Ethics and governance in the European Financial centers

I wrote yesterday an article to explain why it is not very probable that the light is made on the responsibility for the depositary within the framework of the EFAMA.

I took again these arguments to send the following mail to Commissioner McCreevy:

Dear Mr McCreevy

Further to Niall Bohan’s answer on your behalf last 20 March 2009 (Cf. my query dated 13 February on "The UCITS Directive and its transposition in Luxembourg and Ireland in the context of the Madoff case"), I would like to share with you my views on the way the EFAMA is handling the issue, which is worrying for the credibility of the UCITS.

The reading of the EFAMA annual report 2008-2009 (pdf file created on 16 June 2009 and modified on 17 June 2009) allows to concluding that it does not seem aware of the stake of the truth on the depositary’s liability.

There is a development about the depositary’s liability, which wants commenting (pages 18 and 19):

1. Your conclusion dated 28 May (the minimum high level principles of the UCITS Directive have been transposed in very diverging ways by Member States. The outcome is an unlevel playing field. This means that some EU investors in UCITS funds are better protected than others) (Source: Midday Express EXME09 / 28.05) is ignored. This opinion was however known when the EFAMA report was written and should have been taken into account.

2. The CSSF statement dated 27 May (As the CSSF has previously noted, UBSL shall have to indemnify a UCI depositor according to its obligations as a Luxembourg depositary bank, subject to valid and opposable contractual clauses to the contrary and, as the case may be, to a court decision in such matter) is ignored. This press release that made investors upset was however known when the EFAMA report was written and should have been taken into account.

3. The EFAMA bet that the European commission will do nothing: it states in its report that “signals seem to indicate that the Commission itself is not keen to “tighten up” the rules in the UCITS Directive regarding the responsibility of the depositary for safekeeping and the conditions for delegation of custody and would prefer to resort to other means rather than re-opening the Directive to achieve clarification on these issues.”

4. Above all, the EFAMA admits that it wants to hush up the issue of the transposition of the UCITS directive in Luxembourg in a manner that opened the drift. In other words the EFAMA does not want to tighten up the ship and sanction failures.

The EFAMA states that its “position in this discussion has been very clear from the beginning: contribute to making the discussion more objective and to putting an end to reciprocal incrimination, meet the concerned competent authorities to hear about the progress of their research and to remind them that the issue is urgent as the UCITS brand and investors’ trust are at risk, underline that investor protection remains EFAMA’s top priority, draw attention to the fact that the mechanism of the UCITS Directive provides for a high level of investor protection and that it is not yet clear that any investor in a UCITS will lose money, support the Commission in its view that a fundamental analysis is needed before discussing new or additional legislation.”

“Contribute to making the discussion more objective and to putting an end to reciprocal incrimination” is its first goal and is more important than “investor protection”, which is in third position. As far as competent authorities are concerned, the Luxembourg regulator (the CSSF) was disappointing: it did not sanction UBS (there would have been a sanction in any seriously regulated jurisdiction), and should have been any sanction, the amount would have been anyway ridiculous compared to what is done in any seriously regulated jurisdiction. This was admitted by the former head of the CSSF who just retired (See Paperjam, 20 mars 2009: http://www.paperjam.lu/archives/2009/03/2003_schaus/index... )

The appointment of Claude Kremer, chairman of the the ALFI (the official representative body for the Luxembourg investment fund industry) as EFAMA Vice-President makes difficult even impossible the principle of calling into question in the framework of the EFAMA the Luxembourg legal and regulatory framework.

I am afraid that investors and the European Commission cannot rely on the EFAMA, which seems much more business-oriented than client-oriented.

Two relevant questions should actually be answered:

Who (individual and/or legal person) introduced Madoff in Luxembourg (Europe)?

Probably someone that has/had an office in New York and that condoned red flags (See Greg N. Gregoriou and François-Serge Lhabitant, Madoff: A Riot of Red Flags. EDHEC, 16 February 2009).

Who (individual and/or legal person) support (in an opinion, in a committee…) the remove of two critical provisions of the Directive in the Luxembourg law of transposition, which opened the drift?

As I said, there are actually two critical provisions that are clearly missing in the Luxembourg text but that can be found in the Irish text or the French text:

• On the one hand, article 7 of the UCITS directive that states that “1. A unit trust's assets must be entrusted to a depositary for safekeeping”. The word “safekeeping” (that is missing is the French version of the article) was removed in the transposition (Cf. article 17 of the Luxembourg Law of 20 December 2002). Additionally, Circular IMS 91/75 (as amended by Circular CSSF 05/177) dated 21 January 1991 states that “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” (…) 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.“ Madoff was reputable and competent and had sufficient financial resources.
• On the other hand, Article 10 of the UCIT directive that states that “ 1. No single company shall act as both management company and depositary”. This provision is not in the Luxembourg text. This first paragraph was removed to only transpose literally paragraph 2 that states that “2. In the context of their respective roles the management company and the depositary must act independently and solely in the interest of the unit-holders.” (Cf. article 20 of the Luxembourg law of 20 December 2002). What is not clearly prohibited by the law is possible and it seems that UBS acted both as Management Company and depositary.

The European Commission has just referred Luxembourg to the European Court of Justice over its incorrect application of the Savings Directive. In my opinion, the European Commission should refer as well Luxembourg to the European Court of Justice over its incorrect application of certain provisions of the UCITS directive. There must be no tolerance for those so-called pragmatic professionals that caused prejudice to investors, and put the European fund industry at risk by harming its credibility.

Best regards.

Jérôme Turquey

Consultant in Business Ethics and Reputational Risk

http://ethiquedesplaces.blogspirit.com

Yesterday I wrote an article about the appointment of Claude Kremer from ALFI as Vice-President of the European Fund and Asset Management Association (EFAMA), which is not of good omen in my opinion for the investors’ protection, as this appointment may mean that EFAMA supports Luxembourg’s view on the depositary’s liability and definitely disregards demonstrated failures in the transposition of the UCITS Directive in Luxembourg.

I had confirmation by reading the EFAMA annual report 2008-2009 (pdf file created on 16 June 2009 and modified on 17 June 2009).

There is a development about the depositary’s liability, which wants commenting (pages 18 and 19):

1. Commissioner McCreevy’ conclusion dated 28 May (the minimum high level principles of the UCITS Directive have been transposed in very diverging ways by Member States. The outcome is an unlevel playing field. This means that some EU investors in UCITS funds are better protected than others) is ignored. This opinion was however known when the EFAMA report was written and should have been taken into account.

2. The CSSF statement dated 27 May (As the CSSF has previously noted, UBSL shall have to indemnify a UCI depositor according to its obligations as a Luxembourg depositary bank, subject to valid and opposable contractual clauses to the contrary and, as the case may be, to a court decision in such matter) is ignored. This press release was however known when the EFAMA report was written and should have been taken into account.

3. The EFAMA bets that the European Commission will do nothing: it states in its report that “signals seem to indicate that the Commission itself is not keen to “tighten up” the rules in the UCITS Directive regarding the responsibility of the depositary for safekeeping and the conditions for delegation of custody and would prefer to resort to other means rather than re-opening the Directive to achieve clarification on these issues.”

4. The EFAMA admits that it wants to hush up the issue of the transposition of the UCITS directive in Luxembourg in a manner that opened the drift. In other words the EFAMA does not want to tighten up the ship and sanction.

The EFAMA states that its “position in this discussion has been very clear from the beginning: contribute to making the discussion more objective and to putting an end to reciprocal incrimination, meet the concerned competent authorities to hear about the progress of their research and to remind them that the issue is urgent as the UCITS brand and investors’ trust are at risk, underline that investor protection remains EFAMA’s top priority, draw attention to the fact that the mechanism of the UCITS Directive provides for a high level of investor protection and that it is not yet clear that any investor in a UCITS will lose money, support the Commission in its view that a fundamental analysis is needed before discussing new or additional legislation.”

“Contribute to making the discussion more objective and to putting an end to reciprocal incrimination” is its first goal and is more important than “investor protection”, which is in third position. As far as competent authorities are concerned, the Luxembourg regulator, the CSSF, was disappointing: it did not sanction UBS (there would have been a sanction in any seriously regulated jurisdiction), and should there have been any sanction, the amount would have been anyway ridiculous compared to any seriously regulated jurisdiction

This was admitted by the former head of the CSSF who just retired.

The appointment of Claude Kremer as Vice-President makes difficult even impossible the principle of calling into question in the framework of the EFAMA the Luxembourg legal and regulatory framework.

Two relevant questions should actually be answered to “make the discussion more objective”:

Who (individual and/or legal person) support (in an opinion, in a committee…) the remove of two critical provisions of the Directive in the Luxembourg law of transposition which opened the drift

There are actually two critical provisions that are missing in the Luxembourg text but that can be found in the Irish text.

1)

Article 7 of the UCITS directive states that “1. A unit trust's assets must be entrusted to a depositary for safekeeping”. The word “safekeeping” (that is missing is the French version of the article) was removed in the transposition (Cf. article 17 of the Luxembourg Law of 20 December 2002). Additionally, Circular IMS 91/75 (as amended by Circular CSSF 05/177) dated 21 January 1991 states that “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” (…) 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.“

Madoff was reputable and competent and had sufficient financial resources.

2)

Article 10 of the UCIT directive states that “ 1. No single company shall act as both management company and depositary”. This provision is not in the Luxembourg text. This first paragraph was removed to only transpose literally paragraph 2 that states that “2. In the context of their respective roles the management company and the depositary must act independently and solely in the interest of the unit-holders.” (Cf. article 20 of the Luxembourg law of 20 December 2002).
What is not clearly prohibited by the law is possible and it seems that UBS acted both as Management Company and depositary.

Who (individual and/or legal person) introduced Madoff in Luxembourg?

Probably someone that has an office in New York and that condoned red flags.

There must be no tolerance for those so-called pragmatic professionals that caused prejudice to investors, and put the European fund industry at risk by harming its reputation.

I am afraid investors cannot rely on the EFAMA, which seems much more business-oriented than client-oriented, by refusing

- To admit that the European UCITS password from Luxembourg is corrupted i.e. is altered from the original version of the Directive and

- To support the relevant actions to be done.

TI has just published a report on the enforcement of the OECD Bribery Convention. 

In the report it is stated page 7 that “No TI reports were prepared for three countries, Estonia, Iceland and Luxembourg, since TI lacks experts in those countries, but TI Estonia provided current data on cases and investigations”.

It appears that in the tables data are actually missing only for two jurisdictions: Iceland, the jurisdiction that went bankrupt, and Luxembourg.

As far as Iceland is concerned, the jurisdiction is not an EU Member State. It has just hired Judge Eva Joly to tighten up the ship on the economic collapse and related crimes. There is no doubt that thanks to this powerhouse in the fight against corruption, the jurisdiction will be able to provide data in the future. But Eva Joly faces problems and said she would quit unless radical changes are implemented to prevent conflicts of interest and provide relevant means.

As far as Luxembourg is concerned, to begin with it is interesting to observe that the TI report confirms the relevance of my comparison Luxembourg v. Switzerland in favour of Switzerland as Switzerland is very well ranked in the enforcement of the OECD convention.

Additionally, among the EU Member States that signed the OECD convention (most States) Luxembourg distinguishes itself, as it is the only jurisdiction that is unable to provide data, which is telling for a jurisdiction that is an important financial center despite it is a tiny state.

As I explained, because of its small size, there are many conflicts of interest that may turn de facto into objective corruption situations without money paid, what is called the "system".

Networks

There are many associations in Luxembourg, but the center is very small so everybody meets in the same associations and when there is an issue involving a member a couple of phone calls to fellow member may help to hush up the issue. Everybody in the network knows the issue but there is no need to repudiate the bad professional that is supported by the group. To consolidate the support fellow members may knowingly join a board with the member in question. The problem in Luxembourg is that it is visible because of the small size, which is not the case in a bigger country where the bad professional may move up to another state to join the same kind of association but with new fellow members.

Intimidation

This situation is met when people do not do their duty because they fear for their job. This is particularly verified
- for internal auditors and compliance officers because of the subordination in the framework of the employment contract,
- for external auditors because of the business contract especially in a country where the leader of audit focuses on its growth and clients' confidence (not stakeholders'), which is not compatible with international professional provisions relating to audit ethics. This situation may explain the reason why there are so few declarations of suspicion (only 4) from auditors, which was considered suspect by the CRF, the Luxembourg FIU (Cf. for example Report 2003-2004, page 8 , were the number of 3 (close to 4) was said "ridiculously low for a profession composed of 304 members individual and having access to all the financial information of the center")

Fame

This last type of situation is met when people may hesitate to do or do not at all do their duty because they do not want to involve people that gain a professional standing because of professional, political or academic supports (in a board, in an association...). In other word, the will is to protect the frontage of the reputation of the center and its professional in any case. This is particularly verified
- for the media that have a public financing and globally do not have the culture to criticise the "system" and to tighten up the ship (even though there are exceptions),
- for justice, that lacks means (Cf. report "Petita Pro Nova Justitia" issued by the Cercle Joseph Bech), a perfect illustration of this problem being the delay to judge sensitive affairs and the absence of judgements database.

The decision of the CSSF on UBS about Madoff is perfect illustration of how the "system" works with a wrong perception of the stake as the case is not internal.

Management of UBS/Luxalpha were close to Management of the CSSF, in CSSF Committees for example.

The CSSF did not sanction UBS where there would have been a sanction in any other jurisdiction.

I do not think that Luxembourg, where the criminal liability for legal persons does not exist despite an injunction last year by the OECD, may be credible with the launch of the LIGFI to promote worldwide stronger ethical practices and standards based on the principles of integrity: transparency, fairness, responsibility and accountability.

EFAMA, the European Fund and Asset Management Association, has announced that Mr Claude Kremer was appointed as Vice-President Mr Claude Kremer is Chairman of the Association of the Luxembourg Fund Industry (ALFI). He is also a founding partner and head of Investment Management of the law firm of Arendt & Medernach, based in Luxembourg.

EFAMA never answered my question on the failures of the Luxembourg UCITS legal and regulatory frameworks where Commissioner Mc Creevy did (detailed e-mail from Niall Bohan, Head of Unit. DG MARKT G4. European Commission, dated 19 March 2009).

It is before the EFAMA that the ALFI presented in January its deceptive views on the Madoff affair and its implications for the Luxembourg fund industry.

What was officially said definitely does not comply with the reality, which was confirmed later by two main facts late May:

1. Commissioner McCreevy admited failures in the transposition of the liability of depositories.

2. The Luxembourg regulator did not sanction UBS and admitted that UBSL shall have to indemnify a UCI depositor according to its obligations as a Luxembourg depositary bank, subject to valid and opposable contractual clauses to the contrary and, as the case may be, to a court decision in such matter.

In this context, I am afraid the appointment this month is not of good omen for the investor’s protection.

The European Corporate Governance Institute (ECGI) and the University of Luxembourg a couple of days ago signed an agreement towards the establishment of a new entity, the European Corporate Governance Research Foundation (ECGRF), in Luxembourg. The announcement of the agreement was made at a conference on “Corporate Governance in Crisis?”, which assembled a distinguished group of researchers under the High Patronage of European Commission President, José Manuel Barroso. The event was held a week after G8 Finance Ministers made corporate governance the first of five categories in the Lecce Framework (In Lecce, Italy on 13 June 2009, the G8 Finance Ministers agreed on common principles and standards for propriety, integrity and transparency, what is called “The Lecce Framework”.)

As explained, since its foundation in 2002, the ECGI has established itself as the largest and most prestigious group of academics working in the field of corporate governance in the world. It has as its research members the most prominent researchers in economics, finance and law in both Europe and North America. It has a growing base of individual and corporate practitioners with a shared interest in corporate governance. It has organised high profile conferences that have been at the forefront of academic debate and at the top of the policy agenda. It has exposed leading practitioners and policymakers in Europe and across the Atlantic to the latest facts, academic thinking and analysis; and it has demonstrated that it has the managerial capabilities to organise activities and events of the highest quality and to the highest standards.

It is stated that ECGI's activities are complementary to those of the University of Luxembourg’s dynamic Faculty of Law, Economics and Finance that stands to benefit from ECGI's scientific potential, international reach and privileged contacts. While housing and materially supporting ECGI, the University has fully recognised that ECGI's intellectual and organic independence must be entirely preserved and governance provisions have been foreseen to ensure this

There are two main contact persons: Marco Becht, ECGI Executive Director, and Prof. Dr André Prüm, Dean of the Faculty of Law, Economics and Finance of the University of Luxembourg

One can have two readings: a negative one and a positive one.

The negative reading

As the LIGFI was stillborn, Luxembourg may have managed to have another international body in the same fields to enhance its good international reputation. There are links for a long time between Luxembourg and André Prüm on the one hand and Marco Becht on the other hand:

For example:

- Marco Becht was speaker at a conference with André Prüm two years ago.

- He was speaker at a conference where André Prüm was as well speaker in 2005 

It is stated that the Council of the Foundation will marry the same general characteristics as that of the ECGI, while the presidency like two other seats, one university and the other not, will be reserved for candidates proposed at the beginning of Luxembourg.

The positive reading

The European Corporate Governance Institute (ECGI) is not an empty shell and the agreement may enhance the international pressure on Luxembourg to brush up its governance as there are huge concerns about governance in Luxembourg, that does not comply with the common principles and standards for propriety, integrity and transparency:

A couple of facts

Propriety

·          In Luxembourg, anyone can be statutory auditor (Cf. law of 10 August 1915 on commercial companies as amended). There are statutory auditors that are neither members of the IRE (institute of registered auditors) nor the OEC (institute of chartered accountants), including auditors registered in exotic jurisdictions and that only exist in the Luxembourg Corporate Registration. Nobody controls them.

·          In Luxembourg, there are many “red flags” in the Corporate Registration of offshore scams including with non-cooperative jurisdictions. Exotic companies, i.e. companies that are registered in non-cooperative jurisdictions and that only exist in the Luxembourg Corporate Registration, may be shareholder and/or auditor of Luxembourg-registered companies.

Integrity

·          The Luxembourg Bankers’ Association, where external auditors – those guys who certified the accounts -  are members, explained in the framework of the transposition of the second directive that offences such as forgery, use of forgery, false balance sheet, use of false balance sheet or unauthorised use of corporate property are vague and ambiguous (See ABBL report 2003 page 22 for instance). Nobody repudiated the statement.

·          Nobody in Luxembourg, either politicians or professionals, told the truth on the transposition of the UCITS Directive. The discrepancies between the Luxembourg legal and regulatory framework and the UCITS Directive are clear enough.

Transparency

·          In Luxembourg there is no transparency: no data about corruption, no judiciary judgements easily available…

·          In Luxembourg, because of the small size there are many conflicts of interests, many cases of "professional incest".  The direct consequence is the small number of crime cases or corruption cases, which are of concern in official reports (See Narcotic Control Strategy report and GRECO report Phase III about Luxembourg).

And so on.

Will Luxembourg use the new body to influence the European policies and promote its view, or to do the brushing up of its governance?

It very quickly will be known.

The European Commission has decided to refer Luxembourg to the European Court of Justice over its incorrect application of certain provisions of the Savings Tax Directive as regards interest payments made to beneficial owners who benefit from so-called "non-domiciled resident" status in their country of residence.

Luxembourg refuses to apply the Directive to beneficial owners who benefit from the so-called "non-domiciled resident" status in their country of residence. Consequently, Luxembourg paying agents do not levy withholding tax on interest payments to such beneficial owners.

The Commission considers that Luxembourg's legislation, in its current state, is not compatible with articles 2, 3, 10 and 11 of the Directive that are fully applicable as they are not in the scope of the transitional period that apply for Chapter II (article 8 and 9) as defined in article 10 of the Directive.

Given that the above Luxembourg tax rules were not amended following the reasoned opinion sent by the Commission in November 2008 (IP/08/1815 ), the Commission has decided to refer the case to the European Court of Justice.

There are three observations:

Luxembourg is unable to abide by every applicable commitment of the Directive. I am afraid that Jacques Santer was not telling the truth when he recently stated that “le Luxembourg applique également les directives européennes” (free translation “Luxembourg also implements the European directives”). Knowing that Jacques Santer is Chairman of the Board of Directors of the Luxembourg Institute for Global Financial Integrity (LIGFI) , this is not of good omen for the credibility of the mission to promote the principles of integrity, which are fairness, transparency, responsibility and accountability.

The European Commission should refer Luxembourg to the European Court of Justice over its incorrect application of certain provisions of the UCITS directive as it is established that the minimum high level principles of the UCITS Directive have been transposed in very diverging ways by Member States, which means that some EU investors in UCITS funds are better protected than others. The Madoff affair did not occur by chance in Luxembourg as I demonstrated.

The European Commission is more credible than the OECD, for jurisdictions that do not respect their commitments: the criminal liability for legal persons is not enforced in Luxembourg despite an injunction last year, and the statement that the OECD's Working Group on Bribery “reserves the right, in the event of continued failure to implement the Convention, to take further steps” seems to be a charade all the more than Angel Gurria’s statement that “Luxembourg has joined the international drive to combat tax havens and is moving swiftly towards substantial implementation of the OECD standard” does not comply with the reality as observed by the European Commission.

Swissinfo has reported that Aid organisations from countries currently defending banking secrecy laws said their governments need to change course in the interest of helping developing nations.
With a meeting in Berlin among the Organisation for Economic Co-operation and Development (OECD) unfolding later this month, aid organisations from Switzerland, Luxembourg and Austria united last Tuesday to argue the benefits behind an automatic exchange of banking data.
They said that wealthier nations should provide immediate administrative assistance to developing countries in tax matters by creating a type of most-favoured-nation status for them.
Peter Niggli, director of Alliance Sud, said any concessions made on granting administrative assistance in tax cases between the United States and the European Union should extend to all countries.
Developing countries should also step up their fight against tax evasion, the agencies said, while multinational corporations should provide a country-by-country breakdown of their balance sheets.

The Cercle de Coopération, the Luxembourg representative, underlined that the OECD definition of tax havens is not limited to jurisdictions with no or low taxes.

Read Press documentation (in French)

Today and tomorrow is taking place in Luxembourg the 11th Annual Fund Compliance Conference on the topic : The Responsibility of The Depositary Bank A Detailed Regulatory and Business Practice Overview

In the Ad, it is said that the European Commission will highlight the Commission Approach with regards to “Depositary Responsibilities”.

The conference will give a detailed regulatory and business practice overview of “The Responsibility of The Depositary Bank” and will provide a lively debate on how to build on shared and mutually reinforcing responsibilities The Role, Responsibility and Liability of The Depositary Function and its Delegation.

Indeed, there are differences in approaching depositary duties across Europe and consequences from the financial crisis have pledged for a strengthening of the functioning of the financial markets.

A panel session will give the views from Fund Board Members on their role and responsibility vis à vis a substantive oversight of the fund that includes the supervision of the depositary duties.

Finally the conference will assess whether UCITS IV generation is addressing adequately depositary duties and how the various scenarios of the Management Company Passport will impact the functioning of the depositary duties.

It is very amazing that the conference on a sensitive topic for Luxembourg is like boycotted by the Luxembourg financial community. It is a consent that the legal and regulatory framework on the depositary is in question in Luxembourg.

Such behaviour is worrying for investors.

A Google search shows that there is only one article about the conference for site:lu:

The 11th Annual Fund Compliance Conference on the topic : The Responsibility of The Depositary Bank A Detailed Regulatory and Business Practice Overview is not promoted by the ALFI, the official representative body for the Luxembourg investment fund industry. Strange.

The 11th Annual Fund Compliance Conference on the topic : The Responsibility of The Depositary Bank A Detailed Regulatory and Business Practice Overview is not promoted by Luxembourg For Finance, the agency for the development of the financial sector. Strange.

The 11th Annual Fund Compliance Conference on the topic : The Responsibility of The Depositary Bank A Detailed Regulatory and Business Practice Overview  is not promoted by the ABBL, the Luxembourg Bankers' Association. Strange.

In a recent interview, Jean Meyer stated that "le Luxembourg doit sortir de cette image de paradis fiscal, de refuge pour patrimoines non déclarés, qui ne correspond plus à son identité" (free transmation : Luxembourg must leave this image of tax haven, of refuge for not declared assets, which does not correspond anymore to its identity)

This sentence wants a couple of comments.

It is the first time that a Luxembourg powerhouse admits that Luxembourg's identity was a tax haven and a place for not declared assets but it is no longer the case: it not correspond anymore to its identity

I can consider from a semantic point of view that Mr Meyer is officially repudiating what stated Jean Jacques Rommes in February 2009 or Lucien Thiel in February 2008.

He takes into account the commitments to counter tax evasion.

The Council of the European Union yesterday adopted conclusions on good governance in the tax area.

What was said is the following (I have added bold style):

1. The Council takes note of the Commission Communication on promoting good governance in tax matters (9281/09) presented to the Council on 5 May 2009 and, subsequent to its May 2008 Conclusions, recalls the importance of implementing the good governance tax principles of transparency, exchange of information and fair tax competition as a means of ensuring a level playing field and of combating cross border tax fraud and evasion.
2. The Council welcomes the suggestion in this Communication to accelerate the ongoing work on legislative proposals concerning the savings taxation directive (15733/08), the administrative cooperation directive (6035/09) and the recovery directive (6147/09).
3. The Council is committed to further discuss and promote the principle of good governance in the tax area at international level and towards third countries without prejudice to Community and Member States’ competences. It recalls the March 2009 European Council joint position that refers in this respect to the fight against tax evasion and the application of appropriate and gradual countermeasures towards uncooperative third country jurisdictions.
4. Recalling the Council Conclusions of 10 February 2009 the Council urges the Commission to swiftly present the negotiating result on the anti-fraud agreement with Liechtenstein. The Council notes the intention of the Commission to present negotiating directives for anti-fraud agreements with Monaco, Andorra, San Marino and Switzerland.
5. The Council welcomes the emerging broad international consensus on the need to enhance administrative cooperation and mutual assistance in the tax area and to apply the OECD standard as regards exchange of information on request (Article 26 paragraphs 4 and 5 OECD Model Convention), i.e. that provision of information can no longer be refused on the sole ground that the information is held by certain financial institutions, or on the sole ground that the requested state has no domestic interest in such information.
6. More specifically, as regards the ongoing review of the savings taxation directive, the Council notes the Presidency progress report. It welcomes the progress made and agrees that circumvention of savings taxation should be prevented and that the functioning of savings taxation should be improved in the framework of an overall agreement in particular by:

§         an extension of the scope of the Directive to at least other substantially equivalent income than just interest from savings,

§         the introduction of a look through approach for payments to certain non-EU entities and arrangements and a more systematic application of paying agent upon receipt responsibilities, and

§         a broader use of personal identification numbers and the use of the information on actual tax residence, when available, in identification procedures.

It calls for a rapid continuation of work in order to find constructive solutions to outstanding issues, among others possible options for covering certain insurance products, detailed provisions to ensure the coverage of certain untaxed entities and arrangements within the EU and in the dependent and associated territories as well as questions on further decision making.  The work should continue with a view to reaching a balanced political agreement in the autumn of 2009.

The Council also calls on the Commission to open consultations with Switzerland, Liechtenstein, Andorra, Monaco and San Marino on revising their respective agreements on savings taxation with the aim to ensure application of equivalent measures in line with international standards and the improvements agreed at EU level.

The Council encourages Member States with dependent or associated territories to consult with them to apply the same measures in the area of savings taxation as will apply at EU level.

The Council recalls that the issue of the transitional period remains to be addressed in accordance with Article 10 paragraph 2 of Directive 2003/48/EC subject to the conditions set out therein.

7. The Council also welcomes the proposals for the directives on administrative cooperation and recovery, expanding their scope as regards taxes and duties covered, simplifying the exchange of information by means of standardised forms, formats and channels of communication and facilitating recovery by using new or improved instruments. The Council stands ready to examine both proposals further and to continue its efforts in the autumn of 2009 to find solutions to outstanding issues that are fully consistent with the OECD standard (Article 26 OECD Model Convention).
8. The Council invites the future Presidency to report back on progress in the area of good governance in tax matters in the autumn of 2009.

What is said?

Ø      The Savings Directive is being reviewed and especially the principle of the transitional period is recalled: Belgium, Luxembourg and Austria will have to give up their legislation.

Ø      A possible global agreement with Third Countries on the tax information exchange is sought.