Saturday, July 23, 2011

KPMG - Helping Tax Dodgers & Corporate Fraudsters Everywhere

The Ford Bros Circus of Stupid decided that the best way to figure out which services we ought to toss on the bonfire was to hire auditing firm KPMG. Well, that's not quite true. Doug Ford has said that they want to "outsource (privatize) everything that's not nailed down." But perhaps he thought it best to find a fig leaf of objectivity for his mission of slash and burn. KPMG is that fig leaf.

But if it's a fig leaf, it's a pretty flimsy one. KPMG has a long history of corrupt and incompetent business/auditing practices. Back in 2005, KPMG admitted selling illegal tax shelters in the USA that allowed corporations and rich bastards to avoid taxes, and thereby helping to make the kinds of cuts they are now recommending necessary. According to this summary:
KPMG admitted to setting up fake tax shelters for it's wealthiest clients, which helped them evade paying $2.5 Billion in tax dollars throughout the 1990's. If that wasn't enough, KMPG was accused with the obstruction of justice as investigators tried to piece together the facts of the accounting scandal.
Nine people from KPMG ended up being charged for tax evasion and obstruction of justice, eight of them were former partners in the firm.

KPMG was also accused - and remember they were hired for their skills and reputation as an auditing firm - of covering up a bribery operation at engineering corporation, Siemens. Somehow, the auditing firm didn't notice a slush fund worth nearly €2 billion.
Debevoise, the firm of independent US lawyers appointed by the Siemens supervisory board to investigate bribes paid by the company, reported back last week. According to the German publication Sueddeutsche Zeitung, they have uncovered €1.2bn of bribes paid by the Siemens telecommunications business between 1995 and 2006 and a further €300m of illicit payments made by its power generation arm.
Now Debevoise is set to look into the role of KPMG, according to sources close to Siemens. The supervisory board wants to know why the apparent bribes were not noticed by KPMG given their scale over many years.
Back across the pond in the USA, the mortgage company known as Fannie Mae launched a suit in 2006 for $2 billion against KPMG because of $6.3 billion in accounting errors that led to Fannie Mae firing KPMG back in 2004.

In 2005 KPMG had to pay out $22.5 million to the Securities & Exchange Commission for helping Xerox cooks the books to the tune of closing a $3 billion earnings gap - i.e. fraud.

And this is only the tip of the iceberg. Check here for more examples of KPMG's incompetence and corruption as an auditing firm, which has dutifully served its corporate masters to hide money, hide losses, hide bribery and just plain smooth things out for the rich and powerful. And we're supposed to take their recommendations seriously?

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