October 05, 2021

Warren, Jayapal Demand Explanation for Reports of Unethical Revolving Door Between Federal Government and Top Accounting Firms

Lawmakers: “Americans are sick and tired of these corrupt schemes, and we’ve introduced the Anti-Corruption and Public Integrity Act that would end them.”

Text of Letters (PDF)

Washington, D.C. — United States Senator Elizabeth Warren (D-Mass.) and United States Representative Pramila Jayapal (D-Wash.) sent letters to the leaders of five major accounting firms — Deloitte, PwC, EY, KPMG, and RSM — urging them to explain the unethical revolving door between their personnel and the federal government. Warren and Jayapal also demanded information on what safeguards are in place to prevent conflicts of interest for employees who formerly worked for the federal government. A report released by the New York Times last month revealed how the firms send their lawyers into high-ranking positions in the federal government to create new tax loopholes for their clients, and then reward the same lawyers with bigger paychecks and promotions upon their return. 

“Americans are sick and tired of these corrupt schemes, and we’ve introduced the Anti-Corruption and Public Integrity Act (S. 5070) that would end them. The decades-long scam in which large accounting firms have abused the revolving door between the government and the private sector to help their wealthy clients avoid paying their fair share of taxes demonstrates precisely why this legislation is necessary,” wrote Senator Warren and Congresswoman Jayapal.

The New York Times report details how accounting giants are abusing the revolving door between public service and private corporations. 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.

In one instance, 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. 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.

Warren and Jayapal’s Anti-Corruption and Public Integrity Act would close the revolving door between massive accounting firms and the federal government, and ensure that government officials work for the people — not the wealthiest corporations and their clients. Specifically, the legislation would: 

  • Require executive branch employees to recuse themselves from matters that might financially benefit their immediately prior employers or clients; 
  • Restrict private-sector companies from immediately hiring or paying any senior government official that was recently lobbied by the company; 
  • Prevent the world’s largest corporations, banks, and monopolies from immediately hiring or paying any senior government official after they leave government service; 
  • Ban private-sector companies from providing “golden parachutes” to compensate executives for entering into federal service 
  • Ensure lobbyists disclose any specific government actions that they attempted to influence, any meetings conducted with public officials, and any documents provided to those government officials; 
  • And create a new U.S. Office of Public Integrity to enforce federal ethics and anti-corruption laws. 

In addition, Senator Warren’s recently introduced Real Corporate Profits Tax Act would simplify the tax system — making it harder for giant corporations to create and profit from tax loopholes — and reduce the payoff and incentives to engage in these unethical practices. 

The lawmakers requested a response from the CEOs by October 19, 2021.