If Barbados Can’t Trust KPMG – We Are In Trouble…
A story in the New York Times says that the United States Trustee has produced a 500+ page report that details wrong-doing by KPMG Accountants in their handling of New Century Financial – a failed company that collapsed in the recent US housing/mortgage disaster and played a big part in the Bear-Stearns debacle. (New York Times story here)
As our friend at Pull! Push! Blog always says “IANAA – I am not an accountant”, but even ordinary folks are well aware of the close relationship between KPMG Accountants and the Government of Barbados. Indeed, KPMG has a heavy governmental and corporate presence throughout the Caribbean.
How Could This Impact Barbados?
Our offshore banking industry is one of the cornerstones of our economy, but it is coming under increasing pressure from sectors of the United States and Canadian Governments that see all offshore banking as bad for those countries. Even Presidential candidate Barack Obama has developed a position on offshore banking that could be devastating for Barbados should he win. (BFP Obama offshore banking story here)
Our ability to continue to prosper depends largely upon our image of a country that can be trusted and one that has effective oversight of the offshore banking and corporate sectors.
KPMG is heavily relied upon by the Barbados Government to provide much of our oversight. The U.S. Trustee says that KPMG is willing to look the other way if the price is right.
According to the U.S. Trustee report, KPMG and others were willing to look the other way so much that the entire US mortgage industry collapsed and brought down one of the largest global investment banks and securities trading and brokerage firms in the world.: Bear Stearns.
Hmmmm…. and that makes me wonder how much KPMG Barbados has been looking the other way when it comes to Barbados’ government finances too! (KPMG Barbados website here)
In Offshore Finance & Banking, Image IS Reality
Barbados and KPMG have to be concerned about image as well as reality as the internet has made information so accessible. For instance, a decade ago no one outside of those involved would probably know that the Ohio government alleged that KPMG Barbados “breached this duty in preparing and certifying inaccurate and false financial statements” in the collapse of an Ohio insurance company in a case called “Ann H. Womer Benjamin v. KPMG Barbados et al.” (link here – PDF)
KPMG Barbados is relied upon by the Government of Barbados to perform various tasks for our county – even for doing information security audits. Many other Caricom governments are also heavily involved with KPMG. (KPMG Caricom website here)
With the recent appointment of KPMG-alumni Darcy Boyce as Minister of State in the Ministry of Finance, Economic Affairs and Development and Energy, the connections between our government and KPMG can be seen to be getting even closer. (Darcy Boyce’s impressive bio with KPMG and the Barbados Central Bank is here)
Serious and tough times are ahead for Barbados and our offshore industry. Let’s hope that Mr. Boyce’s and our government’s close relationship with KPMG does not become a liability.
We can’t stress it enough folks… Now, more than ever, Barbados needs Integrity, Transparency, Accountability Legislation – ITAL