A pair of Democratic lawmakers on Tuesday asked the Treasury Department inspector general to investigate the revolving door between the country’s largest accounting firms and key policy positions at the Treasury.
Senator Elizabeth Warren of Massachusetts and Representative Pramila Jayapal of Washington were prompted by an investigation published in September by DailyExpertNews that described how giant accounting firms are trapping top attorneys in government to create tax rules that benefit their clients.
The Times found at least 35 instances where lawyers from the country’s largest accounting firms left to work in government, mostly at the Treasury’s tax office, and then returned to their old offices.
The Times found that while in government, many of those lawyers granted tax breaks to the clients of their former firms, softened efforts to crack down on tax evasion and approved the loopholes being used by their former firms. In nearly half of the examples, officials were promoted to partners upon their return to their old company.
The pattern has been repeated in both Democratic and Republican administrations, including those of Donald J. Trump, Barack Obama, George W. Bush and Bill Clinton.
Since October, the two lawmakers have gathered information from five accounting firms – PwC, EY, Deloitte, RSM and KPMG – about the phenomenon.
“Following our own investigation that has confirmed these allegations and raised new concerns about the accounting giants abusing these revolving door schemes, we urge you to immediately open an investigation into the matter,” the two lawmakers wrote in their letter. , which was sent to the Treasury Department’s Acting Inspector General, Richard K. Delmar, and its Inspector General for Tax Administration, J. Russell George.
“Accounting giants are abusing public trust and taking advantage of the revolving door between public service and private profit,” lawmakers said in the letter.
The lawmakers released the responses of the companies, which collectively acknowledged 24 such incidents.
“But these revelations only reveal the tip of the iceberg,” the lawmakers wrote. “Neither the companies nor the Treasury Department have provided meaningful information about the responsibilities and customers of their employees, whether in the corporate or government sector.”
In their letter, they cited an episode discovered by The Times of a Deloitte tax attorney who lobbied to weaken proposed Treasury rules to end an offshore tax strategy set up by several accounting firms. He then joined the Treasury and oversaw those same rules — which ultimately set out the changes he’d been looking for in the private sector. He soon returned to Deloitte and was promoted to partner.
In their letter, the lawmakers asked the agency to investigate a number of areas, including the extent to which the firms, “through the employees posted to the Treasury Department and IRS, could adversely affect department and agency policies or information obtain or influence that gives their customers an undesired advantage.” They also sought information about the employees’ “rewards” after rejoining their old companies, as well as policies with the Treasury, the IRS and the corporations to prevent abuse.