Ethics and governance in the European Financial centers

Among the Territories of the Crown, the BVI wants commenting. A local professional describes the advantages by underlying a couple of qualities from fraudsters' point of view:
1) Not only are there no currency controls, but with the US$ used as the BVI currency, it is essentially impossible for the government to regulate the money supply and hence to ever impose currency controls.
2) Despite its international popularity as an offshore financial centre, the BVI does not have the high profile, attention getting reputation of other centres. It represents an ideal offshore location for clients seeking confidentiality without the 'red flags' that are often raised through the use of more well publicised centres.
3) IBC formation legislation in the BVI requires only one shareholder and one director (both of which may themselves be other corporations); no corporate officers are required; bearer shares are permitted; there is no requirement for an annual general meeting; the company need only keep such accounts and records as the Director(s) think appropriate.
4) The BVI government need not be informed of the identity of the IBC's shareholders or directors.

An to conclude that many of the benefits of the BVI flow from this combination of a very high level of flexibility and the unquestioned confidentiality.


The BVI are identified as a tax haven by US Senators.

So it is a risk for the reputation of another jurisdiction when its professionals or shareholders choose an auditor from the BVI when such professionals or shareholders are neither competent nor honest, all the more than it is demonstrated in public and official sources and than the jurisdiction is small.

We find such situations in the Corporate Registration in Luxembourg, which is a risk for reputation of the Luxembourg financial center in the context of the hunt against tax havens and of an increasing transparency.

In this blog I have raised the question of the promotion in Luxembourg (you known the small place where everybody knows everyone and that is self-regulated as stated to the OECD and GRECO assessors) of employees that are neither competent nor honest despite evidences in public and official sources that may be crossed like judiciary sources and corporate registration.

Former employers of such professionals, that are major companies in Luxembourg supported by the leaders either political of professional, may be upset by my researches that demonstrate that experience and professional standing are a charade in Luxembourg. It is very amazing to see that they remove from their website keywords that are not compatible with the recruitment and the support of such employees. I have kept screens of the former communication and the screens of a google search of keywords.


First case

The communication at the time of an employee that was neither competent nor honest was:
• “the system of values by which our company lives is simple : build trust”,
• our teams are “accurate and efficient” and “highly qualified” .

After the employee was finally fired after he had been supported several months despite a lack of competence and a bad behaviour since the beginning, the company has changed its communication to state that “Integrity defines our business, our company, our people, the information we process and the words we use. Our Professionalism is at work every day striving for excellence to exceed your expectations".

I find it amazing that now some keywords should have been removed as they were not compatible with the management of the case of the employee (recruitment, support): ): the whole sentences were removed and keywords like “trust”, “accurate”, “professionalism”, “qualified”, “integrity” are no longer stated.


Second case

Another company that hired the employee communicated that when he was responsible for the recruitment of experts in legal matters that “Recruiting high quality staff is essential to the success of the firm. X undergoes a rigorous and demanding selection process, which takes the long-term perspective into account (…) Particular attention is paid to constantly updating the knowledge and technical skills of partners, lawyers and associates whilst assuring the highest possible ethical standards are adhered to”

I find it amazing that some keywords should have been removed as they were not compatible with the management of the case of the employee (hired despite he went to the court at a director’s level to contest his dismissal + he lost at the court of appeal where his bad behaviour was demonstrated): the whole sentence was removed and the keywords “high quality staff”, “rigorous”, “ethical” are no longer stated.


What can we conclude?

In this center that gave a “generous grant” to the FATF to pay for an improvement of the information technology systems (as if for example a litigant would give a generous grant to pay for an improvement of the information technology systems to a court that is gonna judge his or her litigation, which would be a problem), experience, and above all professional standing as defined, are actually not sought.

Furthermore those who deplore this lax behaviour before public and official sources are excluded from the labour market, which means that whistleblowing provisions cannot be credible in their implementation in Luxembourg.

A the time when the US senate is gonna investigating on tax havens targeting explicitly Switzerland and Liechtenstein, this is not fair for these centers that do not do not gather the advantages of an on shore jurisdiction because they do not belong to Europe and the advantages of off shore states that are similar to a tax haven (taxes and banking secrecy).

As I already wrote low taxes and banking secrecy are criteria of tax havens: but the determining criterion is permissiveness that is definitely met in Luxembourg when observing what is going on in the small place where everybody knows everyone.

This is what was stated the day before yesterday on the topics of corruption an tax havens.

Corruption

19. We call for the ratification of the United Nations Convention against Corruption (UNCAC) by all countries and a strong and consistent follow-up of the Bali Conference by ensuring effective implementation of UNCAC, including the development of a review mechanism. Reaffirming our previous commitments, we will redouble our efforts to deny safe havens through our national laws to public officials found guilty of corruption and strengthen international cooperation on asset recovery including supporting initiatives of relevant international organizations such as the Stolen Asset Recovery(StAR) Initiative promoted by the World Bank and United Nations Office on Drugs and Crime (UNODC). We also recognize the importance of technical assistance to partner countries in their own efforts to implement the Convention.
We will also strengthen enforcement of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions with the commitment to continue effective monitoring through the implementation of a rigorous and permanent peer review mechanism and call for accession to the Convention by emerging countries. We endorsed an enhanced accountability report detailing actions of each G8 member to implement the anticorruption commitments we have undertaken in the G8, and agreed to update it annually.

Abuses of the Financial System

20. We urge all countries that have not yet fully implemented the OECD standards of transparency and effective exchange of information in tax matters to do so without further delay, and encourage the OECD to strengthen its work on tax evasion and report back in 2010.



Unfortunately these sensitive topics (tax haven, corruption, tax) are not quoted at all in the Press Conference by Prime Minister Yasuo Fukuda that took place yesterday.