In March The Economist magazine rang alarm bells (again) about a rise in concentrated market power: a problem where the biggest firms get ever bigger and more like monopolies, making it easy to extract wealth from the rest of us (as opposed to creating wealth.) This, in turn fosters steeper inequality and poverty and reduces economic growth. As they put it:
“High profits across a whole economy can be a sign of sickness. They can signal the existence of firms more adept at siphoning wealth off than creating it afresh, such as those that exploit monopolies. If companies capture more profits than they can spend, it can lead to a shortfall of demand.”
Back in June 2000, three years before TJN’s birth and at a time when nobody was talking about the issues, the charity Oxfam published a seminal document entitled Tax Havens: Releasing the hidden billions for poverty eradication. It was an important part of global tax justice history. We’re delighted that Oxfam has again been extremely active in the area, and now has produced an important, in-depth new report entitled Ending the Era of Tax Havens: Why the UK Government Must Lead the Way, written with the help of TJN’s research Director Alex Cobham.
A new guest blog by Atul K. Shah, Senior Lecturer, Suffolk Business School, University Campus Suffolk, UK. This is based on a paper Shah first presented at a Tax Justice Network Research Workshop at City University in June 2015, and it follows a more focused piece last month calling for a probe into KPMG: a call that was cited in the Financial Times. Cross-posted with Tax Research UK, slightly adapted.
Guest blog: Professional Chameleons Or Independent Public Auditors And Regulators?
A Case Study of KPMG and its Regulatory Arbitrage Services
By Atul Shah
Recent news regarding tax avoidance and unethical banking cultures are putting an increasing spotlight on the Big 4 Accounting Firms and their independence, professionalism and conflicts of interest. Scholars are beginning to question their huge power and influence in global accounting, auditing and tax, yet little is known about exactly how they practice regulatory arbitrage and the extent to which it is structural and systemic, and how they continue to get away scot free from major financial crises and corporate failures. In the case of the audit failure at HBOS, KPMG have still not been independently investigated eight years after the loss of billions of pounds, thousands of jobs and huge losses for investors, pensioners and retirees.
A guest blog by Dr. Atul K. Shah, Senior Lecturer, Suffolk Business School.
As background to this, it is useful to quote from the work of Prem Sikka, cited in Shah’s research:
“Successive governments have failed to investigate the firms, or prosecute their partners. Instead, the partners of major accountancy firms are given peerages, knighthoods, public accolades and government consultancies, all funded by taxpayers. The same firms have colonised regulatory bodies, fund political parties and provide jobs for former and potential ministers. This penetration of the state has bought them political insurance and their anti-social practices continue to inflict enormous social damage.”
The time has come to investigate KPMG for audit failure at HBOS
It is well known that there was widespread audit and accounting failure in the UK prior to the 2008 Financial Crash. However, not one Big 4 audit firm has been investigated about their unqualified audits of major failed Banks prior to the Financial Crash, despite several appeals from academics like Professor Prem Sikka of Essex University, journalist Ian Fraser, author of Shredded – the truth about the RBS failure, and Richard Murphy.