Alinta accused of pressuring EY over audit report

Through its retail operations, Alinta collects the names, addresses, birth dates, mobile numbers, Medicare, drivers licence and passport numbers, credit card details and in some cases individual health information.

A few months after completing the June 2019 Alinta internal review, EY agreed to conduct an independent external compliance audit that would be sent to the Foreign Investment Review Board (FIRB) as part of a series of foreign ownership sale conditions placed on Alinta in 2017.

The secret conditions were imposed by FIRB after then-treasurer Scott Morrison approved the $4 billion sale to Chinese-owned Chow Tai Fook. Those conditions were never made public but leaked documents reveal there were more than 10 and most related to data security and included annual independent compliance audits.

The appointment of EY to also do Alinta’s external compliance audit for FIRB raised questions inside both organisations about whether it could be perceived as a conflict. “It is like checking on your own homework,” the whistleblower said.

EY discussed internally the potential conflicts but decided to proceed with the report. It is not clear if Alinta discussed these potential conflicts with FIRB or Treasury.

A series of detailed questions were sent to EY and Alinta. EY said it didn’t comment on client matters but said it stands by the integrity of its work. Alinta didn’t answer most of the questions.

When asked if it had pressured EY to dilute the June 2019 privacy report, Alinta said it underwent a standard audit process.

The final draft external compliance report was the subject of discussion at the February 2020 Alinta board meeting. It said “the form of reporting required by FIRB has been provided”.

An EY insider who spoke on the condition of anonymity said he was shocked by the cosiness of the relationship between EY and Alinta. He was referring to the decision by EY to allow one of the auditor’s partners to act as interim chief financial officer of Alinta for four months from late 2018.

Alinta said it was confident the “appropriate processes” were in place to ensure that no conflicts arose when the interim CFO was appointed.

The revelations come as a parliamentary inquiry into the big four auditors, EY, Deloitte, PwC and KPMG, released an interim report on February 28 that made a series of recommendations to reduce the close relationship between companies and audit firms, who also do consulting.

Senator Deborah O’Neill, who spearheaded the parliamentary inquiry, called on EY to release earlier drafts of the Alinta June 30 final report into privacy, along with draft reports and the final report that went to FIRB.

She said she would raise these matters in parliament. “Matters like this are critical to inform the further recommendations of the inquiry into audit quality,” Senator O’Neill said. “It is clear now that for over 1 million Australians, details of exactly what Alinta and their various suppliers have done with their personal identification details is a matter of public interest.”

“The only cure for the sort of cover-up that is being attempted by EY and Alinta is the full glare of public scrutiny,” she said.