Treasury Secretary Scott Bessent announced the termination of contracts with Booz Allen Hamilton, following a significant breach involving the leak of President Donald Trump’s tax returns years ago. This news led to a sharp decline in the consulting firm’s stock, which fell more than 11% by early afternoon.
The Treasury Department highlighted that it currently holds 31 contracts with Booz Allen, amounting to $4.8 million in annual spending and $21 million in overall obligations. The department’s press release pointed out that Charles Edward Littlejohn, a former employee, was responsible for leaking tax returns, impacting approximately 406,000 individuals, according to the IRS.
Bessent criticized Booz Allen for not having sufficient safeguards in place to protect sensitive data, including confidential taxpayer information accessible through its contracts with the Internal Revenue Service. The statement underscores the serious ramifications of data security failures in the consultancy industry.
In its defense, a spokesperson for Booz Allen expressed strong disapproval of Littlejohn’s actions, stating a policy of “zero tolerance” for illegal conduct. They clarified that the data breach occurred on government systems, and not on Booz Allen’s own systems, explaining that the company does not store taxpayer data and lacks the capability to oversee activities on government networks. Additionally, Booz Allen stated its support for the investigation and looks forward to engaging with the Treasury on the issue.
Littlejohn, who pleaded guilty in 2023 to unauthorized disclosure of tax return information, received a five-year prison sentence for his actions, during which he revealed the tax returns of Trump, Elon Musk, and other affluent Americans to media organizations.
This incident has highlighted the ongoing challenges and responsibilities consulting firms face regarding data security and the protection of sensitive information, a concern that resonates across multiple sectors today as organizations increasingly rely on data analysis and external partnerships.