At Hearing, Warren Obtains Commitment from Treasury IG Nominee to Investigate Conflicts of Interest and Revolving Door between Treasury, IRS, and Big 4 Accounting Firms
Highlights Flawed “Whitewash” of Investigation by Current Acting Treasury IG
Treasury IG Nominee James Ives testified that, if confirmed, he would “take a fresh look at this revolving door ethics problem” and report to Congress on adequacy of current ethics laws
Washington, D.C. — At a hearing of the U.S. Senate Committee on Finance, U.S. Senator Elizabeth Warren (D-Mass.) obtained a commitment from James R. Ives, nominee for Department of the Treasury Inspector General (IG), to investigate revolving door influence peddling between the Big 4 accounting firms and IRS and the Treasury Department.
During her questioning, Senator Warren secured a commitment from Mr. Ives that he would “take a fresh look at this revolving door ethics problem” if confirmed. Senator Warren raised her concerns about a report from the current Acting Treasury IG on the revolving door between Treasury and the Big 4 firms. The report took more than two years to complete and failed to properly investigate this problem. Senator Warren slammed the report as an “irresponsible whitewashing” and called on the Acting IG to withdraw in a letter sent last month.
Transcript: Hearing to Consider the Nominations of James R. Ives, of Virginia, to be Inspector General, Department of the Treasury, vice Eric M. Thorson; Rose E. Jenkins, of the District of Columbia, to be a Judge of the United States Tax Court for a term of fifteen years, vice Elizabeth Crewson Paris, term expired; Adam B. Landy, of South Carolina, to be a Judge of the United States Tax Court for a term of fifteen years, David Gustafson, term expired; and Kashi Way, of Maryland, to be a Judge of the United States Tax Court for a term of fifteen years, Mark Van Dyke Holmes, term expired.
U.S. Senate Committee on Finance
June 4, 2024
Senator Warren: Congratulations to all of our nominees.
Mr. Ives, you are nominated to be the Inspector General for the Treasury Department. Now, I've long been a supporter of IGs. I think their work as watchdogs is critical to protecting taxpayers and identifying waste, fraud and abuse.
This role is particularly important when it comes to federal ethics laws. It's an area where I've been calling for tougher laws and tougher enforcement for years, and it's an area where IGs need to do more.
Two years ago, an investigation by my office found that dozens of tax lawyers at Big Four accounting firms had taken key positions at Treasury and the IRS, where they wrote tax rules that saved their former clients tens-of-billions of dollars. That's billions with a ‘B.’
And then these tax lawyers went right back out the revolving door to their old employers, receiving big promotions and raises to boot.
Mr. Ives, do you agree that this kind of revolving door abuse is exactly the issue that merits the detailed investigation by an IG?
James R. Ives, nominee for Department of the Treasury Inspector General: I absolutely agree. Senator.
Senator Warren: Good. Well, I asked the Acting IG to investigate this revolving door scandal at Treasury more than two years ago, and he finally released his findings in March. And let me tell you, it was not worth the wait.
The report concluded that Treasury Employees rewriting our tax code for the benefit of giant corporations they used to work for couldn't be a problem because, and I quote, “Treasury's tax guidance review process includes numerous stages of review and approval, and multiple individuals.”
That's it. And because of that, the Acting IG did not bother to conduct any audit of employer self-reporting of potential conflicts. He did not conduct a detailed review of any single agency policy or agency rulemaking.
Mr. Ives, does that make sense to you? Do you think the mere existence of numerous stages of review and approval are enough to insulate the department from the impact of revolving door influence peddling?
Mr. Ives: Without speaking to the specific report, my answer is no. I am aware of many situations whereby there was a lengthy review process in place, yet conflicts of interest existed. And they were matters that warranted investigation.
Senator Warren: I am glad to hear that.
You know, this report and its conclusions were atrocious. A whitewash of what appears to be serious ethics problems at Treasury and IRS.
I wrote to the Acting IG and told him to withdraw this report and start over. And I'd like to move to have that letter entered into the hearing record, Mr. Chairman.
Chairman Wyden: I'm sorry.
Senator Warren: I would like to have my letter to the Acting IG entered into the record.
Chairman Wyden: Without object, so ordered.
Senator Warren: Thank you.
Mr. Ives, if you are confirmed, will you take a fresh look at this revolving door ethics problem at Treasury?
Mr. Ives: I will, Senator.
Senator Warren: That's what I want to hear. Thank you, Mr. Ives.
You know, the work that IGs do is essential to ensuring that the federal government works for hardworking American taxpayers, not just big corporations and fancy tax lawyers in Washington.
In addition to digging into this specific scandal with the Big Four accounting firms, I hope that more broadly, you will make ethics and conflicts of interest a priority. If you are confirmed, it is critical that IGs investigate these matters, identify whether any laws have been broken — and this is important — report to Congress if you find that current federal ethics laws are inadequate and need to be strengthened.
Mr. Ives: I agree, Senator.
Senator Warren: Thank you very much. Thank you, Mr. Chairman.
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