Ethics and governance in the European Financial centers

According to PwC UK, business ethics is the cornerstone of Corporate responsibility.
Other topics (Marketplace, people, environment, Community Affairs) are based on it.

I find it telling that entities that are supposed to abide by the same code of conduct should have so different views on corporate responsibility despide the fact they are independent.

The reason why there are differences may be found in the deep culture of the jurisdiction where they do the job.
There is an actual "ethics denial" in Luxembourg compared to other financial centers (UK, Switzerland) and even compared to entities in Africa.

The problem in Luxembourg, like in small tax havens, is that issues are hidden or hushed up to protect the reputation in the short term and everyone plays this stupid game including the fourth estate : stupid game because everybody knows everyone and the conflict of interest is permanent.

The consequence is that there is not corrective action and the reputational risk is actually growing so is growing the center in the framework of an international will to fight fraud, money laundering and corruption : will either from organisation like Transparency International, OECD or political will like in the USA.

Luxembourg has many qualities and PwC Luxembourg has a special role to play to acculturate true ethics because it is the leader. They can do it.

In a previous post, we have seen that some jurisdiction may limit the CSR to actions to give money.

This is not the relevant approach to the topic: CSR may be a dubious way that allows the internalisation of the external costs of dubious business behaviours while earning a positive image of “responsible firm” and even winning potential clients thanks to the communication relating to CSR (publication of the logo, press releases).

This should be taken into account by organisations that promote CSR like the World Business Council for Sustainable Development or the United Nations with Global Compact.

Actual CSR is humble and is based on business ethics: it is definitely not limited to performances of money for the prestige like many companies unfortunately do while being lax in the enforcement of rules: AML rules and other rules relating to business ethics.

PricewaterhouseCoopers International CEO Samuel A. DiPiazza, Jr. has been elected Chairman of the World Business Council for Sustainable Development (WBCSD).
The WBCSD was created in 1991 to involve business in the Rio Earth Summit. According to a 2006 world survey by GlobeScan, the WBCSD is not only the leading organization advancing sustainable development, but as well the most respected provider of information on sustainability issues.

Mr. DiPiazza said he would bring an independent mindset and a wide international and cross-industry perspective.

This is what I do. What I truly do on this blog.

Therefore I can state that there is an area that wants being explored by the new Chairman: business ethics in Financial centers as money launderers and other persons that commit frauds are a threat for sustainable development and definitely play against the Council’s objectives, which are
- Be a leading business advocate on sustainable development;
- Participate in policy development to create the right framework conditions for business to make an effective contribution to sustainable human progress;
- Develop and promote the business case for sustainable development;
- Demonstrate the business contribution to sustainable development solutions and share leading edge practices among members;
- Contribute to a sustainable future for developing nations and nations in transition.

Mr. DiPiazza's firm must be an example: there must be no gap between what is said or communicated and what is enforced or implemented all the more than when dysfunctions are public and/or official. The differences between PwC separate and independent legal entities in the definition of topics like CSR wants clarifying: Luxembourg, the small place where everybody knows everyone, is a telling example.
So wants clarfying the censorship on sensitive issues like economic crime where Luxembourg is as well a telling example as auditors' independance is not sought but steady growth is.


Hedlong flight is not a solution especially for firms like PwC that play a role to build public trust all the more than they are the leader. As leader (market share) they have more risks to be involved in scandals: the more business an auditor has, the more risks it has. That is the reason why, to protect the brand there must not be any tolerated negligence: it is management responsibility to tighten up the ship on issues that do not comply with the stated values of the firm and not give the impression that they see their job as to support the actions of the entity on every occasion and to deny or hush up any issue.






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