Holding Green Capital accountants to account
Words: Joanne Ball
Illustration: Patch Plummer
Counting the costs of a ‘big four’ firm for our city.
In August 2014, it was announced that KPMG would be one of Bristol Green Capital’s (BGC) private sponsors, alongside First Group. Details of what, exactly, this sponsorship entails are yet to be made public. Given that in BCG Chairman Andrew Garrad’s own words this deal is “… one of the largest private sector sponsorship deals that Bristol has ever seen”, we thought we’d have a look at the track record of KPMG. How, we wanted to ask, does this partnership fit into BGC’s aspiration of creating “… a city where the things we do every day can be good for our communities, our businesses — and our planet.”
According the BCG’s website,
“Citizens in Bristol have been leading the way for 800 years. Bristol 2015 will create a city-wide platform where people can create, share and learn, and find community-led, grass roots solutions to the challenges we face”.
With this spirit in mind, shouldn’t BGC avoid getting into bed with a company known throughout the world for its aggressive tax evasion scams – scams that work to benefit banks and corporations and which disadvantage citizens and society? Well, nope. The so-called ‘big four’ accountancy firms (KPMG, Deloitte & Touche and Ernst & Young), which have been criticised numerous times, have also largely escaped punishment for their role in tax avoidance and dodgy audits of banks. But then as Manal Corwin, National Tax Service Line Leader at KPMG LLP, said “Morality can’t be a guiding principle for international taxation…”. One might say the same for many things at KPMG. Incidentally, BGC ‘Ambassador’ Leo Johnson, brother of Boris Johnson and Tory advisor/supporter, is a greenwash consultant at PricewaterhouseCoopers – a company known for a number of ongoing ethical scandals.
KPMG oversaw the initial auditing for the BGC grant awards, as the Cable reported back in December 2014, a third of which went to organisations with close links to the awarding body. Clearly KPMG’s initial scrutiny didn’t look too closely at conflicts of interest.
As it turns out, conflicts of interest are everywhere. In February this year, the UK’s Financial Reporting Council (FRC), an “… independent regulator responsible for promoting high quality corporate governance…” fined KPMG £390,000 after an investigation found it had breached conflict of interest rules with two separate clients. It also fined KPMG for four counts of putting commercial interests ahead of ethical standards. The stink seems to have come mainly from KPMG’s Chief Operating Officer, James Marsh*. KPMG continued to audit Cable & Wireless Worldwide Plc (CWW) despite Marsh owning shares in the company. Marsh, however, didn’t think it was an issue to keep his shares in CWW even when he became a partner at the firm. The FRC also discovered misconduct around Marsh’s appointment as COO, saying that he had been in a position to “exert significant influence over the financial statements of CWW” and said KPMG lacked “sufficient or appropriate procedures to prevent or identify the failure on the part of Mr Marsh to sell the shares”. A ‘Jim Marsh’ now heads up KPMG’s International Markets and Government arm. Hmmm.
BGC’s website proudly states
“Part of the magic of Bristol is our ability to do things a little differently … as long as everyone’s having fun”.
Russia and Qatar are, of course, well known for their sense of fun, particularly in their interpretation of human rights. In Qatar workers mainly from poor South Asian countries are certainly having great fun living in abysmal conditions, working long hours with few labor rights, and in an unregulated environment with temperatures that regularly top 50C. A Guardian report attributed one Nepalese worker death every two days to the World Cup construction. Meanwhile, in Russia, according to international human rights organizations, as well as domestic press, there are massive violations of human rights, widespread discrimination and attacks on ethnic minorities and gay people. Since 1992 at least 50 journalists have been killed across the country. What’s this got to do with BGC partner KPMG? Well, the company is the auditor and adviser for the official Russia and Qatar organising committees that prepared the winning bids for the FIFA World Cup. The same bids that are now under investigation for corruption in the U.S. and Switzerland. KPMG continues to support Russia’s organising committee, while Qatar switched to Ernst & Young in 2011. Nice bed partners, BGC.
References:
- FRC/Jim Marsh: https://frc.org.uk/News-and-Events/FRC-Press/Press/2015/February/Outcome-of-disciplinary-case-against-KPMG-LLP,-a-M.aspx
http://www.theguardian.com/world/2014/dec/23/qatar-nepal-workers-world-cup-2022-death-toll-doha
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