Tuesday, June 18, 2013

Who really runs this place? Study into how the Big Four influences government

We have often written about the close relationships between the Big Four accountancy firms and governments around the world. Now Spinwatch in the UK has produced a fascinating case study (hat tip: Naomi Fowler).  As Tamsin Cave, author of the report, notes:
"To see them as separate from our government is a mistake."
The report shows, among other things:
  • One of the Big 4, Ernst & Young, lobbies for tax breaks for its clients – a service that it describes as a ‘low risk alternative’ to tax avoidance – while at the same time advising the Treasury on reform of the tax system;
  • At least 50 employees of the Big 4 have been on loan to the government in the past three years;
  • They successfully lobbied the British government to oppose new EU rules designed to improve audit standards and challenge the monopoly of the Big 4;
  • They are profiting from changes to government policy, changes that are made by government departments that they are contracted to;
  • Lobbying by the Big 4 accountancy giants – either on their own behalf or for clients – is unlikely to be included in the forthcoming register of lobbyists.
  • Collectively, these four earn £500 million per year directly from government contracts - but this isn't the only benefit they get. Far from it.
One more example of political and economic 'capture', the essence of the Finance Curse.


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