Kerry scores high in accounting masterclass

You might consider Jacques Chirac’s comments on the ‘nefarious’ consequences of international accounting standards or Bush’s comments about new rules for share option accounting. And with his recent comments about ending ‘tax giveaways for those at the top to stimulate the economy in the Cayman Islands and Bermuda,’ you might want to add John Kerry to the list.

But you would be wrong. Kerry came to the US Senate in the eighties with a reputation for independence, reinforced by his contributions to exposing the fraud at the heart of the BCCI scandal. If you look at the transcript of the hearings held in 1992, you can see senator Kerry has a pretty good grasp of accounting matters – raising issues that, in these post-Enron and mid-Parmalat times, are still valid.

Take the hearing of the terrorism, narcotics and international operations subcommittee of the senate foreign relations committee held 14 years ago to this day. As chair of the committee, Kerry was questioning Price Waterhouse partner Robert Bench about the regulatory response to the BCCI affair.

He asked what specific work Price Waterhouse undertook on behalf of BCCI to strengthen its relationship with regulators and what analysis auditors undertook for regulators.

And later, in a Perry Mason flourish and after an interminable pause, Kerry produced an internal Price Waterhouse memo that stated Price Waterhouse US was going to coordinate the offshore banking with its Cayman and Bahamian counterparts.

‘Do you know who at Price Waterhouse US was coordinating those activities with the BCCI offshore operations?’ Kerry asked Bench. He did not.

‘To your knowledge, has Price Waterhouse ever made referrals to any criminal enforcement agency or any bank regulator at any time regarding any of the BCCI issues or any Price Waterhouse or BCCI employee?’ asked Kerry.

‘Not to my knowledge,’ said Bench.

With a different auditor and a different client you can imagine those questions being valid today. As for our swing-o-meter, we might still introduce it. Just don’t expect Kerry to appear – not just yet, at least.

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