The government of first minister Alex Salmond yesterday gave a £1.7 million Regional Selective Assistance grant to the ‘Big Four’ accountancy firm KPMG to establish a tax avoidance centre in Glasgow.
To me this is an astonishing waste of public money, a kick in the teeth to ordinary taxpayers, detrimental to the long-term health of the Scottish economy, and a bizarre thing for the former Royal Bank of Scotland economist to do.
We really should not be giving any encouragement to ‘Big Four’ accountancy firms at the moment, given their pivotal role in fomenting the global financial crisis (thanks in part to the inadequacy of their auditing of banks and financial institutions from the late 1990s on), in draining governments around the world of resources (thanks to their hawking of both legal and illegal tax scams, etc), and their increasingly desperate post-crisis attempts to cover up fraudulence and other wrongdoing in the financial system.
Why should we as taxpayers be subsidising KPMG to set up a tax centre whose employees, one assumes, will focus on trying to stay one step ahead of Her Majesty’s Revenue & Customers by devising elaborate schemes to help multinational corporations and high-net-worth individuals avoid tax (or, if not that, then helping higher-paid colleagues to do that, by doing their box-ticking for them)?
Also, the global accountancy firm is hardly struggling at the moment — in 2012, it had global revenues of $23 billion (£15 billion) up 4.4 per cent on the previous year.
On a wider level it is worth remembering that KPMG — the firm that signed off HBOS’s wildly inaccurate 2007 accounts in February 2008, having earlier smeared the whistleblower who sought to avert the bank’s collapse — is a wholly unethical outfit. As Richard J Murphy says in his blog, in the wake of the worst financial crisis the world has seen since the 1930s, they are very much part of the problem and not part of the solution.
It is also incredible that the chancellor, George Osborne, thinks it is appropriate to appoint ex senior partners of the firm to run both the Financial Conduct Authority and Her Majesty’s Revenue & Customs (he appointed John Griffith Jones to chair the FCA last June and Ian Barlow to run HMRC in July 2102; both are former senior partners or chairmen of KPMG).
The appointments have killed off any prospect of meaningful reform of either tax or financial regulation in the UK, at least for as long as these guys in charge.
Osborne has arguablly put the foxes in charge of the hen coop and, it seems, given senior members of a quasi mafia clan licence to cover-up their past crimes and perpetuate new ones at the taxpayer’s expense.
In the case of Griffith-Jones the FCA will lack credibility so long as he remains in place, especially given his role in ensuring that the Financial Services Authority did not investigate the KPMG’s pivotal role in the failure of HBOS, and the conflicted nature of its role when the firm produced a flawed report into the departure of the bank’s ex head of group regulatory risk, Paul Moore.
In a letter published in today’s Financial Times Alan McDougall, chief executive of corporate governance body PIRC, said:- “We now learn that the new chairman of the Financial Conduct Authority, John Griffith-Jones, chairman of KPMG before and after HBOS collapsed, attended the Financial Services Authority meeting that set the terms of reference for the FSA’s own inquiry into the collapse of HBOS. The minutes of that meeting show the FSA not to be looking at the conduct of the auditors or the role of accounting standards.
“In Pirc’s opinion, both the presence of Mr Griffith-Jones at the meeting and the scope agreed at the meeting raise more questions. It cannot be right that the chairman of the new FCA has any link with the second largest UK banking collapse in history. He should at least step down until the performance of KPMG in the audit of HBOS, and accounting standard setting, has been properly and independently investigated.
I endorse Allan’s and Richard’s calls — both Griffith-Jones and Barlow should step down, and step down now.
KPMG has also admitted to criminal tax fraud in the United States, and this week one of its partners admitted to accepting at least $50,000 in bribes, a Rolex Cosmograph Daytona watch, plus other lavish gifts in exchange for providing a friend with inside information about audit clients Herbalife and Skechers USA.
KPMG audit partner Scott London admitted taking the bribes to provide the information to his long-time friend and golfing buddy Bryan Shaw, who was latterly wired up as a stooge for the FBI. Shaw used the inside information to make immensely profitable trades in the shares of the companies concerned. KPMG has now resigned as auditor of Herbalife and Skechers, London, 50, has been fired and was today charged with one count of conspiracy to commit securities fraud through insider trading by the US Department of Justice.
How many other KPMG partners are augmenting their already very generous salaries (the typical partner can expect to earn in excess of £600,000 plus per year, while senior partners like Griffith Jones earn up to £6m a year) by selling confidential client data to their mates?
Oh, and while I am on the topic, most of the fund managers I speak to these days say the KPMG imprimatur on a set of accounts does nothing to reassure them of the accuracy of anything, and in some cases actually increases their scepticism about the numbers.
Yes this is the sort of firm that KPMG is. Not to be trusted. If he had any sense, Salmond would withdraw this bizarre £1.7 million bung to KPMG before he becomes irredeemably tainted by association.
This blog was posted on 11 April 2013