Accountants, lawyers and other enablers and intermediaries
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- ‘Without reservation they think advisers had undermined spending plans by governments."
Dave Hartnett,
Director-General of UK Revenue & Customs, July 2007. He said every country
involved in a recent OECD project believed tax advisers had an adverse effect on government budgets.
- “Our investigation revealed a culture of deception inside KPMG’s tax practice.”
Senator Carl Levin, the senior ranking
member of the US Senate.
- The adage that a bird in the hand is worth two in the bush is now old hat. A conservative accountant counts the bag at the end of the shoot and a less conservative one registers the numbers as the birds fall from the sky. But the modern accountant not only eats what he kills but also takes credit for the expected cull as soon as the hunters’ guns are primed.
John Kay, Financial Times, Oct 14, 2008
- It's too early to say whether we will see more prosecutions of lawyers who helped engineer tax shelters, said John Moscow, who spent 30 years at the New York County DA's office investigating fraud and white-collar crime. But there are "a couple thousand people in the world who run this industry, and if they were to be prosecuted, tax collections would rise without an increase in tax rates.
John Moscow , veteran crime-fighting lawyer, 2009
- Men have to do some awfully mean things to keep up their respectability
George Bernard Shaw
- The auditing industry is the private police force of capitalism.
Prem Sikka, John Dunn, 1999
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The role and influence of tax intermediaries on the tax-paying public, including corporates is significant. Tax administrations need to
demonstrate that they operate on the basis of fairness, that they are transparent, that the laws governing taxes are clear and that good
governance is practiced. This goes along with making it easier to comply through innovative measures designed to make paying tax easier.
Intermediaries, however, influence these attempts to raise levels of compliance for good and for ill. On the one hand they may make the tax
system more accessible to taxpayers. On the other they may market or facilitate aggressive tax strategies that undermine the policies of
government and influence perceptions around what is fair and equitable. In our environment, this is of particular concern as the role of the
fiscus in development, redistribution and providing stability and predictability cannot be understated.
Trevor Manuel, South Africa's Finance Minister, January 2008
- The industry is going to crap.
David Kelley, U.S. attorney in New York in charge of a case against KPMG on selling fraudulent tax shelters.
- An essential component of any agenda for more stable capital flows is better accounting, for accountancy plays a vital role in economic development. At its simplest, economic growth is the cost-conscious pursuit of productivity. . . In this respect the commercialisation of the professional ethos in accountancy has been singularly unfortunate. The fact that the big accountancy firms franchised their brand names outside the US and Europe without maintaining the quality of their audits has contributed to corporate scandals in the emerging market and transition economies, so eroding investor confidence. . . . The work of bodies like the IASB will comprise a critical element in the puluming of globalization. . . . it would be greatly helped if its funding base could be broadened to the point where its dependence on the big professional firms and large corporations was insignificant.
From Going off the Rails: Global Capital and the Crisis of Legitimacy, by John Plender, Wiley, 2003
- At some point . . . such conduct passes from clever accounting and lawyering, to theft from the people.
US Internal Revenue Service, in a case dealing with KPMG's "phoney tax losses."
- "(IFRS-8) moves accounting into uncharted waters that only the US have looked at before (and not without some difficulties arising
for them on the way). Worse, it abandons any commitment to accounting on the basis of geography which breaks the links between a corporation
and the societies which grant its licence to operate, and as such undermines the whole essence of Corporate Social
Responsibility."
Richard Murphy , Tax
Research LLP, April 2007
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"I have had Russian clients introduced to me who appear to have built up wealth . . its not just the source of the wealth
though. It's the attitude to advice. Too many clients want to hide behind the institutional name of the law firm - "my
lawyer is X". It gives a level of approval the client might not otherwise get."
Charles Lubar, London partner, Morgan Lewis & Bockius
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"In many respects tackling the secrecy culture of tax havens should be the highest priority for anti-corruption campaigners because
the agents who create and maintain this secrecy space include some of the most powerful and privileged elites with society. It is
bankers, lawyers and accountants who create and operate the corruption interface linking illicit activities to the mainstream
economies."
John Christensen, Tax Justice Network
- "There are plenty of carrots encouraging accounting firms to look the other way ... there had been one big stick discouraging them. If things went awry, they could be sued ... In 1995, Congress adopted legislation intended to limit securities litigation ... in doing so, they provided substantial [liability] protection for the auditors. But we may have gone too far: insulated from suits, the accountants are now willing to take more 'gambles'.
Joseph Stiglitz, in his book The Roaring Nineties
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With complexity of commercial activities, regulators need some expert input and thus need to consult the relevant corporations and
industries. However, that should not result in domination by technical experts. As a crude analogy, consider the case of nuclear energy. In
building any reactor and power plant, nuclear experts should be consulted, but whether we should have nuclear energy is a social and
political decision.
Professor Prem Sikka,
University of Essex, Jan 29, 2008.
- Mark-to-market accounting is criticised today for forcing banks to recognise that unsalable assets have little value. Companies resent the obligation to use mark-to-market accounting when the market is down. But the public should be more concerned for the implications of mark-to-market accounting when the market is up. The authors Bethany McLean and Peter Elkind describe how Enron’s Jeff Skilling, in a fit of uncharacteristic generosity, once ordered champagne for all his colleagues. The toast was in appreciation of a letter from the Securities and Exchange Commission agreeing that Enron could make wide use of mark-to-market accounting.
John Kay, Financial Times, Oct 14, 2008
