The Independent on Sunday ran a report yesterday concerning the report entitled 'Closing the Floodgates' that I edited and was principle author of for the Tax Justice Network. The message they chose to highlight was one of the simplest in the report. That is that the Big 4 accountants endorse the offshore world by choosing to operate in so many of the world's tax havens. As research done by Chris Steel of TJN / ATTAC Jersey has shown, the Big 4 all operate in well over half of the 45 principle tax havens in the world, and that excludes those such a the Netherlands and Ireland. KPMG is in 41 of them.

As I am quoted as saying in the report:

"The extensive presence in tax havens of the Big Four accountancy firms in itself serves to legitimise the offshore world, which is vital in capital flight," said Richard Murphy of the Network, a group of accountants and economists concerned at the escalating wealth held in offshore locations.

"The global losses, often for the poorer countries, probably runs to many hundreds of billions of dollars a year.

"Accountancy firms have been castigated in recent years for their part in a series of financial scandals like Enron and WorldCom which had major offshore elements," added Mr Murphy, a leading tax expert. "But these firms still have a strong offshore presence."

I was, I admit, unsurprised at KPMG's reply to the suggestions made, which are reported in the article. They said:

"KPMG has consistently called for more transparency in tax at all levels, and OECD has been leading efforts to improve transparency and effective exchange of information between countries on tax matters. We support their work.

"As HMRC, the UK tax authority, has said: 'Across the whole range of taxpayers, taxes and circumstances, tax intermediaries help their clients to avoid errors and deter them from engaging in unlawful actions. So tax intermediaries are not part of the problem, they are part of the solution.'

Note that last point was KPMG quoting HMRC. The comment comes, as far as I can see from an article by Chris Davidson of HMRC writing in the Tax Journal in January this year. His comments are of course right, in general. But let's also be clear. As the article he wrote also made clear, he is heading the inquiry by the OECD into:

the role of tax intermediaries (e.g. law and accounting firms, other tax advisors and financial institutions) in relation to non-compliance and the promotion of unacceptable tax minimization arrangements with a view to completing a study by the end of 2007.

When that enquiry was announced by the OECD in September last year Loughlin Hickey, global head of tax at KPMG issued on of his usual incomprehensible press releases, which I discussed here, making it clear that he opposed the whole process. Funny that he can now spin it to his advantage.

Let me however do a little spin of my own. How can a group of independent firms operating separately in the different counties of the world have a global head of taxation? The sheer impossibility of reconciling the legal structure adopted with the management reality that the firm seeks to portray does, I think justify my comment in the article that:

KPMG represents itself to be an international business but is in fact a Swiss 'cooperative' of individual member firms but no one knows how they are linked. This is unacceptable under all current governance standards,