Ethics and governance in the European Financial centers

Early this year I was quoted by the Financial Times.  

This is what I said: “The [financial centre of Luxembourg] wants to brush up its governance. If it doesn’t do that in the next few months, the centre will collapse. ”If the regulatory situation is not sorted out, dissatisfied investors and asset managers will move their business elsewhere.”

Two facts in the last couple of weeks demonstrate that the jurisdiction is unable to brush up its governance as it is in perdition.

1.      The launch of LIGFI

It appears that this institute has nothing to do with business ethics. Its genesis is an economic intelligence operation.

It is borne by professionals that never ever demonstrated a will to implement what they are now promoting: ethical conduct and its standards and practices in regard to the principles of integrity, which are fairness, transparency, responsibility and accountability.

All these professionals with business standing were especially unable to address the truth or reality of the Luxembourg shutter of the Madoff affair: the law of transposition of the UCITS directive removed two provisions of the directive and the depositary’s liability was rephrased in a way which opened the drift.

2.      The findings of the CSSF on UBS and Madoff

The findings of the CSSF on UBS and Madoff are not a surprise: all is now in order with UBS regarding procedures; it is up to the courts to decide compensations in the contractual framework between UBS and its clients that may include possible valid and opposable contractual clauses contrary to the normal liability of the depositary. It is a caricature.

The Luxembourg “system”, with all its “professional incest” (auditor-auditee, regulator-bank, administration-bank, and so on), because of the small size, is unable to produce anything else than an emollient conclusion from the regulator.

Investors and asset managers cannot be satisfied with such attempt to manipulate facts and such absence of governance in the jurisdiction.

Finance is too serious to be left to amateurs in business ethics…