Monday, August 29, 2005
Quoted CrimProfs: John Strait and Peter Henning Comment on KPMG's Resistance to Investigation by the Senate
Wayne State's Peter J. Henning and Seattle University's John Strait are quoted in this story about the accouting firm KPMG's resistance to a Senate subcommittee's investigation into "four questionable tax shelters created and sold by KPMG that earned the firm $124 million in fees, but cost the Treasury, according to Senate investigators, at least $1.4 billion in unpaid taxes."
According to emails and documents KPMG tax executives pushed the tax shelters off to clients. But when questioned about this allegation by the Senate subcommittee, KPMG execs "were evasive." Since the hearings, KPMG has settled with "the Justice Department over the creation and sale of the arcane tax shelters, which the Internal Revenue Service contends helped wealthy investors illegally hide billions of dollars in taxable income. The agreement, which is expected to be announced tomorrow, calls for the firm to pay $456 million and accept an outside monitor of its operations. Former partners separately may face criminal charges."
CrimProf Peter J. Henning commented, "KPMG viewed its conduct as above reproach, in a sense viewing itself as smarter than the I.R.S. and Department of Justice by developing these creative tax shelters."...
"It's a very high-risk strategy to start out stonewalling," said CrimProf John A. Strait..."when KPMG came under scrutiny, it chose to fight. And it did so after the collapses of Enron and WorldCom, at a time when the tide of corporate history was turning decisively in favor of corporate accountability and government regulators." Story here... [Mark Godsey]