Ethics and governance in the European Financial centers

The websites of bankers associations in the financial centres show that the Big Four are often members of these associations (Cf. British Bankers Association , Swiss Bankers Associations, and Luxembourg Bankers Associations)
This membership may be a problem for the independence because Big Four are the auditors and banks are the auditees.
The risk for the independence and the reputation depends on values that are shared and stated in the framework of the associations.

As far as the British Bankers Association is concerned it is involved in the FATF works (BBA response to FATF consultation paper on the review of the FATF 40 recommendations , Proposed Amendments to the Money Laundering Regulations 2001 . The wording of the contributions demonstrates a responsibility of professionals in this center.

As far as the Swiss Bankers Association is concerned, it does not seem involved in the FATF works and wants to minimize requirements for professionals.


As far as the Luxembourg Bankers Association is concerned it is not involved in the FATF works. Above all the ABBL standardized accounting frauds by stating that “offences such as forgery, use of forgery, false balance sheets, use of false balance sheets or unauthorised use of corporate property should not be included. These are offences with financial connotations which are confused with laundering for the sole purpose of applying exceptional powers to these vague offences.” (See Report 2003)
Auditors in Luxembourg should have disapproved of the wording, which involves every member of the ABBL, and especially them. The consequence is that after cases like Enron, Parmalat, and Worldcom... there are some auditors that standardize accounting offences through their membership in business networks, and are therefore much more on auditees' side than on the controlling side.

A couple of weeks ago an article that was published in Liberation by Mr Arnaud Montebourg , who is one of the co-authors of the reports on financial crime, that targeted the United Kingdom, the territories of the Crown, Monaco, Switzerland, Liechtenstein and Luxembourg.
In his article Montebourg took a swipe at Switzerland, Liechtenstein and Luxembourg.
Montebourg's analysis does not make sense but the press release that was issued in common by Luxembourg and Switzerland was a mistake. Neither Montebourg nor the authorities of the financial centres are credible.
Montebourg's analysis does not make sense because countries that have an attractive tax policy have the right to define their policy provided that they are credible in business ethics.
The press release that was issued in common by Luxembourg and Switzerland was a mistake because, as far as business ethics is concerned, Switzerland is more credible than Luxembourg where there are visible drifts that do not comply with competence and respectability (i.e. proper business conduct) that are required by the law of 1993. These are either denied or ignored so problems officially do not exist: the permissiveness feeds accusations on Luxembourg and financial centers in general.

A bogus pragmatism weakens international finance.

Who supports the best the financial centres: those who are clever enough to understand the stakes for the reputation and require a stricter behaviour, or those who supports negligence and bad governance by their silence and inaction including for official and public facts that cracked the ethical frontage?

19/01/2007


The British Bankers' Association (BBA) said today that it has serious concerns over the 8 th Directive on Statutory Audit. As it is currently worded, the Directive will have an adverse impact on third country companies trading on the UK market by potentially requiring them to be audited by an auditor registered in the UK.

The BBA has already raised these concerns with the European Commission in November 2006. The Commission has now launched a consultation on applying transitional measures until equivalence of third country oversight into auditing is established.

The BBA considers that this Directive should promote confidence in auditing and enhance investor protection without damaging the attractiveness of EU capital markets. However, in order to do so, companies from third countries must have a transition period for their home country auditing to be considered equivalent to EU standards.

Angela Knight, chief executive designate of the BBA said: "The BBA is fully aware of the impact of this issue, which is why we wrote to the European Commission in November setting out our concerns. We are pleased to see that the Commission has launched a consultation on this and we are urging the Commission to address the potentially adverse consequences implicit in the Directive.

We would also strongly recommend that the business community and the Government support the Commission's initiative."

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