KPMG are one of the Big 4 firms of accountants. As such they have a lot to answer for. They've been guilty of tax crimes in the US. They audited the failed HBOS here, and gave it a clean bill of health. They've sold tax abuse. This year in the Channel Islands they argued against tax transparency. The list goes on, and on.
But now a former KPMG senior partner heads HMRC.
And another heads the new Financial Conduct Authority.
Both moved to these jobs without periods of contrition for past acts: they went because they were KPMG partners.
The reality is that this is putting the foxes in charge of the chicken coop. Worse, it's the clearest sign of the degradation of regulation, taxation and the concept of civil service in this country when the entirely reasonable suspicion must exist that these bodies are now being run by and for the benefit of those that they are now meant to regulate. It is simply not possible to turn from poacher to gamekeeper in the time allowed for these two appointees. And the fact that they want because of KPMG service proves it.
We will not restore faith in public service, regulation or tax in this country with KPMG in charge. It is not possible. They are the problem,. not the solution.
Both appointees need to go now.
But more importantly, radical rethinks of what regulation, civil service and governance means must take place.
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Richard, and to think that the precedessor firm was Peat Marwick Mitchell/McLintock, accountants to the Royal Household…and for whom we both worked in our younger years…!
How sad this makes me feel that such a once proud institution as “Peats” finds itself embroiled in such unethical conducts…and the blame cannot be heaped solely on the American firm.
I wonder if Sir Michael Peat would be around for comment…?
Indeed….
And once they’ve squared the legislation they return to the poacher role. Neat.
I nominate HBOS whistleblower Paul Moore to head the Financial Conduct Authority.
Short of importing Bill Black from the US, there is no better qualified candidate out there. And of course once in post he should quickly receive a knighthood to get the message across to the “foxes”.
I like the analogy, but then it reminds me of Janacek’s “Cunning Little Vixen” where the vixen massacres the hens. But in the Opera the Vixen eventually gets shot by a gamekeeper. The trouble with KPMG is that the Vixen in this case has become the gamekeeper and is not just shooting the hens but anyone who gets in the way.
Support from Ian Fraser in his latest blog: “Scottish government’s £1.7 million bung to KPMG beggars belief” [as reported in the Sun].
“I also strongly recommend reading Richard J Murphy’s blog on why KPMG are the problem and not the solution …”
http://www.ianfraser.org/scottish-governments-1-7-million-bung-to-kpmg-beggars-belief/
How does Ian Fraser manage to construe KPMG setting up a “compliance centre” as a tax avoidance centre? They said they are looking to recruit students and new parents returning to work so it hardly sounds like the type of people capable at being at the sharp end of international tax avoidance.
And you believe KPMG press releases?
It’s a low cost compliance centre. It’s a fact that they (like all the big 4) prepare many companies tax returns. I suspect you did lots when you were at Peats and that business has not gone away. What is your evidence to doubt that?
Low cost compliance?
From KPMG?
Are you kidding?
And why should we subsidise it?
Low cost to KPMG (not clients) = more profits for the partners (and UK tax btw) = capitalism in action.
Why would Scotland provide a grant? To attract several hundred jobs to Scotland rather than Bangalore. Simples.
And it’s sickening
So your preference is for UK tax compliance jobs to be in Bangalore and more tax in India rather than Scotland and the UK?
Not at all
But I really see no need at all to subsidise KPMG – a highly profitable business
This I socialism for the 1%
oh come on richard – I agree that the Scottish government shouldnt be subsidising it, but to pretend this is something other than a glorified admin centre where a load of people fill in tax returns is no credit to you.
we all know that the clever people who dream up the schemes wouldnt dream of moving to scotland to do it.
How very patronising of you
Missed this yesterday, as busy on other things, Richard, but I’d like to pick up on your last sentence.
The eqully big issue here is the process and people involved in these appointments. Given that CVs will have been submitted and studied extensively by the relevant appointments panels the fact that the backgrounds – and thus highly compromised nature – of certain applicants turns from what should be a negative into an absolute positive is deeply, deeply worrying. Indeed, it shows beyond any question the scale and extent to which key systems and institutions that sit at the heart of our system of public administration have been captured and corrupted by corporate interests.
Furthermore, I’d argue that the fact that those involved in the appointment of the likes of KPMG partners to key roles in HMRC, financial regulation and oversight, and key policy advisory roles, are so blatantly unconcerned about the type of issue you highlight here is not a mark of ignorance. It is a mark of the power and influence they believe they have.
As a political scientist who has followed these developments over many years I’d say that that belief is entirely justified. The question is, will any political party ever have the conviction and courage – and resources – to challenge it? Certainly the Tories won’t as they long ago marked themselves out as a party that is entirely comfortable with a democracy and government that is simply a cypher for big business.
Ed Miliband shows flashes of courage, but after what we’ve seen this week over lack of back-bone to challenge Thatchers state funeral (and that is what it is in all but name), I seriously doubt it, particularly as members of teh big four are currently – and almost always are – playing a central role in providing advice and support to Labour while in opposition. The expression ‘vampire squid’ (used in another context, I know) doesn’t even come close to capturing the corrosive and corrupting influence of these organisations on contemporary government and democracy.
Agreed
@Ivan – spot on, but there’s an additional, so far unmentioned, point, which is contrary to Anthony’s view – rightly adjudged “patronising” by Richard – and that is the up-and-coming Scottish Independence Referendum.
I’d be willing to bet that, in a sort of “supping with the Devil” agreement (and as to who is the Devil between the SNP and KPMG, let the reader decide) ahead of an expected “Yes” vote, and the subsequent setting up of Scotland as a new secrecy jurisdiction, with Edinburgh as a new rival to London.
Edinburgh is already quite a financial centre in its own right, and Salmond will be backing horses both ways on the two issues of the Union – Yes or No, and the EU – Yes or No. An independent Scotland in a Great Britain still in the EU would be powerful enough (and I think they WILL break away).
However, an independent Scotland that is STILL in the EU, with an England that has left (and be assured, Scotland WOULD seek to stay in the EU, even if England withdrew, as the Scots have always been more European than the English) would see a massive switch of attention and wealth from London to Edinburgh.
My guess is that this is the eventuality that Salmond is seeking to provide for – to have some shock troops on site, and on call, to take immediate action. That’s why he’s judged it worth making this bung!
(P.S. – if Scotland goes, be assured, Wales will follow, and both will retain a real NHS, which will progressively draw away from the anaemic puppet NHS being implemented by the Tories.)
Andrew
We know Salmond already wants to play the low corporation tax charge
The rest follows – with the Orkneys as jersey and Shetland as Guernsey
Fantasy? I wish it were
Richard
The best guy to head HMRC IMO should be that fellow that brought down Olympus & got sacked. He saw wrongdoing & blew the whistle. Top man.
My apologies, I have come late to this.
In response to Mary Snell’s comments, there’s a much shorter phrase to describe KPMG’s scheme and that is “corporate socialism”.
The grant for the alleged compliance “factory”, sorry centre = costs socialized
Profits from running the centre = gains privatized
This can take many forms and here’s another example:-
http://blogs.reuters.com/david-cay-johnston/2012/04/12/taxed-by-the-boss/
I would allege that the three elements that all corporate socialism schemes have in common are sophistry, extortion and exploitation. (as in we can all SEE what you are doing!)
I would further allege that this can be applied to KPMG’s “scheme” as follows:-
Sophistry – how shall I put this, I doubt very much that KPMG laid all their cards face up on the table when discussing this venture with Alex Salmond. I wonder what the real costs of establishing the venture in India would be? Not only immediate cash costs, but also in relation to the cost to KPMG’s reputation or goodwill of an Indian venture.
I make no comment, but merely question whether all of KPMG’s corporate clients would be happy with this arrangement? I am aware of at least one accountancy firm that outsourced tax work to India, which was anxious not to, how shall I put this, highlight the issue.
Extortion – the grant KPMG managed to inveigle from the Scottish Government in order to defray its costs and also to some extent play on the loss of taxes to Scotland/UK on pay and profits.
Exploitation – here we have two elements.
The first is political, I would imagine that KPMG are not unaware how desperate the Scottish Government are to create jobs in Scotland.
The second will be of all those “bright eyed and bushy tailed Meerkats” ie the workforce, who will be paid very modest wages, by KPMG standards, in order to have a job at the 21st century equivalent of a “cotton mill”.
Here’s someone else’s take on the effect of outsourcing in the US:-
http://www.globalresearch.ca/the-offshore-outsourcing-of-american-jobs-a-greater-threat-than-terrorism/18725