Ethics and governance in the European Financial centers

On 15 January 2009, it was admitted unofficially that Luxembourg Funds are exposed up to EUR 7 Billion to Madoff.

“The experts have tallied the amount between five and seven billion euros," a MP said, speaking on condition of anonymity. Does he fear to be repudiated to tell the truth to speak on condition of anonymity?

As I wrote this exposure us 20% of the Madoff Fraud of USD 50 billion for a jurisdiction of... 2500 Km2 (about 1000 sq miles)

How the authorities are handling the situation ?

Let’s have a look on the agenda of the last Council of Goverment that took place on 16 January 2009. There is not a word about Madoff despite the exposure.

Let’s have a look on the CSSF website. Luxembourg's financial sector monitoring commission, the CSSF, had initially estimated at the end of December that Luxembourg funds had EUR1.9 billion invested in funds managed by Bernard Madoff. The CSSF did not issue a press release to update the figure.
This attitude demonstrate that Luxembourg is unable to face the situation, to take decisions in time, to communicate fairly for the investors on disfunctions... The last press release about the Madoff cas is dated 2 January 2009 only to confirm that Luxembourg complies with the European legislation. But it did not specify that rules are clear but prag-ma-tic. For example a circular states that : "Pursuant to the commentary of the Articles of the Law of 30th March, 1988, the concept of custody used to describe the general mission of the depositary should be understood not in the sense of “safekeeping”, but in the sense of “supervision” which implies that the depositary must have knowledge at any time of how the assets of the UCI have been invested and where and how these assets are available. In accordance with the meaning thus attributed to the concept of custody, the physical deposit of all or part of the assets may be made either with the depositary itself (which represents the most prudent solution) or with any professional designated by the UCI in agreement with the depositary (...) As regards the extent of the duty of supervision of the depositary, one can consider that the depositary has discharged its duty of supervision when it is satisfied from the outset and during the whole of the duration of the contract that the third parties with which the assets of the UCI are on deposit are reputable and competent and have sufficient financial resources" (Know more).

I do not think that official's attitude is responsible. This attitude remind me of Louis XVI : on the day the Bastille was seized by revolutionaries, he wrote in his diary, "Rien," "Nothing happened."