The accounting giants have their roots mostly in alliances formed in late 19th and early 20th centuries by U.S. and U.K. accounting firms. Their continuing Anglo-American flavor and their global clout is a reflection of Wall Street and London’s dominance within the world’s financial system. The firms are structured as decentralized alliances of local partnerships in different countries, but much of their top leadership is based in America and Britain.
Legal battles over the past decade have raised questions about whether governments see the major accounting firms, like major banks, as “Too Big To Fail.” This unwritten policy, anti-corruption campaigners say, has discouraged real reform at the big audit firms because they know authorities will only go so far in punishing bad behavior.
The Big 4 have also gained clout and inside knowledge by helping governments write the laws that establish the offshore system’s rules of engagement, and by lobbying heavily to keep the rules to their liking. Austin Mitchell, a member of the U.K.’s Parliament, has gone so far as to call the Big 4 “more powerful than government.”
As the flow of money into tax havens has become an increasingly hot issue, financial transparency advocates fear the big audit firms will use their expertise and influence to undermine efforts to reform the offshore system. The firms have lobbied, for example, against proposals that would give national tax authorities more power to demand information on global corporations’ activities around the world.
Critics say Big 4 accountants shuttle back and forth between the accounting industry and government so often in Europe and other regions that it undermines authorities’ efforts to police the industry and enforce tax laws.
“You have got this revolving doors thing, where gamekeepers — if they are any good — get bought by poachers,” U.K. House of Lords member Trevor Smith said during a parliamentary debate in 2013.
Source: ICIJ