VARIANT 36 | WINTER 2009 | 25 Sticky Fingers KPMG and the Accountancy Oligopoly John Barker Capitalism is a mode of production, not a though they are global issues. This is intertwined them as administrators. system. True, it has its own internal patterns of with regulatory systems which, despite Sarbanes- • In March 2008, redundancies were made without circulation, dynamics and crises, but it has always Oxley, are industry-dominated, and raises the any consultation at Texol Technical Solutions, depended on external kick-starts like the looting question of whether, given that it is a global mode Dundee.5 KPMG’s Blair Nimmo said they took their of South American gold and silver; colonial real of production, it is possible to talk of an “Anglo- position as administrators “extremely seriously”, politik; state infrastructure – both material and Saxon” capitalism with distinctive neo-liberal and advised the workers involved that they could as protectorate; war; and a variety of nominally characteristics. This is outside the purpose of talk to “their local Citizens’ Advice Bureau”. neutral intermediaries. These intermediaries this investigation, but it’s hard not to notice how Nothing could show how aloof the partners of mainly consist of corporate lawyers, credit-ratings Gordon Brown talks big about global financial KPMG are from the realities of poor people on the agencies, and accountants/auditors. They are and reform, and then cries foul at all attempts to receiving end. If, and that’s an if, there is a local profit-making in their own right but take their seriously regulate financial capital based office of the Citizens’ Advice Bureau, 1 share by increasing the totality of privatized in London. Given that it is an ad there are likely to be queues around surplus value. In the ongoing crisis of this mode of hoc, Big Four-dominated institution the block for those times in the production however, this has also taken the form that determines international week when it is open to give advice. of realising – or attempting to realise – potential accounting standards, it suggests Instead, from this other planet, future surplus value in the present, as if it had that these characteristics are KPMG offer up what they call a already been created. functional to global capital as a Downsizing Service: “The provision of At its simplest, this has involved an over- whole. independent and professional advice to valuation of capitalist assets. One of the The present crisis is making for staff in redundancy situations can assist intermediaries that has connived with or been all kinds of anger as its impact on a company in negotiating, implementing instrumental in this over-valuation have been the not-bankers and not-auditors is felt, and delivering on an efficient and credit-ratings agencies, an oligopoly of three. For a and will be felt for years to come. The non-confrontational severance package.” Non- brief period there was talk of limiting their power intention of this investigation is to help put the confrontational? The Visteon workers would have – and perhaps there will be regulations – but spotlight on the outrageous and shameless actions been screwed had they not either occupied or then almost immediately on the back of the Crunch- of this auditor/tax avoidance oligopoly. It aims to picketed the company’s plant with the company’s and-Squeeze they resumed their god-like role in show how the oligopoly in general, and KPMG, machinery inside. Independent? Who pays for deciding the interest rate at which debtors, both in particular – a worldwide organisation with a Downsizing Service? Efficient? Efficient for public and private, should pay. offices in 24 tax havens – has their sticky fingers whom? The accountancy/auditing companies/ in so many areas of economic and political life, Fact is, KPMG likes having it all ways. On partnerships are a global oligopoly of in which everything it does is to the benefit of the one hand in a briefing on redundancies it 2 four, all with histories of merger. They are: capital and the individual rich. It also brings argues that they are not necessarily the best PricewaterhouseCoopers (PwC), Deloitte to light the elitism that rationalizes both its way for companies to react to the “experience Touche, Ernst & Young, and KPMG. In their case highly lucrative government consultancy, and its of downturn”. Why? Because, as KPMG’s Human there is little talk of post-Crunch independent resistance to formal regulation which it does not Resources director, Dave Condor, pointed out regulation, even though it is valuation which control. It is that form of anti-democratic elitism (in commenting on a survey by the company should be their expertise. They have not been which says that only the few who are in the know itself) making redundancies will cost employers subject to even temporary blame though they can understand the complexities of finance and on average £10,000 per head – which could take were both consultants and auditors for Northern contracts, even when those in the know are self- several months to recoup. In the cases above Rock (PwC), HBOS (KPMG), and Royal Bank interested. it would seem KPMG are doing their best to of Scotland (Deloitte Touche). This particular lower that average. While talking of taking the ‘conflict of interest’ was addressed in the USA by Flexible Futures advantages of retaining staff into consideration, the Sarbanes-Oxley Act of 2002, but the Act did KPMG produced another report on the virtues of not prevent the over-valuations that precipitated A prominent characteristic of KPMG is their virtuosity in self-aggrandisement, as they outsourcing, in which it identifies 31 cities “which the Crunch. It helps the oligopoly’s freedom of are rapidly emerging as leading pretenders to action that they control the regulatory agencies persistently advertise their supposed virtues in their own publications. Investigative reporting the traditional powerhouses such as Bangalore, of the accountancy sphere, and, in the UK, that Chennai or Shanghai”, and tips Buenos Aires, they are integrated into government. This involves back in 2002 revealed they would take a £500 fee 3 Winnipeg and Belfast. Perhaps in the latter case profitable consultancy contracts with government for an hour of advice on personal tax avoidance. It’s the case that the role of administrator, one it has in mind those redundant Visteon workers? and a revolving-door between government and None of this has stopped the pats-on-the- oligopoly personnel. At the same time, they of several that it plays, is not a major source of its revenues.4 In 2009 they acted for Ford Motor back KPMG has received for instituting undermine the financing of this very same sabbaticals and other forms of temporary protectorate government via a proactive role in tax Company and its spin-off Visteon, in attempting to deny redundancy money to workers in Belfast, lay-offs for its own staff at the beginning of evasion. 2009 under the title “Flexible Futures”. Auditing has a necessarily captive clientele, Enfield and Basildon. and these four audit 99 of the FTSE 100 top When Visteon was spun-off from Ford in UK companies. They are, all in all, an especially 2000, workers were given contracts mirroring Oversight(s) privileged group. In addition, by lobbying those of Ford car workers. This would mean that It is as auditors that the “Big Four”, who receptive governments, especially New Labour, they would get 12-18 months’ wages as audit 97% of the FTSE 350, which by law they have all the tax advantages of being redundancy money. When Visteon must be audited, are most legally privileged. partnerships, while now enjoying a in the UK was liquidated, KPMG The other privilege being that they operate as large degree of the limited liability as its administrators started from partnerships with the tax perks this entails, but accorded to non-partnership the position that the workers were which in theory make them liable for unlimited companies. Now, in the wake of not entitled to anything other than losses of companies they have audited and are the Crunch-and-Squeeze, they are, a cash payment equal to 16 weeks’ subject to legal redress by investors. In recent according to Prem Sikka, lobbying pay, whether you had worked there years the Big Four have gained a considerable for yet more protection from claims 15 years or not. Its argument; that measure of limited liability with their duty being against them by investors in their Visteon was a separate entity from defined as to the company, and the principle that role as auditors. Ford, and had been so since 2000. only the individual partner concerned is liable.6 This investigation focuses on KPMG which had Media slimeballs joined in, saying things were In theory, auditors have comprehensive powers. worldwide profits of $20 billion (roughly £11bn), different from how they were in 2000, and that The recent House of Commons Treasury Select of which £1.6bn came from its UK operation. The they couldn’t expect contracts from then to be Committee on the Banking Crisis refers to their investigation was prompted by KPMG’s role, as applicable. But in this case KPMG backed down in privileged position: “Apart from the regulator, administrators, in attempting to deny the UK the face of successful occupation and picketing of nobody else has the right to delve into a company’s workers of Visteon their rightful redundancy Visteon plants. records, speak to their staff about decisions made money. Most of the evidence about KPMG’s many • In June 2007, 1100 workers at KwikSave were and strategies being pursued.”7 KPMG has the legal scrapes comes from the UK and the USA made redundant with no promise of payment from biggest client list in the UK, and this function, as 26 | VARIANT 36 | WINTER 2009 for all the oligopoly, “gives them easy access to one of the British banks caught by the Crunch their published accounts are opaque.