Tuesday March 5 2013
Ernst and Young agreed to pay $123 Million to settle charges of peddling abusive tax shelters. This comes several years after a similar plea deal with KPMG which paid $450 Millon , the largest fine ever.
EY does not know right from wrong? How do these guys retain credibility? Did anyone lose their license, did anyone get personally fined, did anyone go to jail? No, like Goldman Sachs and the TBTF banks, they just pay some money and go right back to work.
I wonder how Bernie Madoff and Jeff Skilling, both in jail, feel about this.
Well it was explained to me why they go with fines, it actually makes a wired buracratic sense. When the DOJ hammered AA and drove it into bankruptcy, used emotion to convict AA they killed tens of thousands of jobs only to have AA be found not guilty across the board. The result has burned the DOJ and since then they have settled for fines and "supervised" changes. The second reason is simple: the DOJ is scared to death to be seen as an active agent in crippling the system. If the DOJ went after these people in cort for criminal charges the faith in the system would begin to fail (their thinking no mine). Of course in a free market system the fall of these firms allows better run company's to fill the gaps and provides new opportunities, it also gives object lessons to company's on how not to behave. Untill we let these company's go under there will be no incentive for doing business right. I am always reminded that "as long as the company pays for the audit" they will have a measure of control over the auditors and that means there will always be abuses.
Posted by: cary kingsley | March 07, 2013 at 10:48 AM
Dr. Elam,
I recommend the book "Final Accounting." Or wait! Maybe you recommended it in your classes. Nevertheless, what you post here is a good ethics lesson.
Posted by: Jerry | March 08, 2013 at 09:46 AM