Betrayed by the Big Four: whistleblowers speak out

Lucy was trying to jump into a black cab to escape from an overly familiar boss. He got in too, followed her as she left the taxi and, eventually, physically shook her while she tearfully refused to go for a drink with him.

Mary will only tell her story in a hushed voice from the bottom of the garden. She is worried about her children overhearing how a partner at her firm sexually assaulted her, kick-starting a process that led to her eventual redundancy.

John recalls weeks sitting at home in his pyjamas, depressed and staring at a blank computer screen. He was told to stop coming into work shortly after reporting several incidents involving sexist and homophobic abuse to human resources.

Julia felt ostracised by colleagues at the Tokyo branch of her firm because she was not ethnically Japanese, and says she was subjected to a form of bullying known as mushi in Japan, in which the victim is completely ignored by co-workers.

These individuals worked for four of the most renowned names in the business world: EY, Deloitte, KPMG and PwC. They are among 20 former employees from the Big Four accounting firms who have spoken to the Financial Times about their experience of harassment, bullying and discrimination in the workplace over the course of a year’s investigation into how these firms treat whistleblowers within their ranks.

The FT identified a disturbingly common pattern in terms of how complainants were treated: most initially felt ignored, then isolated and were eventually pushed out. Legal clauses aimed at silencing them swiftly followed; nine of those interviewed said they were pressured into signing restrictive non-disclosure agreements. Others were asked to sign but resisted.

“Much worse than the incident itself is the fact that the company I thought was going to protect me then betrayed me and protected him and hung me out to dry,” says Mary. “That has been much more damaging to me in the long run.”

Many were extremely concerned about speaking to the FT, asking to meet in inconspicuous coffee shops and scanning the door every time a new customer walked in. Several worry about employers viewing them as troublemakers, or about the impact of breaking confidentiality agreements. Some don’t want their friends and families to know the full extent of their experiences.

One harassment victim only spoke out because she worries about the scores of graduates that join the Big Four each year. “[The firms] are blooming good at PR, and there are an awful lot of young graduates leaving university and joining them, and the culture is not what they were expecting,” she says.

Much worse than the incident itself is the fact that the company I thought was going to protect me then betrayed me and protected him

Many of these whistleblowers — most of whom shared documents with the FT that supported their accounts — claim they were treated like pariahs by their employers at a time when they most expected to receive support.

They found this particularly galling given the influential role the Big Four — who employ more than one million people between them and posted $154bn in collective revenues over the past 12 months— have in advising the world’s most powerful institutions on best management practices.

“Their clients are in every industry in the world, from universities to governments to businesses, and they are the ones setting the bar on ethics,” says Mary. “I have a really hard time accepting that the people who are writing the rules of the corporate world are the same people who, when the rubber hits the road, really have no ethics and will ruin someone’s life to protect their reputation.”

Lucy can still remember her excitement the day she started as a trainee auditor at EY, one of the world’s largest accounting firms. She was wowed by the firm’s UK headquarters and the buzz she got after being given a company phone, a laptop and a corporate credit card. “It was super exciting. I felt like — this is it, I am proud of myself and I’ve made my parents proud.”

She was asked to join the EY audit team at a major Asian client in London. But soon she became uneasy. A senior manager in the audit team — who was popular among partners and trainees — began paying her a lot of attention. When she went to pick up a dinner order for the team from Wagamama, he would insist on accompanying her.

Although her team had a “hot desking” system, he often ended up sitting next to her. One evening before Christmas 2009, he left her a voicemail. He sounded drunk and made several sexually explicit references, including saying that he wanted to “f**k” her, and that he “needed and wanted” her.

She hoped it was just a drunken phone call that she could forget after the holiday. But by January, she says, his behaviour became even more extreme. He would leave Post-it notes on her desk, saying she looked “hot”. One evening, she says, he followed her as she left the office.

When she hailed a black cab to escape, he jumped in as well, then followed her into the Apple Store and pressured her to go for a drink with him. When she refused, he put his hands on her shoulders and shook her. Exasperated, afraid and on the brink of tears, she pushed him away and again asked him to leave her alone. He finally left.

“That’s when I thought, surely now he’s got the message that I’m not interested? But it did not stop him,” she says. In the weeks that followed, he started booking one-on-one meetings that she felt obliged to attend. She would arrive with her laptop and notebook, only for the senior manager to tell her to put them away and bombard her with requests to meet him for a drink.

“By that time, I reached breaking point. I kept thinking, how am I going to get through this? I just cannot do this. What do I do? Do I go straight to HR?”

The firm’s HR team set up a meeting between Lucy, her line manager, a partner and the senior manager she had complained about. In the meeting, she says, she was pressured into accepting a verbal apology from him for making her feel “uncomfortable” and asked to sign a document — which she was never given a copy of — stating that she accepted the apology and agreeing to a confidentiality clause.

“I signed it because I was scared and did not feel I had any option,” she says. As soon as she qualified as an auditor, she quit and moved into another industry. The senior manager was promoted to partner within two years and remains at EY today.

The events have gnawed away at Lucy since. She cannot bear walking near her old office and is wary of being alone with senior male colleagues. “It’s still incredibly raw — it’s horrendous,” she says. This summer, she asked the firm to reopen its investigation.

EY said this case “was investigated in 2010, in line with the firm’s policies, and we understood the matter had been satisfactorily concluded with both parties . . . This year, the individual contacted us and we conducted a new investigation. Based on all the information that was available from EY and the individual, we found no new evidence to lead us to a different conclusion.

“We have asked the individual to share any further evidence with us, but she has not done so. We take all allegations of inappropriate conduct very seriously and investigate fully.”

The firm added that it introduced a global policy in 2017 that obliges all staff to “speak up when they see, suspect or become aware of any acts of discrimination and harassment”.

The 20 whistleblowers interviewed for this article worked around the world, from San Diego to Tokyo to London, but their experiences were strikingly similar. Almost all complained about an individual of a higher rank within the firm. In most of these cases, the whistleblower left within months of raising their concerns, while the alleged perpetrator remained.

The reason this pattern is so stark is simple, according to several current and former insiders: the Big Four want to protect their top fee-earners, even if this is to the detriment of the rest of the workforce.

“We are nothing. We are grist to the mill for these organisations,” says a former EY employee who complained about homophobia at the firm. “There is no prestige attached to anybody below partner level, and the reputational damage of having a partner being seen to misbehave is far more significant to them than paying someone off and telling them to shut up.”

The structure of the Big Four is a contributing factor. As partnerships, they are owned by hundreds of individuals who have often worked for decades to attain that coveted position. In the UK, partners across the Big Four earn an average annual income of between £600,000 and £900,000. Only a fifth of them are women.

A former Big Four HR professional, speaking privately, says the firms are reluctant to fire misbehaving partners because this would undermine the model of staff lower down the food chain “breaking their backs to become a partner”.

The reputational damage of having a partner being seen to misbehave is far more significant to them than paying someone off and telling them to shut up

Unlike the top ranks of large listed companies, partners have usually worked together since their careers began and it is rare for outsiders to enter that circle of seniority. This means the firms tend to be run by an inner clique.

“When you raise issues with people who have grown up together, you become a problem for having raised an issue and finding fault with a friend,” says a former KPMG director.

When asked whether the Big Four tend to protect fee-earners and punish complainants, KPMG said: “This is not an environment we recognise.”

“If that person is generating £5m of fee revenue, you have to look at the £5m alongside the complaints from relatively junior staff,” says Laura Empson, director of the Centre for Professional Service Firms at London’s Cass Business School.

“It is not necessarily that [internal investigators] will crudely make that calculation, but in terms of how they look at the evidence there will be a bias towards wanting to protect the golden goose. Because first and foremost they are meant to be profit-making businesses.”

All of the Big Four say they have policies that make it clear that any kind of inappropriate behaviour — including bullying, harassment and discrimination — are unacceptable. None of the firms agreed to share data on how many whistleblowing reports they received over the past three years or how many of these were upheld.

They also declined to comment on how many departing employees were asked to sign confidentiality agreements, or whether the use of these agreements has increased over the past decade.

Mary, who previously worked at Deloitte, can only speak via a long-distance phone call and hurries out of the house when the interview begins so that she remains out of earshot of her family. She worked in Deloitte’s Bermuda office for several years until she was made redundant in March 2017.

Her redundancy came just 15 months after she reported to her firm and local police that she had been violently sexually assaulted by a male partner from Deloitte’s New York practice following an evening out with colleagues in August 2015. The details of the assault, which were first reported by the Australian Financial Review, are harrowing.

Over the course of the evening the woman said she drank four glasses of wine in a hotel bar with several other colleagues. After the group viewed the hotel’s new restaurant and art collection, the partner invited them to see his freshly renovated room. But the others peeled off before they reached his door. To be polite, Mary agreed to have a quick look before heading home.

Once inside, she noted that the bedroom was “small, the decorations were brown, and it was not new”. “I remember thinking, this does not look very interesting,” she said in her witness statement to the police, seen by the FT. She turned to leave but was blocked by the partner.

He asked: “Why do you still have your clothes on?” Mary immediately told him to “f**k off” and tried to get to the door. “That’s when I knew I was in trouble.”

A violent sexual attack followed. When she got home, she realised that the “skin was torn off of my nipples, the right more than the left, and they were both bleeding”, and she had bruises on her chest and arms, according to the statement.

Mary was initially terrified of the consequences of talking about the assault. “I knew that reporting a powerful US partner would put my job at risk. I was really just in shock.”

But in the following weeks, she began to suffer extreme anxiety, connected to the fact, she says, that the partner “came and went to the Bermuda office whenever he wanted . . . I once heard an American accent in the stairwell and had a huge panic attack . . . I couldn’t go on like that.”

Mary reported the incident to Bermudian police, on her doctor’s advice, in December 2015. She told her firm about the police’s involvement and requested that Deloitte US be kept in the dark until the official investigation was complete. Her concern was that someone would tip off the partner.

But Mary says her request was ignored. Within days, the partner was told about the investigation. Since then he has not returned to Bermuda, where he would face immediate arrest. “I don’t stay up at night thinking about this partner at all but I do think about this institution and how they have betrayed me. And now I think the whole world is evil and corrupt and dishonest,” she says.

Deloitte said its Bermuda firm “encouraged the employee to participate in an investigation, which she repeatedly declined to do”. It added that Deloitte US “promptly engaged an outside law firm to conduct an independent investigation, including interviewing witnesses, and could not corroborate any of the allegations”.

“Subsequent assertions regarding the handling of this matter are simply not consistent with the facts,” it said.

The firm also said it took concrete action in the UK in 2015 to ensure that “all our people believed they could raise any concerns without fear of penalty”. This involved putting more than 6,000 of its leaders through “respect and inclusion” training.

Many of those interviewed for this piece said the fact that the Big Four are almost inescapable in corporate life makes it very difficult to move on from a traumatic exit. The firms have vast alumni networks across the world’s largest listed companies, regulators, the civil service, academia and NGOs.

The firms are also widely seen as the watchdogs of the corporate world. All listed companies are required by law to hire reputable accounting firms to scrutinise their accounts and flag anything suspicious.

If junior staff are too afraid to speak up about internal problems, there is little chance they will feel bold enough to question holes in a client’s accounts or challenge a partner’s judgment — particularly if that client brings in huge fees.

Mauro Botta, a former PwC director who reported the firm to the US Securities and Exchange Commission in 2016 over concerns about the audits of several Silicon Valley clients, says:

“These four institutions are the ones that every investor trusts to report any issues in the companies they audit, such as fraud. By definition, they are meant to be held to a much higher standard. The fact that they are not — everybody should be worried about it.”

One of the biggest problems repeatedly highlighted by this investigation was flaws in the Big Four firms’ whistleblowing channels. A common refrain from the whistleblowers was: don’t trust HR.

“One of the things I came to realise is that HR works for EY, it does not work for you. I thought at the very least that they would be impartial. I now realise how naive I was,” says the former EY employee who complained about homophobia.

A former HR professional at one of the firms says: “HR is awful. They are there to protect the business. Their goal is to get [complainants] out of the business as quickly and as quietly as possible. . . Once you put in a complaint it is David versus Goliath. The whole system is set up to protect the firm.”

Several sources also raised concerns about whistleblowing hotlines. They said formal whistleblowing reports would be initially outsourced to an external provider, but then redirected to internal employee relations, HR or legal teams. A KPMG whistleblower said he suspected he could not trust the hotline or internal HR teams when he wanted to lodge a report.

“When I raised [an official complaint], I thought long and hard about it because I figured if they knew who raised it, they would be pretty unhappy. People find it very difficult to take that step — it’s like walking off a cliff. You don’t know if the plunge will be two metres or 20,” he says.

Julia is planning legal action against her firm after deciding its whistleblowing channels had failed her. The young mother says she was unfairly disciplined by PwC Tokyo for bringing her toddler into the office cafeteria when kindergarten had to close early during an emergency.

This incident is one of several that she claims were part of a campaign by colleagues to unlawfully demote and ostracise her at work over the past two years. Because she is not ethnically Japanese, she believes that many of her problems arose from a perception by colleagues and managers that she is “culturally unfit” to work at PwC Japan.

Julia’s troubles began when her in-house “coach” failed to provide clear goals despite being asked many times. Gradually, she says, she was pushed out of daily activities and subjected to mushi, being completely ignored. At her annual evaluation, she was given a poor rating because she had not met goals that she says were never set.

The whole episode, she now believes, was part of an attempt to first sideline and ultimately get rid of her. She remains at PwC but has been demoted, and now works in what she describes as “limbo” — being asked to do odd translation jobs for which she is not qualified.

She has taken her complaints to the local labour bureau and to PwC Global, while her lawyer is planning to bring a case of unlawful demotion against PwC Japan.

PwC said: “Speaking up is crucial to PwC’s culture and its long-term results. We take complaints seriously, and maintain an appropriate process for reporting concerns both by PwC professionals as well as by outside parties.

“We require appropriate follow-up and investigation of complaints, and we protect our people against retaliation for reporting concerns in good faith. Retaliation is itself a form of serious misconduct that we do not tolerate.”

The whole process around employment tribunals is to rack up your costs and bleed you dry until you give up

Julia’s legal battle is likely to prove difficult. The Big Four’s aggressive approach to legal action also angered many of the whistleblowers, with several saying they were advised by their own lawyers not to pick a fight. Two former employees said their firm made explicit threats to ruin their reputation if they pressed ahead with legal action.

Others believe the firms deliberately drag out legal proceedings to make it impossible for anyone without huge financial resources. One woman said her lawyers told her a UK employment tribunal claim would take at least two years, and cost her more than £300,000.

Unable to cope with the potential stress, she followed her lawyers’ advice and signed a settlement agreement with an NDA.

“The whole process around employment tribunals is to rack up your costs and bleed you dry until you give up,” says the former HR professional. “Most people just want to move on. That’s why there’s no accountability in these firms.”

Another woman, who did take legal action against her firm, said each employment tribunal hearing cost her at least £12,000. She estimates the total cost was more than £300,000.

“They make claim after claim in the hope that you run out of money for the tribunal, your witnesses get sick of you and your lawyer wants money up front. Who can afford or cope with this? It’s not right that a big firm can deploy these tactics so you run out of steam and money.”

John was in his early thirties when he started his second internship at KPMG after a career in computer science. He was excited to return to a major outpost on the US East Coast. But, assigned to a banking team in the audit division, he became disturbed by the frequent use of offensive language.

He recalls one colleague referring to the gay community as “f**king fags”, mocking female members of staff and imitating LGBTQ people by adopting an effeminate accent — behaviour that John reported to HR.

In early 2018, John’s manager stated that he would like to “gang bang” a female member of staff. The manager asked John what he would like to do to the woman. When he did not respond, the manager laughed and said: “We are just f**king with you, we certainly don’t need a MeToo movement here.”

John reported the incident to KPMG’s HR team and to the partner who recruited him. To his surprise, the partner later criticised his decision to report the matter to HR, telling him: “I wish you had shut up and not said any of this.”

In early 2019, John reported a more trivial matter to HR involving threatening behaviour from a colleague. He says he was initially advised not to worry and to work from home for a short period. But the weeks stretched into anxiety-ridden months. At the end of April, he received a phone call telling him his role had been terminated.

John has since found work at another Big Four firm but says the experience scarred him. “[It caused] embarrassment [and] my confidence to completely shatter . . . It was depressing and stressful and not easy for my husband.”

Although he was never given an official reason for his termination, he believes he was pushed out for blowing the whistle too many times on inappropriate behaviour by those more senior than him.

KPMG US said: “KPMG has zero tolerance for retaliation. We investigate allegations of misconduct whenever we are made aware of them. We take action in instances where inappropriate behaviour is substantiated, and we have robust policies and practices in place to protect complainants . . . We encourage and expect our people to report unethical and offensive behaviour.”

KPMG UK, which has investigated three partners this year over conduct-related issues, adds that it recently introduced staff guides on how to raise concerns about behaviour and launched a new “Speak Up” app to make it easier to report problems.

For many of the individuals interviewed by the FT, losing the support of the firm where they had spent the bulk of their careers has had a devastating mental-health impact.

A former director at KPMG, who left two years ago after complaining about bullying by a male partner, says she fell apart in the months before her departure. Requests for support from senior colleagues were ignored, she says, until eventually she was signed off sick with severe stress.

I was a gibbering wreck. It had a massive impact on my health and my confidence. It’s taken a long time to get over it, and you feel embarrassed. Was it my fault? Was I not strong enough?

Although she signed an NDA, she agreed to meet to discuss her experience. Sipping a lime and soda in a south London pub, she seems nervous but frank. “It had a huge impact on me,” she says. “I was a gibbering wreck and could not function. I was not sleeping, I was on antidepressants, it had a massive impact on my health and my confidence.

“It’s taken a long time to get over it, and you feel embarrassed. Was it my fault? Was I not strong enough? I’m not sure it will ever stop having some impact. [KPMG is] all I’ve known in my working career and it’s pretty devastating to leave in that way.”

The former EY employee who complained about homophobia says they required psychiatric treatment after leaving. “I was just completely broken, because work was the one thing I felt like I was still doing really well at. When work was taken away and this is how I was treated, I felt completely adrift.”

Several whistleblowers added that the impact of signing confidentiality clauses, at a time when they felt at their most vulnerable, continues to wreak havoc in their lives. The criticism of how the Big Four use NDAs comes at a time of heightened scrutiny around the use of these agreements across the corporate sphere.

There is widespread concern that NDAs are being used inappropriately by employers to cover up egregious workplace behaviour, prompting campaigners to call for more concrete action to stamp out their misuse.

The whistleblowers believe their former firms have been too quick to push confidentiality agreements on individuals over matters that really have nothing to do with confidential information.

“The NDA is absolutely outrageous,” says the former EY employee. “It reinforces the notion that this whole thing is a shameful affair. Signing the NDA prevents you from doing one of the things that helps you best move on — talking about what has happened to you. Essentially it perpetuates the abuse.”

The former KPMG director adds: “[Signing the NDA] felt very, very harsh, as if I had some kind of state secret. It was heavy-handed. It is in the nature of an audit firm to be risk-averse. If they put as much effort into getting to the root cause of the cultural issues as they do into trying to contain these complaints, they might get somewhere.”

Some names have been changed to protect individuals’ anonymity. Additional reporting by Leo Lewis in Tokyo.

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Letter in response to this article:

KPMG is a fair and respecful place to work / From Nick Sarker, London W5, UK