KPMG have published a new paper called 'Developing the Concept of tax Governance'. Published yesterday, I think, I've now read all 31 pages of it. As a result, I've got to tell you my copy is covered in comments such as 'No', 'Wrong', 'Source?' 'Window dressing' and 'Come on!'. Put simply, I think this paper misses the mark by a mile. Why? Well, let's start with two quotes which tell you what KPMG really seem to think, despite all the discussion the present on ethics, morals and legality that precede them. They are:
Arguably, in the tax arena the desirable commercial outcome is to pay as little tax as legally possible. (p13)
In the case of employees, there is a requirement in s172(1)(b) to have regard to their interests per se rather than simply to the need to foster the company's relationship with them. In the tax arena this might involve, for example, ensuring that remuneration was paid in a tax-efficient manner. (p14)
It's staggering that these appear the clearest conclusions they come to. To put it another way, what does this document change? Despite all the caveats in the paper they can't avoid the argument that 'tax efficiency' is what it's all about. Indeed, having even shown that this cannot be legally required of companies, they then argue it is for employees - a point almost no one would agree with. Which makes me wonder what this paragraph is all about:
This paper adopts the view that if debate on these issues is to proceed in a helpful way, it is important that participants be careful not to impugn the motives of those with whom they disagree. Those who see certain forms of tax avoidance as clear moral evils may need to recognise that those who, by contrast, see those particular activities as perfectly acceptable do not necessarily do so because they lack ethical sense, or because they have deliberately disregarded what they know to be right. They may simply differ on how ethical principles which are held in common by all the parties, for example honesty and consideration for other people, apply to the particular circumstances. If they are happy to debate the issues on the basis of such a shared ethical framework then they are not enemies of the first group, but friends with whom they disagree.
No doubt this is addressed to the persons called 'some commentators' who appeared throughout the document, but who seem to have never expressed their opinion in an identifiable source so that substantiation of their view can be confirmed,. Let's suppose for a moment though that one of those referred to might be me. It's a long shot, I know, but just possible. The footnotes show that they've been here, which is no surprise.
What KPMG are asking me to do is assume that they KPMG have never deliberately disregarded what they know to be right. Well guys, that's what the US Senate found you did, not that long ago. And we're also asked to assume that KPMG is motivated in the same way as us, for example with regard to honesty and consideration for people. But candidly, that's absurd. KPMG's tax practice is riddled with what some see as dishonesty. Take this as an example, that's printed on every page of the report:
¬© 2007 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved.
I think that's disingenuous. I think KPMG is playing games by making that statement. It would have us believe that it's one international firm on the one hand, but a bunch of unrelated entities when it comes to liability on the other. That's not honest, not in common usage of the term. And those independent entities can still have a global head of tax practices, suggesting to me a unified command and control structure, which is in tax and governance terms in complete conflict with the stated independence of the individual entities. What's more, that control is hidden, secretively, in Switzerland where the impact it has on the transfer of wealth from those without to those with wealth cannot be assessed. Sorry - but all ethical codes that exist think that consideration for the poor is a fundamental part of ethical conduct, and it's not inherent in KPMG's approach to its work or the services it promotes.
So we don't share an ethical framework. As Senator Carl Levin, the senior ranking member of the US Senate said of KPMG:
Our investigation revealed a culture of deception inside KPMG's tax practice.
But we will talk, even so. I'll tell you I talk to some of the others in the Big 4, without difficulty. KPMG though, when I tried to engage with them, told me that until I played by their rules they wouldn't engage. They still are. That's not the way to find common ground. Surely they know that? I will talk to them - whenever they like. Off the record if they want (much of what I do is - which makes this blog less interesting than it might be, but advances issues more quickly than might otherwise be the case). But please KPMG don't set the pre-condition that I have to agree you're good guys before I and others like me can do so. That is not going to happen. Not when you're still on probation on some charges and the court cases are still rolling on others.