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The twilight of the Luxembourg financial center for frauds

Yesterday Luc Frieden answered verbally a parliamentary question.
The transcription of what he said was circulated.

A couple of paragraphs are worth commenting as they demonstrate that Luxembourg in the current context will not be able to make the necessary aggiornamento as leaders deny the specific problems in the jurisdiction.

Le G20 n’est ni une organisation internationale, ni un organisme pouvant arrêter des critères juridiquement contraignants (G20 is neither an international organization, nor an organization which can decide constraining criteria)

The statement is arrogant and forgets that some G20 members are major contributors to the OECD and FATF that could make a pressure.

Le Luxembourg n’est ni un paradis fiscal, ni un territoire non coopératif, puisqu’il applique l’ensemble des règles prudentielles et fiscales en vigueur dans l’Union européenne (Luxembourg is neither a tax haven, nor a non-cooperative territory, since it complies with the whole of the prudential and tax rules in the European Union)

The debate is on the relevance of the existing rules that are not strict enough.The OECD list is almost empty. The FATF list is empty.

Luxembourg would not be a tax haven.

What about bankers that organise knowingly tax evasion that are not repudiated (it is not our duty to control if the taxpayer was honest) ? What about scams linked to exotic jurisdictions that are visible in the Corporate Registration (BVI, Seychelles, Panama...) : firms with exotic shareholder(s) and/or statutory auditor, with no economic reality (no address, no website, no staff... despite a commercial activity on the paper) ? Etc.

Nous souhaitons dans ce contexte un débat fructueux et constructif avec l’OCDE. Notre position, qui est une position de dialogue constructif, sera discutée avec le parlement luxembourgeois. (We wish in this context a profitable and constructive debate with OECD. Our position, which is a position of constructive dialog, will be discussed with the Luxembourg Parliament)

The experience of the implementation of recs relation to the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions demonstrates that the "constructive debate" is for Luxembourg a delaying tactic while implementing quickly texts in favor of the business or being quickly in agreement to change the constitution. The jurisdiction is lax.

C’est à cet effet que je rencontrerai le secrétaire général de l’OCDE avant la fin de la semaine (It is for this purpose I will meet the general secretary of OECD before the weekend.)

Luc Frieden already met Angel Gurria in 2006 in Luxembourg and 2007 in Paris (the meeting in Paris was to discuss the Luxembourg positions in a certain number of questions where Luxembourg is the subject of critical observations, such as tax cooperation, harmful tax practices and fight against corruption).
Will the general secretary be given at this occasion a "generous grant" for the OECD like the FATF?
It seems that such grants from members, despite they are not a quoted funding, are accepted: the FATF and OCDE never answered my questions on the risks of such grants.

Additionally, as Angel Gurría, OECD Secretary-General, said (http://www.oecd.org/document/37/0,3343,en_2649_34487_39656933_1_1_1_1,00.html) in the framework of the ten-year anniversary of the adoption of the Convention on Combating Bribery of Foreign Public Officials in International Business Transactions: "It is one thing to enact laws, and another to enforce them".

I guess Angel Gurría will smell the coffee...

Le gouvernement, tout comme d’ailleurs le gouvernement précédent, reste prêt à adapter sa législation à la lumière des développements internationaux et des législations d’autres centres financiers pour améliorer la lutte contre les délits fiscaux. (The government, just like besides the previous government, remains ready to adapt its legislation in the light of international expansions and of the legislations of other financial centers to improve the fight against the tax offenses.)

A government does not make the legislation: it is the parliament. But in Luxembourg changes to the legislation are decided by the financial sector, which acts as the fourth estate that dominates the government, the parliament and the justice.
For example banking secrecy is not a tradition in Luxembourg. It was decided by bankers then validated later by the law.

06:53 Posted in Luxembourg | Permalink | Comments (1)


A further fascinating insight into the 'Burgers' continued belief in their ability to walk on both sides of the track simultaneously. There is an old adage that says "hunt with the hare or hunt with the hounds" what is certain is that you cannot do both. If you move fast enough you may give the appearance of walking on water for those few precious seconds before you sink!! Prenez garde Luxembourg!!



Posted by: CharlesO'S | 03/11/2009

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