Ethics and governance in the European Financial centers

I have been studying CSR in the financial center of Luxembourg since 2004. This center has definitely advantages for investors. But it relies too much on its certitudes by denying or condoning problems.
This insularity that prevents any criticism has become a risk . And unfortunately anyone who states issues is repudiated while everyone in the system is fascinated by the growth that is expected forever.

I went through a brochure: Luxembourg Bank Insight 2008, that was published on May 2008.

It is amazing to see how officials deny or condone risks :

Message by Mr Luc Frieden

Banking institutions worldwide have experienced turbulent times recently. The global financial crisis, initially triggered by the subprime mortgage crisis in the United States, has caused significant losses, both socially and
economically. Fortunately, the Luxembourg financial institutions have so far been less hit than some other banks elsewhere.

Brilliant analysis.

Opinion of Mr Jean-Nicolas, Schaus, CSSF

In our supervisory area we did not identify any drastic problems caused by the subprime crisis. Of course, credit for this is not entirely ours, rather there are several reasons behind it. When the problems began in August
last year, we had no difficulties in getting a fast and comprehensive overview of the situation with the Luxembourg Banks

What about Dexia and Fortis a couple of months later?

Analysis of Carlo Thill, Fortis

The merger with ABN Amro was one of great satisfaction and pride for Fortis management and employees, as Fortis managed to achieve this result despite some people saying that Fortis was too small to play in this league.

I think they definitely should have listen to these people. Don't you?



As they should have listened and listen to those who haven been warning them the last years that there are specific risks for the financial center in a competitive environment with a paradigm shift for transparency and ethics.

As I wrote professionals and politicians in Luxembourg operate with a distorted sense of reality. Finkelstein calls institutions that are unable to question their prevailing view of reality zombies. A zombie company, he says, is “a walking corpse that just doesn’t yet know that it’s dead—because this company has created an insulated culture that systematically excludes any information that could contradict its reigning picture of reality”. (See Finkelstein, Sydney, Why Smart Executives Fail: And What You Can Learn from Their Mistakes. Portfolio Hardcover, 2003)

It is true as well for a financial center.