Setback for US government in KPMG case

The judge in the long-running tax shelter case involving 16 former partners
at KPMG has issued an important judgement in favour of the Big Four firm.

US District Judge Lewis Kaplan said government prosecutors had
unconstitutionally pressured the firm to not to pay legal fees for the 16 former
partners accused of setting up the illegal tax shelters for wealthy clients.

The judge, though, has allowed the largest-ever criminal tax case to go
forward, saying in an 83-page decision, that it was ‘premature’ to dismiss the

Former KPMG executives accused prosecutors of improperly pressuring the firm
in 2004 to end its long-standing practice of paying their legal bills – helping
to avoid an indictment of the firm itself.

‘KPMG refused to pay because the government held the proverbial gun to its
head,’ Kaplan wrote in his decision.

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