Mr John Dixon
Head of UK and Ireland Tax
Ernst & Young
1 More London Place
5 March 2012
Dear Mr Dixon,
I enclose a letter sent to you last July by my parliamentary colleague, Teresa Pearce, which is still awaiting a response.
In light of the recent testimony at The Leveson Inquiry by DAC Sue Akers that News International had created a “network of corrupted officials” and a “culture of illegal payments”, I would be grateful for your explanation as to how Ernst & Young responded to my colleague’s letter.
I also seek your assurance these practices are no longer taking place at News International and that you are co-operating with the HMRC to ensure that appropriate tax is paid as a result of the disclosure by the company. For the record, please can you also confirm that Ernst & Young were not aware of the system of cash payments used to create the “network of corrupted officials”?
As I understand it, Ernst & Young have an obligation to monitor payments made, cash or otherwise if they were part of the accounts, and to the level of materiality agreed between the Board and the auditor according to APB standards. Can you let me know whether payments were ever queried when selected as part of the sampling process?
If the cash payments were outside of the accounts completely, what explanation did Ernst & Young receive as to why News International’s cash holdings were reduced?
I look forward to receiving your reply as soon as possible.
Member of Parliament for West Bromwich East
Cc Ms Lin Homer, Chief Executive & Permanent Secretary, HMRC