As many as 20 former partners of KPMG LLP could face criminal charges tied to their roles in selling tax shelters in the 1990s, according to The Washington Post.
Some of the people were members of the Big Four accounting firm’s senior-management team, the newspaper noted. KPMG has reportedly been working hard to stave off criminal charges from government lawyers seeking what the Post calls “tough concessions” in any potential settlement.
Among the high-ranking ex-KPMG officials being probed are the firm’s former deputy chairman, the onetime head of its tax-services unit, and the former leader of its national tax practice, according to the newspaper, which recounted that KPMG sold the tax shelters to 350 people and generated about $124 million in fees between 1997 and 2001.
Although federal prosecutors had recommended earlier this year that the firm itself face criminal charges, senior Justice Department officials expressed worries about another accounting firm collapsing as Arthur Andersen LLP did in 2002 and the Supreme Court’s reversal of Andersen’s criminal conviction in May, according to the newspaper. Instead, prosecutors and the firm are continuing to negotiate, the story noted.
Many observers fear that a reduction in the number of large accounting firms to three could significantly hurt public companies’ ability to comply with Securities and Exchange Commission requirements, especially those under the Sarbanes-Oxley Act.
In June, KPMG issued a press release apologizing for its transgressions. “KPMG takes full responsibility for the unlawful conduct by former KPMG partners during that period, and we deeply regret that it occurred,” it stated.