Lawmakers Question Accounting Firms Over ‘Revolving Door’ With Federal Agencies
A recent news investigation detailed potential ethics issues over the past four presidential administrations.
Two Democratic lawmakers are calling on five major accounting firms to provide information following a recent report about a “revolving door” between the federal government and private sector companies.
Sen. Elizabeth Warren, D-Mass., and Rep. Pramila Jayapal, D-Wash., sent letters to Deloitte, PricewaterhouseCoopers, Ernst & Young, KPMG and RSM on Tuesday regarding a New York Times investigation titled, “How Accounting Giants Craft Favorable Tax Rules From Inside Government,” published on September 19.
“The New York Times report details how accounting giants are abusing the revolving door between public service and private corporations,” said a press release. “The report revealed that in the last four presidential administrations, dozens of lawyers have left top accounting firms for tax-policy positions in the Treasury Department and the Internal Revenue Service. Once in these positions, they have rewritten America’s tax laws for the benefit of their former clients—some of the world’s wealthiest and most profitable corporations—only to swiftly return to their firms and work for those same clients while receiving promotions and massive salary increases in exchange for their government service.”
For example, “Deloitte and PricewaterhouseCoopers designed a lucrative new tax shelter for multinational corporations, which was placed at risk when the Treasury Department issued a warning notice to shut down the scheme,” the press release continued. “Several years later, a former Deloitte attorney entered the Treasury Department, and his office issued new regulations to ease the path for companies shifting their profits offshore to avoid U.S. taxes. The attorney soon returned to Deloitte and was immediately promoted to partner.”
The New York Times article noted that government officials are prohibited by federal rules from working on matters in which they have financial interests; however, “it is hard to prove the existence of such financial entanglements.”
In response to the report, Walter Shaub, senior ethics fellow at the Project on Government Oversight who previously served as director of the Office of Government Ethics, called for an investigation by the House Oversight and Reform Committee. “This is an example of how personnel is policy,” he said in a tweet.
Warren and Jayapal asked each firm to provide by October 19 information about their employees dating back to 2001, their clients, and their policies to avoid conflicts of interest. The lawmakers also used the opportunity to advocate for the Anti-Corruption and Public Integrity Act that seeks to close the “revolving door,” which they reintroduced in December 2020. Warren and Jayapal’s offices did not respond by the time of this article’s publication to Government Executive’s question on whether or not they plan to reintroduce the bill during this Congress. On the first day of his administration, President Biden issued a sweeping ethics pledge outlining rules for his officials that reflected many of the priorities in the anti-corruption bill.
PrivcewaterhouseCoopers and KMPG declined to comment. Deloitte, Ernst & Young and RSM, as well as the Treasury Department, did not respond for comment by the time of this article’s publication. RSM provides IT services to GovExec, Government Executive's parent company.