PwC: Who else? : Ethics and governance in the European Financial centers

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09/16/2009

PwC: Who else?

The Chamber of Commerce and PwC published a brochure and a video to promote Luxembourg and PwC.

« Une vision pragmatique et réaliste d’un pays qui propose un cadre attractif et innovant pour établir et développer une entreprise en Europe » (a pragmatic and realistic vision of a country that offers an attractive and innovative framework to set up and develop a company in Europe), the Chamber of Commerce wrote.

There are testimonies of companies of which Paypal that is a PwC Client.

As Richard Murphy observed in June 2007, Pay Pal went to Luxembourg for all the wrong reasons:

Officially, tt was said that the transfer would enable management to market the service to online merchants across Europe and allow consumers to use PayPal in more places and ways across the web. Other eBay group companies, such as Skype and eBay, have an important presence in Luxembourg, so it makes sense for PayPal Europe to co-locate with them.”

Richard stated the three real reasons:

- Pay Pal would pay less tax;

- Pay Pal would not be as effectively regulated;

- Information exchange would be harder. Luxembourg tries hard not to play that game. And tax authorities are increasingly asking for data. If that information is located in the UK tax authorities can now get it. That will be harder from Luxembourg. It’s a tax haven that still promotes secrecy, after all.

We have seen with Madoff and Luxalpha that the regulation is perfectible in Luxembourg : professionals admit they influence the regulator in its duties : the small size of the jurisdiction creates the risk all the more than professionals decide what is to be done for the regulation:

“The Luxembourg Investment Fund Industry has regularly had a very close and direct say on the evolution of the Luxembourg prudential regulatory environment governing the collective Investment Industry (...) This influence has been exerted directly and indirectly by the lobbying initiatives taken on the level of the different professional associations, be it ALFI or ABBL , but also and more importantly, trough a direct association with the Luxembourg Supervisory Authorities by means of a number of standing committees" (Rafik Fischer, Vice Chairman, ALFI, in 2005)

This is confirmed by the CSSF: "The 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."

In other words professionals require changes in the transposition of directives and other international texts whatever matter (AML, tax, audit...) and therefore influence the regulator in its duties.

What about Paypal as a Luxembourg-registered company in this so-called regulated center?

There are actually 6 companies registered:

1) PAYPAL (EUROPE) S.A R.L.

No Reg. de Commerce: B0127485

Forme juridique: Société à responsabilité limitée de droit luxembourgeois

Date de constitution: 18.4.2007