrow am, which meetings - and confirm
schedules.
11 Paul - San has also asked I introduce you by email - which I have done, and attached.

4. I have also attached the COGC Framework for resolution of commercial conflicts, as a timely reminder of the
20 protocols we have discussed and are operating within.
11 Major issues should be escalated through EQCRs to COGC as quickly as possible, and if necessary
meetings convened to discuss and resolve.
11 The COGC purpose is not to be reviewing and providing sign off on technical operating model or
accounting standard matters. These roles are the accountability of the specialist partners and the
EQCRs we have in place on specific programs of work.

questions with these notes, please call me.

Regards James

Cabinet-In-Confidence
James Hunter I Partner KPMG
NSW Treasury
Mobile
EA: Ashlee Moreton

2
L on, Brendan

From: Hunter, James (Sydney)

Sent: Thursday, 10 September 2020 9:48 AM
To: Linke, David; King, Andrew (AUS); Yates, Andrew J; Lucas, Joel; Low, Paul; Lyon,
Brendan; Heathcote, David; Watson, Heather
Subject: RE: Operating Model: NSW Treasury ask I Cabinet-In-Confidence

Cabinet-In-Confidence

Team,
As these communications are referring to Cabinet-In-Confidence materials, we need to have Cabinet-In-Confidence
in all headers, and on all materials we develop.
Please be very careful with all communications which is discoverable. This includes any reference to COGC
reviewing/ QA these documents, or providing advice, which we are not doing.
James

'
.ames Hunter I Partner KPMG
Mobile
EA: Ashlee Moreton

From: Linke, David

Sent: Thursday, 10 September 2020 9:44 AM
To: King, Andrew (AUS) ; Yates, Andrew J ; Lucas, Joel
; Hunter, James (Sydney) ; Low, Paul ;
Lyon, Brendan ; Heathcote, David
Cc: Watson, Heather
Subject: RE: Operating Model: NSW Treasury ask

Andy

Thanks for the update. Can I ask that as we respond we reflect on the words "correct, complete and align with the
"".ccounting advices". I cannot recall reading in any of the accounting advices how TAHE should be characterised and
•.:herefore what functions need to be in or out from its perspective.

What I think TfNSW has put forward is a solution to make TAHE work while acknowledging certain pressure points
that the operating model gives rise to which need to be resolved between the departments. The operating model
proposed may mean the accounting outcome is not achieved and that the model therefore needs to be changed or
alternatively, it does work and nothing needs to change. The identification of these issues and the modifications
required seems to me to be the prudent approach.

David

From: King, Andrew (AUS}

Sent: Thursday, 10 September 2020 9:00 AM
To: Yates, Andrew J ; Lucas, Joel ; Hunter, James (Sydney)
; Linke, David ; Low, Paul ; Lyon,
Brendan ; Heathcote, David
Cc: Watson, Heather
Subject: Operating Model: NSW Treasury ask

Dear COGC members

1
 L on, Brendan

From: Lyon, Brendan

Sent: Friday, 20 November 2020 3:08 PM
. To: Michael Pratt; San Midha; Linke, David; Heathcote, David; Low, Paul; Hunter, James
(Sydney)
Cc: San Midha
Subject: RE: UPDATED FINAL KPMG TAHE REPORT (NSW CABINET IN CONFIDENCE)

Importance: High '}Jf>({

Mike,

I am writing to apologise for my email and phone conversation yesterday. The tone was not appropriate or
professional.

TAHE has been a very complex and trying engagement, for all concerned.

~ooking ahead, I have decided it would be better for any correspondence on the TAHE engagement be addressed via
my second Partner, Paul Low, to put in some appropriate space.

Sincerely,

Brendan

From: Michael Pratt

Sent: Thursday, 19 November 2020 5:13 PM
To: Lyon, Brendan ; San Midha ; Linke, David
; Heathcote, David ; Low, Paul ;
Hunter, James (Sydney)
Cc: San Midha
ubject: RE: UPDATED FINAL KPMG TAHE REPORT (NSW CABINET IN CONFIDENCE)

Apologies TAFE should read TAHE.

Michael Pratt AM I Secretary

52 Martin Place, Sydr:ey (enter v1;:i 127 Phillip Street)

GPO 8.ox 5469, Sydney NSW 2001
T: IM
E. l Trc.::isur_y nsw gov .::iu
NSW
GOV[RN~ENT Treasury
EA

From: Michael Pratt

Sent: Thursday, 19 November 2020 5:12 PM
1
L on, Brendan

From: Lyon, Brendan

Sent: Friday, 20 November 2020 3:36 PM
To: Low, Paul; Heathcote, David
Subject: RE: Draft words

Importance: High

Noting that the phone call will have been 'emotively' described by some of our colleagues - I though it worth just
arming you up to understand what I said and did.

1. I got an email from the Deputy Secretary asking me to change our finalised report.

2. I then got an email from the Secretary asking in effect the same - and quoting at me Heather's (additional,
conflicting) scope of work.

3. I then wrote my short email.

4. And then I got called a rogue partner- even though I have been the only one doing my scope that was
agreed by everyone including Treasury.

5. And then I rang him

6. What I said to Mike yesterday on the call was:

• In 20 years I've not seen the types of behaviours I'd seen from Treasury and it was unrecognisable to
me.
• I said that the continued mischaracterisation of our work and personal attacks were deeply
inappropriate.
• I said that Treasury had not advised of errors in any of our work and that I do not appreciate the efforts
to discredit our my team, our professional work or our firm.
• I told him that I thought the efforts to hide the results are inappropriate and unprofessional.
• I asked him why he thought it was ok for Treasury to behave as it has - he said that we had 'not listened
to us'
• I said "/ am listening now, what do you disagree with?"
• He said that he agrees with Heather Watson's work (which is being used precisely to discredit our work)
• I asked him which bit of the financial or operating model Treasury disagrees with.
• He struggled for words and then hung up.

Important:
It's important to note that I was not angry, didn't yell or swear- I just said as above; and very calmly.

I did not raise this this morning as I didn't want you to think I was explaining or justifying - but now that I've sent the
agreed retraction, it's worth my two champions knowing what I actually said and did.

I am not surprised that Pratt went mental. He's passive aggressive, a real fan of 'tough' letters - but has the minor
problem of having a dog that ate about $7.3bn of homework. Whoops!

With the benefit of the content, I am not sure either of you would disagree - noting that the delivery was not ideal
-@@

Anyway, that's what went down - and almost word for word what I said.

1
Have a good weekend.

From: Low, Paul

Sent: Friday, 20 November 2020 2:57 PM
To: Heathcote, David ; Lyon, Brendan
Subject: RE: Draft words

I'm good with that guys©

Regards

Paul Low
National Leader - Infrastructure, Government and Healthcare

KPMG
Riparian Plaza, 71 Eagle St
Brisbane QLD 4000 Australia

:,pmg.com.au

From: Heathcote, David

Sent: Friday, 20 November 2020 1:50 PM
To: Lyon, Brendan ; Low, Paul
Subject: Re: Draft words

Hi Brendan,

My suggestions detailed below:

./like,
.am writing to apologise for my email and phone conversation yesterday. The tone and comments were not
appropriate or professional.
TAHE has been a very complex and trying engagement, for all concerned.
Looking ahead, I have decided it would be better for any correspondence on the TAHE engagement be addressed via
my second Partner, Paul Low, to put in some appropriate space.

Brendan - I think this needs to go back to all copied in the original email to close this out and ensure we can move
forward positively.

Paul - not sure if you have any comments?

Rgds
David

Get Outlook for iOS

From: Lyon, Brendan

Sent: Friday, November 20, 2020 1:47:26 PM