On Tuesday, a pair of Democratic lawmakers asked the Treasury Department’s inspector general to investigate the revolving door between the country’s biggest accounting firms and key political positions at the Treasury Department.
Senator Elizabeth Warren of Massachusetts and Representative Pramila Jayapal of Washington were guided by investigation published by The New York Times in September details how giant accounting firms bring in the best lawyers in government to develop tax rules that benefit their clients.
The Times found at least 35 examples of lawyers from the country’s largest accounting firms leaving to work for the government, mostly in the Treasury Department’s tax policy department, and then returning to their old firm.
The Times found that while in government, many of these lawyers provided tax breaks to clients of their former firms, softened efforts to limit tax havens, and endorsed loopholes exploited by their former firms. In almost half of the cases, officials were promoted to partners after returning to their former firm.
This pattern has been repeated in both Democratic and Republican administrations, including the administrations of Donald J. Trump, Barack Obama, George W. Bush, and Bill Clinton.
From October two deputies collected information from five audit firms – PwC, EY, Deloitte, RSM and KPMG – with a detailed description of this phenomenon.
“Following our own investigation, which has confirmed these claims and raised new concerns about the accounting giants who are using these revolving door schemes, we urge you to immediately launch an investigation into this matter,” the two lawmakers wrote. in their letter. It was sent to the Ministry of Finance. Acting Inspector General Richard C. Delmarand this Inspector General of the Internal Revenue Service J. Russell George.
“The accounting giants are abusing public trust and taking advantage of the revolving door between public service and private profits,” the lawmakers said in the letter.
Deputies disclosed firms’ responseswho collectively recognized 24 such cases.
“But these revelations only reveal the tip of the iceberg,” the lawmakers wrote. “Neither the firms nor the Treasury provided meaningful information about the responsibilities of their employees and clients either in the firms or while in government.”
In their letter, they cited an episode disclosed by The Times of a Deloitte tax lawyer who lobbied to loosen proposed Treasury rules to end Offshore taxation strategy proposed by various accounting firms. He then joined the Treasury and oversaw the very rules that eventually included the changes he had been pushing for while working in the private sector. He soon returned to Deloitte and became a partner.
In their letter, the lawmakers asked the agency to investigate a number of issues, including the extent to which firms, “through Treasury and IRS officials, may have an adverse effect on department and agency policy or may receive information.” or influence that gives their clients an unfavorable advantage.” They also asked for information about employees’ “rewards” upon returning to their firms, as well as the policies of the Treasury Department, the IRS, and the firms to prevent abuse.