Big Four Accountants Accused of 'Legitimising' Tax Havens ; BUSINESS & MONEY
Lashmar, Paul, The Independent on Sunday (London, England)
The Big Four accountancy firms have been criticised for "legit- imising" the use of offshore tax havens and for not taking a strong enough lead in international tax compliance. The claims are made in a new report by the Tax Justice Network.
"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 World-Com which had major offshore elements," added Mr Murphy, a leading tax expert. "But these firms still have a strong offshore presence."
KMPG worked for WorldCom before its collapse. The report cites an example of "creative" accounting whereby under WorldCom's licensing agreements some $20bn ([pound]10.3bn) was moved from high tax states to low tax states in return for companies in the high tax states having access to "management foresight" in low tax states.
"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," said Mr Murphy. …