Here’s a short history of Accenture, which touts itself as a high performance company, whose employees adhere to the highest ethical standards.
The Beginning
Accenture started out as Andersen Consulting, a division of Arthur Andersen, a giant accounting firm, later implicated in the Enron scandal.
During the 1980s, the partners at Andersen Consulting and Arthur Andersen feuded over sharing profits. In 1989, Andersen Consulting broke away. It changed its name to Accenture in 2001 before the Enron scandal broke. When Accenture changed its name it also incorporated and established its headquarters in Bermuda.
Good Enough for Gov’t Work
Accenture has been aggressive in seeking government contracts, especially the outsourcing of social services. Here are examples of its high performance work.1991 Accenture, then known as Arthur Andersen, signed a contract with the TX Attorney General to design a child support computer system. Six years and two missed deadlines later, the cost of the project had ballooned to more than $100 million.
When the new system came online, child support productivity plummeted and customer complaints skyrocketed.
Service was so bad that the legislature considered moving the program out of the AG’s office. It took four years of work primarily done by state employees to fix the system, restore productivity, and reduce customer complaints.
- 1996 Accenture billed Nebraska $24 million more than its original proposal to build a unified welfare computer system. The state treasurer called it the most wasteful project he ever heard of and said that paying Accenture was like “pouring money down a deep dark hole” (Dallas Morning News, May 17, 1997).
- 1998 New Brunswick, Canada canceled a welfare-redesign contract with Accenture after the original project cost mushroomed from $60 million (Canadian) to $144 million.
- 2003 The New York state comptroller described child welfare system designed by Accenture as “a high-cost, incomplete system that did not meet the needs of [its] users” (Correspondence from the New York State Comptroller to John A. Johnson, New York Office of Children & Family Services, Sept 18, 2003).
- 2004 Florida canceled three information technology contracts with Accenture worth more than $250 million. One of the contracts was for help desk services that the state’s chief information officer said “weren’t addressing the needs of the various agencies the way they should have been” (Tallahassee Democrat, Aug 20, 2004).
Ontario
Accenture contracted with the Canadian province of Ontario to redesign its welfare system. The Toronto Star called this business transformation project “the mother of all sweetheart deals” (November 8, 1998).
The original deal would have allowed Andersen to make $180 million. By 2002, the cost of project had swelled to $246 million. The provincial auditor criticized Accenture because its “billing rates were substantially higher than the corresponding amounts charged by the (Ontario) Ministry (of Community, Family and Children’s Services)” (Auditor’s Report: Ontario Works, 2002).
In 2004, Ontario decided to overhaul Accenture’s work to restore integrity to its welfare system. As part of this overhaul, Ontario closed its Accenture-designed call centers because they were “frustrating for applicants.”
Is this stuff legal?
In 2001, Ohio fired Accenture from its Ohio Works project. Accenture designed Ohio Works, a computer system to help people find jobs.
But Ohio Works didn’t work. In fact, some dubbed it Ohio Doesn’t Work because it was overpriced and difficult to use (Cleveland Plain Dealer, December 12, 2001). Arnold Tompkins the former head of the agency that contracted with Accenture for Ohio Works pleaded guilty to violating the state’s revolving door law. After pushing through the $60 million, Ohio Works contract without competitive bidding, Tompkins went to work for Accenture as a $10,000 a month consultant (Columbus Dispatch, November 2, 2001).
In 2005, the Pentagon launched an investigation into 15 Air Force contracts tied to Darleen Druyun, a former procurement official convicted of conflict of interest charges. One of the contracts under investigation, an information resource system worth $82.5 million, is with Accenture. (Dow Jones Newswire, July 12, 2005).
Taxes? We don’t pay no stinkin’ taxes!
In 2004, Accenture landed a $10 billion contract with the US Department of Homeland Security to design a border security system. But the US House Appropriations Committee blocked the contract because Accenture had incorporated in Bermuda to avoid paying US taxes.
Accenture protested. It stated that it “has never been a U.S.-based or U.S.-operated organization” and did not base itself in Bermuda to avoid paying taxes (Forbes.com June 10, 2004).
After intense lobbying, Congress bought Accenture’s “we’re not tax dodgers” argument and allowed the contract to stand. But it subsequently passed a law that took away the tax breaks enjoyed by offshore companies. Accenture, however, convinced Congress to grandfather in its tax breaks.
In 2005, IRS considered an interpretation of the law that threatened Accenture’s offshore tax breaks. Accenture’s lobbyists asked Congress to pass technical amendments to shield Accenture. But this time, Congress balked. “Clearly, this is not considered fair . . . in a time of war for people to be looking to avoid taxes,” said Rep. Charles Rangel (The Asian Wall Street Journal, July 15, 2005).
In 2005, The US General Accounting Office identified Accenture as one of the four largest federal contractors that incorporated offshore in tax havens as a way of lowering their corporate tax liability (Washington Technology, Feb 26, 2005).
Note from Blogger: This information obtained from TSEU website:
http://www.cwa-tseu.org/
Thank you to TSEU for all of your research!
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