Another View: Corporate Cooperation Taken to New Lows

The KPMG DPA contains several remarkable provisions. As an initial matter, the government has dictated that KPMG, upon pain of corpor-ate death, must adhere to the government's version of facts that the tax strategies at issue are inherently fraudulent. This company confession is embodied in the DPA's 'Statement of Facts,' which mirrors the indictment of the 19 individuals now blamed for KPMG's alleged wrongdoing, United States v. Stein et al., S1 05 Cr. 888 (LAK) (S.D.N.Y., October 19, 2005). The DPA prohibits KPMG and any of its employees from making any statement, in any context, which is inconsistent with the Statement of Facts. It also requires KPMG to waive any attorney-client privilege or work product protection in favor of the government while allowing it to retain the protections against others. KPMG was forced to accept these and other conditions of the DPA despite that fact that: 1) none of the tax strategies charged as a crime have ever been found to be illegal; and 2) for years, KPMG assured its management, employees, and customers, as well as the government, that the strategies were lawful. The DPA will prevent KPMG from bringing these facts to light.