KPMG 'put profits above ethics'

KPMG chose ‘profits over professionalism at every critical juncture’, when
marketing abusive tax shelters in the US, a senior US tax official has said.

Cono Namorato, head of the IRS Office of Professional Responsibility, told a
meeting of advisers in the UK this week that what KPMG had done was a ‘reminder
of what can happen when ethical behaviour is traded for a quick profit’.

He added: ‘It illustrates the role that individuals can play in undermining
the integrity of the tax system. KPMG chose profits over professionalism at
every critical juncture.’

KPMG was fined £456m earlier this year for its role in marketing tax
shelters, in a row that at one stage threatened to escalate into a Department of
Justice indictment that would have imperiled the Big Four firm’s global future.

The firm is set to court further controversy today when Loughlin Hickey,
global head of tax at KPMG, tackles tax avoidance in a public lecture at the
ICAEW.

Namorato was in the UK to talk to HM Revenue & Customs and UK advisers
about his work.

Asked whether HMRC would be adopting any of the IRS tactics, Dave Hartnett,
HMRC’s director general, repeated a view he expressed in an interview with
Accountancy Age earlier this year that the US had seen a far worse
breakdown in trust between advisers and government.

He said: ‘I think that one of the things that we have seen in the US is a
different environment, a breakdown of ethical standards. We have been able to
look on as voyeurs and see there are lessons to learn.’

Responding to Namorato’s remarks, a spokesman for KPMG’s US firm said: ‘KPMG
has a process in place to ensure that those individuals responsible for the
wrongdoing have been separated from the firm.’

The firm added that the DoJ settlement had resolved the IRS’s examination of
its tax shelter activities.

‘This matter is now behind us. KPMG is focused on moving forward and
providing the highest quality audit, tax and advisory services to our clients,’
the spokesman said.