May 14, 2024

Warren, Jayapal Slam Treasury Inspector General’s “Irresponsible Whitewash” of Big Accounting Firms’ Revolving Door Influence over Tax Policy, Demand Retraction

“It took you over two years to conduct your review – and the result was an irresponsible whitewash that failed to seriously investigate the problem or hold any individual or company accountable.” 

“This was a drive-by investigation that appeared to be designed to reach pre-conceived results absolving Treasury officials of wrongdoing despite the obvious evidence of serious revolving door conflicts of interest.” 

Text of Letter (PDF)

Washington, D.C. – Senator Elizabeth Warren (D-Mass.) and Representative Pramila Jayapal (D-Wash.) wrote to the Department of Treasury’s (Treasury) Inspector General (IG), Richard Delmar, demanding a retraction of the IG’s recent report, and conduct a new and thorough review of the scope and significance of revolving door influence-peddling problem by big accounting firms at the Treasury Department. 

In February 2022, the lawmakers requested the investigation following a report from the New York Times exposing how the largest accounting firms in the U.S. have perfected a hidden system to promote their interests in Washington. 

The report took more than two years to complete – and failed to hold any individual or company accountable. The report’s main conclusion was that because many Department officials are involved in developing important tax rules, there can be no meaningful conflicts of interest. But there is no basis for this conclusion: the lawmakers noted that as more officials work on key tax rules, particularly in the absence of key rules and regulations, the more likely these rules are to be affected by conflicts of interest. 

“This represents a failure on your part – you failed to conduct a serious inquiry, and you should retract this report and start over in order to conduct a meaningful review of the scope and significance of this revolving door problem at the Treasury Department,” wrote the lawmakers. 

The new IG report has multiple flaws: the IG did not conduct an audit of any employees’ reporting to determine the extent of potential conflicts, did not perform a review of the ethics tracker that Treasury uses to track ethics information on employees, and did not conduct an in-depth audit of any key Treasury rulemaking.

When the IG’s sister office, the Treasury Inspector General of Tax Administration, conducted a similar review, it found that from 2017 to 2021, 15% of the agency’s workforce received income from a large accounting firm or large corporation, with dozens of those employees including IRS executives or senior officials responsible for key agency decision-making.  

“This was a drive-by investigation that appeared to be designed to reach pre-conceived results absolving Treasury officials of wrongdoing despite the obvious evidence of serious revolving door conflicts of interest,” wrote the lawmakers.

Senator Warren is a leader in fighting corruption and revolving doors in the federal government: 

  • In April 2024, Senator Warren called for closing loopholes in the revolving door between the military and foreign governments, including policies that allow active duty service members to begin negotiating employment with foreign governments before they leave the military.
  • In March 2024, Senator Warren secured ethics commitments from Douglas Schmidt, ahead of his confirmation to be the Director of Operational Test and Evaluation (DOT&E) for the Department of Defense.
  • In February 2024, Senator Warren secured unprecedented ethics commitments from former Congressman Sean Patrick Maloney, President Biden's nominee for U.S. ambassador to the Organisation for Economic Co-operation and Development (OECD), including his recusal from participating in the OECD’s decision making processes regarding crypto and digital assets policy. 
  • In January 2024, Senator Warren and Representative Jayapal sent a letter to Secretary of Commerce Gina Raimondo, expressing concerns about the Department of Commerce’s reliance on a small team of Wall Street financiers to help allocate $39 billion in CHIPS and Science Act taxpayer-funded manufacturing and R&D subsidies.
  • In June 2023, Senator Warren and representative Andy Kim reintroduced her Department of Defense Ethics and Anti-Corruption Act.
  • In April 2023, Senator Warren chaired a hearing with Pentagon officials and ethics experts about problems with the revolving door, retired military officers working for foreign governments, and issues with executive branch officials owning stocks in companies impacted by their official actions.
  • In May 2022, Senator Warren secured a commitment from then-Federal Reserve Vice Chair for Supervision nominee Michael Barr not to seek employment or compensation – including as a result of board service – from any company that has a matter before the Fed, or any financial services company, for four years after he leaves government service.
  • In February 2022, Senator Warren secured the strongest ethics standards ever agreed to by Federal Reserve Board nominees from Lisa Cook, Phillip Jefferson, and Sarah Bloom Raskin. The nominees agreed to a four year recusal period from matters which they oversee on the Board of Governors, not to seek a waiver from these recusals, and not to seek employment or compensation from financial services companies for four years after leaving government service.
  • In January 2022, Senator Warren secured a commitment from then-FDA Commissioner nominee Dr. Robert Califf to recuse himself from matters involving his former employers and clients for four years, two years longer than what is required in the Biden administration’s Ethics Pledge. He also agreed not to seek employment with or compensation from, including as a result of board service, any pharmaceutical or medical device company that he interacts with during his tenure as FDA Commissioner for four years after completing his government service. 
  • In October 2021, Senator Warren’s Corporate Profits Minimum Tax, was included in the Build Back Better Act, to create a fairer tax system by limiting how much giant corporations can exploit tax loopholes and fight the incentives that drive these unethical and greedy tax-dodging schemes. 
  • In December 2020, Senator Warren and Representative Jayapal introduced the Anti-Corruption and Public Integrity Act, the most ambitious anti-corruption legislation since Watergate, which would outlaw corrupt revolving-door schemes so that public servants are serving the public – not the financial interests of themselves or giant corporations.

###