Ethics and governance in the European Financial centers

In three recent articles I have commented PwC Luxembourg press release published last week:
Surprising PwC Luxembourg
PwC Global Economic Crime Survey
PwC Luxembourg and Corporate Social Responsibility


Time is up to lead to three conclusions, based on this press release, for the job of external auditor.

1) An audit firm cannot communicate on its growth as value like a vulgar commercial private company. Such a value involves risks to reach commercial objectives and can lead the staff to fail to fulfil the professional deontology not to lose the client or to gain clients. The external auditor has a legal assignment which definitely requires a reserve in the communication.

2) Audit reports are not for the client (who pays) but for the investors, the market and more generally the stakeholders. It is them that must trust the auditor's report. Aiming at clients’ confidence unfortunately does not guarantee the quality (ethics) of the work because the client can trust the auditor especially to condone fraud : after all Luxembourg is a small place where bankers stated officially that “offences such as forgery, use of forgery, false balance sheets, use of false balance sheets or unauthorised use of corporate property should not be included. These are offences with financial connotations which are confused with laundering for the sole purpose of applying exceptional powers to these vague offences”. This is the deep business culture.

3) An audit firm that censors clients’ economic criminality (including money laundering) in a small country that boasts a large financial sector cannot inspire confidence with stakeholders. If it is unable to speak freely about economic criminality while having strong commercial objectives, how can stakeholders be certain that issues will be raised in the framework of the audit assignments? The absence of country report is very significant of situations that definitely impair or tend to impair the independence.

Luxembourg unfortunately concentrates all dysfunctions of the financial sector and of the audit professions worldwide. And because of the small size compared to the growth of the business, dysfunctions are amplified so is amplified that “Code of conducts” or “philosophies” are a charade.

What counts is making money, always more money without shame.

"Fricum prior omnia"