Sometimes someone covers a story in a way that you don't think you can better. Dennis Howlett has done so on Ernst & Young's role in Walmart's aggressive tax abuse in the US. He wrote the following, which I reproduce with his permission:

Courtesy of Francine McKenna, I came across a link to this press release from Wakeup WalMart.com. It seems WalMart may be in the firing line for around $2.5 billion in US state taxes it 'saved' through schemes cranked out by Ernst & Young. More interesting is the way E&Y tried to spin this at the time. This from Wakeup WalMart's blog:

As Ernst & Young worked on its proposals, one high-ranking tax partner sent an email to a colleague addressing a concern often faced by companies: how to describe a tax-driven transaction in a way that won't create problems later on with tax authorities. "You asked if we have a document that details how the tax savings will work, how much they will save….We really don't have anything like that except for the sales document, partly because we have avoided calling this a 'tax' project, to show that we did not have a tax savings motivation, rather it is a 'domestic restructuring' project," he wrote.

E&Y worked on what appears to be value based fees. Check this to see a fee schedule submitted.

It is interesting to compare the above with page 5 of E&Y's Global Code of Conduct (click the link for the publication in the right hand column) which states:

Our Professional Integrity …
We comply with laws, regulations, and standards that apply to us in our professional conduct.
We promote a culture of consultation.
We address questions of ethics and consult appropriately to help resolve them.
We do not hide from or ignore issues.
We provide ethics hotlines to deal with sensitive ethical issues.
We understand and comply with Ernst &Young policies and procedures.

Our Competitive Approach …
We recognize that our competitive advantage is achieved through the excellence of our professional advice and the quality of our service delivery.
We compete energetically and vigorously, and recognize the need to be honest in our competitive behavior.
We reject unethical or illegal business practices in all circumstances.
We do not offer personal inducement to secure work.

Documenting our Work …
We maintain appropriate documentation of client engagements and of our business operations in accordance with Ernst &Young
policies and relevant legal and professional requirements.
We never destroy or alter documents, or recommend their destruction or alteration, for any illegal or improper reason.

Our Fees …
We charge a fair fee for our services in accordance with our engagement terms.
Time and Expenses …
We report actual hours worked and expenses incurred.
We incur expenses in accordance with Ernst &Young policies or, where agreed, our clients' expense policies.

I don't know about anyone else but it seems to me there are glaring differences in what E&Y says in public and what it says in private. The two are wholly inconsistent and you have to question whether the code of conduct is actually worth the paper it's written upon. Moreover, E&Y knew exactly what they were doing because it is in response to a direct request for tax mitigation services. In other words, they tried to disguise the nature of the transactions in order to achieve a tax benefit on behalf of their client.

The over arching question has to be: why are they allowed to get away with this flagrant abuse with apparent impunity?

I'll add just two thoughts. The first is that these firms expect to get away with flagrant abuse. The second is that this proves that self imposed Codes of Conduct are worthless. They have to be externally monitored and have teeth to be effective. The Code I have written for the Tax Justice Network has both such characteristics.