Sir Mike Rake, head of KPMG is off to BT. In the well-researched FT report, author Barney Jopson joins all the Enron dots….except one. He notes that:
In 2005 Sir Michael was closely involved in handling KPMG’s “near miss” with the US authorities after it admitted selling “fraudulent” tax avoidance schemes from 1996 to 2002.
There was deep anxiety that if the Department of Justice took legal action KPMG’s survival could be threatened.
Sir Michael was involved in the delicate negotiations that averted that danger and led to the firm settling with a $456m (£234m) fine.
As far as I know, that’s new information. What Barney doesn’t do is ask the obvious question: “Given Rake’s position at the time and his intimate involvement with what was going on which must have pre-dated 2005, why did he not fall on his sword? Would that not have sent an unequivocal signal to everyone that KPMG was serious about cleaning up its act? Instead of which, we have Richard Murphy continuing to pour scorn in KPMG. Quite rightly IMO.
I’ve read the same KPMG tax report to which Richard alludes. Don’t be fooled by its pretensions to academic rigour. Its arguments are easy to demolish in any debate about the internal logic of the arguments as presented.
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