Ethics and governance in the European Financial centers

The Guardian has reported that the British government is attempting to torpedo a section of an international plan to eradicate tax evasion with the view of protecting the interests of City law and accountancy firms.

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PwC Luxembourg has recently published a brochure called "Investment Management Luxembourg - the location of choice" that is worth reading in the context of the financial crisis and of the contestation of offshore centers and other tax havens.

Here are some extracts page 8 that are very representative of the local state of mind :


Being a small country in size and having had to rethink its traditional steel-based economy to make it a centre for international banks and funds, the Luxembourg government has always had an open and friendly ear for the financial community. The authorities, and particularly the financial regulator, are accessible and flexible; officials are welcoming, easy to contact and open to dialogue.
(...)
Luxembourg’s success has been and continues to be predicated on a combination of the depth and breath of the supporting infrastructure – service providers and professionals, systems and technology geared toward supporting the diverse and complex vehicles we see in the funds world today – in addition to a stable and business friendly regulatory and tax environment which effectively supports international fund providers


What does mean a business friendly regulatory environment ? Is it the role of a regulator (or of the justice) to be the "friend" of financial institutions ?
Definitely no.

What does mean a particularly flexible financial regulator? Does that mean a regulator that consider business over rules?
I am afraid yes because the regulator is involved in the promotion of the center.

What does mean officials are welcoming, easy to contact and open to dialogue? Does that mean that they some may be corrupted?
I am afraid yes because many officials are involved in networks with business people that may lead to conflicts of interest or corruption.

What does mean a "government that has always had an open and friendly ear for the financial community" Does that mean that if the financial community is not willing to abide by international recs (OECD, GRECO, FATF...) the governement is ready to give up before the financial community?
Definitely yes. There are many examples in public and official sources.


What is extraordinary with this jurisdiction is that the financial community governs in a way the country and this is admitted.

The Financial Times has reported that Ireland, easily the best performing eurozone economy since the birth of the single currency, this week became the first in the 15-country region to fall into recession.
As I already said, a financial center cannot base a sustainable growth on tax advantages to attract companies.
Which financial center will be next to face reality? I am afraid Luxembourg as the development model has not been changed and is still promoted.

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