Ethics and governance in the European Financial centers

Luxembourg is a strange jurisdiction that can be described as an argocracy, from old Greek ἀργός (argós) “white, shining” and κράτος (krátos) “body politic”, “government”.

It is a political system based on three powers: Financial, Executive and Legislature in which the Financial power has the final word.

 

In particular, from a practical point of view, the financial power

 

1) Uses propaganda with the involvement of the minister of finance himself,

 

Videos like the one online today are similar to the communication movies in dictatorships: http://www.lff.lu/finance/speeches-presentations/financial-centre-diversification-is-the-key/

 

Propaganda is defined as communication aimed at influencing the attitude of a community toward some cause. As opposed to impartially providing information, propaganda in its most basic sense, often presents information primarily in order to influence its audience. Propaganda often presents facts selectively (thus lying by omission) to encourage a particular synthesis, or gives loaded messages in order to produce an emotional rather than rational response to the information presented. The desired result is a change of the attitude toward the subject in the target audience to further a political agenda 

 

My blog is not propaganda, it is opinion. I can support and congratulate Luxembourg whenever I think there are good things:
- Luxembourg has one of the best FIUs in the world because of its statute (prosecuting authorities and not administrative body),
- Luxembourg did a very good job in the Jurado affair
- Luxembourg has a strict legislation (on the paper) for the profile of the professionals of the financial sector

 

Luxembourg TV spots like all of Luxembourg’s communication, is propaganda as it presents facts selectively (thus lying by omission: e.g. the Commission considers that Luxembourg's legislation, in its current state, is not compatible with articles 2, 3, 10 and 11 of the Savings Directive and referred the jurisdiction to the European Court of Justice) to encourage a particular synthesis (Luxembourg is a regulated and compliant financial center) and it is wooden language as it diverts attention from reality by using vague and ambiguous words, which appeal to sentiment and emotionality rather than to facts, which are emphasized by the small size : in Luxembourg 50% of banks never report any STR which is not possible from a practical point of view (Source : FIU), sanctions are not dissuasive enough (Source: CSSF former Director), there are many possible scams that are Luxembourg-registered companies with exotic shareholders and/or exotic statutory auditors that are not controlled, there are many conflicts of interests as professionals influence the regulator (source : ALFI and CSSF), professionals responsible for reprehensible behaviour are removed from management while being granted compensations and hired knowingly by new employers (Source : CSSF)... 

 

For the little story, I sent an application to Fernard Grulms  when LFF was launched to offer my services for a communication based on the truth in the context of a true involvement of the jurisdiction to correct dysfunctions, and I contacted him more recently twice (read first e-mail and second e-mail). I never received a reply to my e-mails. In my opinion Luxembourg for Finance is a dying body that refused the friendly overture and which is locked up in the refusal and in the lack of tolerance.

 

Time is up for Mr Angel Gurria to smell the coffee, and not congratulate such jurisdiction, which is used by the actors as an argument not to call themselves into question whereas they communicate that they are not a tax haven.

 

Other examples of propaganda: Communist propaganda and Soviet propaganda

 

2) Decides on regulations,

 

Internal committees assist the CSSF in the analysis of the development of the different financial sector segments, give their advice on any question relating to their activities and participate in the drawing-up and the interpretation of regulations relating to their specific field. The members of these Committees represent the companies subject to the prudential supervision of the CSSF, professional associations representing the various segments of the financial sector as well as external auditors and legal advisers active in the financial field. (CSSF website)

Committees have very close and direct say on the evolution of the Luxembourg prudential regulatory environment governing the collective Investment Industry (Rafik Ficher, Member of the Board, ALFI, 2005)

 

3) Decides and authorises the financing on works and studies, which should in no case blame the financial sector,

 

The fact that Luxembourg NGOs now also get onboard that train is more than questionable. The fact that they thereby use such un-serious “studies”, is more than embarrassing. And the fact that they spent taxpayers’ money on this – because these NGOs are also funded with tax payers’ money – is outright scandalous (Fernand Grulms, CEO, Luxembourg For Finance, 2009)

 

4) Decides on which people to ostracise, in particular those who do not comply with the organisation’s procedures, practices and/or rules to bypass business ethics,

 

"There would seem to be very little likelihood in Luxembourg that a company employee who has been witness to misappropriation of funds will report this to the authorities. According to the union representatives interviewed by the examining team, the main reason for this is the country’s small size: everything becomes known very quickly, and so anyone who reports an offence will soon find himself labelled as an informant and excluded from the labour market" (OECD report, 28 May 2004)

 

5) Causes censorship.

Read my previous article

 

 

 

Such political system only exists in tax and judiciary havens.