Ethics and governance in the European Financial centers

The QI program has recently been the focus of several discussions involving the IRS, the US legislator and some
international accounting firms. The much broadcasted purpose was to set up potential enhancements to the Qualified Intermediaries (QI) regime in order to prevent tax avoidance techniques used by certain US taxpayers. As a result, revised QI rules are expected before the year end.
PwC Luxembourg proposes a review of activities and procedures to comply.

Following the Hearing of the Permanent Subcommittee on Investigations (PSI) of the US Senate, LGT Group asserted that it has always conducted its business in accordance with the applicable legal and regulatory provisions. The data under investigation by the PSI – which is based on the data stolen from LGT Treuhand in 2002 and goes back to the 1970s - is from a time when different regulations applied and when there was no Qualified Intermediary (QI) agreement in place. The specific cases mentioned in the subcommittee’s report are dated and do not in any way reflect LGT’s current business practices.

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In a financial center some employers that fire an honest employee may make a pressure on him or her to have the employee sign a transaction with confidentiality clause .

This way the former employee that knows about a fraud issue, a corruption situation, an abuse in a contract with a business partner and of course a money laundering issue must keep silent on the facts and cannot testify in the future.

This is definitely a kind of obstruction to justice as a transaction is not intended for the pervertion of the integrity of the judicial system by preventing the demonstration of the truth.

Sometimes there is limited confidentiality clause for “The information which was granted to the employee after a request” or similar wording, even though the employer may repudiate later the wording and try to intimidate the former employee by suing him or her if he or she does his or her duty. In such case the justice should investigate to determine what's wrong with the company as there is definitely something wrong for the company to react like that.

But usually there is general confidentiality clause for “The information which the former employe knew” or similar wording.

Should such general clause be written, the testimony and evidence from the employee must be accepted: it is vital that the rules of evidence in criminal procedural codes permit this testimony and evidences in the name of the truth.
It is vital as well that criminal procedural and civil codes protect the former employee by admitting the legitimate breach in the transaction as the justice is not intended for the protection of illegal and/or criminal activities.