Ciaran Ryan | Moneyweb | 3 July 2020 |
A new report by Open Secrets puts them back in the crosshairs.
Of the roughly 1 000 people attending the virtual release of the latest Open Secrets report titled The Auditors, a good number were likely from the accounting profession. They must have been squirming in their seats as their crimes were read out in excruciating detail.
For example, in 2005 KPMG was fined $456 million (R10 billion) for defrauding the US tax authorities by designing, marketing and implementing illegal tax shelters to help wealthy individuals and corporations escape tax liabilities.
For this, KPMG received a deferred prosecution and paid a fine much smaller than the profits it made from the schemes.
KPMG wasn’t alone. The Big Four were all in on one of the biggest profit spinners of the last 20 years – ‘tax shelter’ structuring. In 2013 Ernst and Young (EY) paid $123 million (R2.1 billion) after admitting to US regulators that it had helped clients dodge taxes worth $2 billion (R34 billion). The other two members of the Big Four cartel – PwC and Deloitte – were likewise involved in schemes to escape tax.
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Not all of these were illegal, but they were pervasive enough to characterise the Big Fours’ institutional behaviour as “skirting the rules and placing profit above principle for the sake of consulting clients,” says the Open Secrets report.