Rudolf Elmer, Swiss whistleblower: Generally speaking the real culprits – bankers, tax lawyers, the Big Four auditors, asset advisers and managers etc – are not being prosecuted at all. And countries, such as India, do not follow through to request and receive information. That’s a key problem in this opaque financial system. Personal responsibility is simply not there. Suppose I was a banker and I knew if I helped someone to avoid taxes or even worse, I know I will not need to go to prison because the bank will pay a fine and the legal case is closed. There’s not even the slightest bit of fear. So what kind of personal responsibility do I have? It will only change if there is the risk and that there is a high probability if I am caught I would go to prison for several years for facilitating and assisting tax fraud or other crimes related to my work.
So, sanctions, in the sense that people who help assist tax evasion have to be afraid of going to prison, are simply a must. And one thing that has changed is that international and domestic law [of various countries] has changed recently but not enough and strict prosecution of those tax evaders still does not really exist or the punishment is still very, very mild. Therefore, it has not been acted upon or followed through to tackle the problem seriously. That’s one thing which is crucial: people have to be prosecuted and they have to go to prison! https://www.swissinfo.ch/eng/rudolf-elmer_the-business-of-secrecy-has-become-even-more-lucrative-says-whistleblower/43387894
Secondly, there are a number of issues with the ‘Big Four’ audit companies. The conflict of interest is built in their business model. On one hand, they act as advisers on tax matters for ultra high net worth individuals, multinational conglomerates and even governments and then they go onto work as auditors and confirm the accounts are based on a ‘true and fair’ view. Now, I was an auditor for seven years with KPMG. I did know what was going on, but I couldn’t speak up due to the Swiss secrecy and professional laws which I had to obey.
Therefore, the Big Four, they precisely know what is going on. However, they are not held or made responsible. The only big audit company I can think of the is the Enron case in the US where the partners had to go to prison and the firm of Arthur Anderson disappeared. But that’s the exception – which simply confirms the rule.
So if you don’t hold these guys responsible as well… and the game is only about fines, things will not really change at all. What I have learnt over the last 15 years is that fines even the ones levied by the US DOJ have just become parking tickets these days. The Big Four shouldn’t be allowed to do both things: tax advising and auditing. And actually, the auditors have to have the responsibility to confirm in an audit report that there is no material tax evasion happening within the multinationals.
Because the partners of the Big Four know what the term ‘material’ means – you have to make them responsible for it if material profit shifting is going on and having mentioned it in the yearly audit report. These partners do have the knowledge…they are very close to the business and are well aware how the multinational makes their big profits by profit shifting.
But our society is not there yet to make these partners and particularly the Big Four responsible and force them to make disclosures in their auditor reports or actively fight such abusive practices.
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