Ethics and governance in the European Financial centers

In the context of the financial crisis where auditors are in question, I went through the website of the registered auditors in Luxembourg and in Belgium.

There are almost 1000 registered auditors at the IRE in Belgium and 350 in Luxembourg.

Logically there should be a kind of proportionality in the disciplinary activity of both institutes all the more than Luxembourg is most important in business (GDP and GNP much higher).

In Luxembourg there are only two disciplinary judgements available online:
- one dated 16 June 2005 and
- one dated 30 June 2006.

In Belgium there are disciplinary judgements available online every year:
2005: 23
2006: 29
2007: 42
2008: 22
2009: 2 (at 12 Mars 2009)

From 2005 to 2008 the average is 29 disciplinary judgements every year.


I have already quoted two reports : The Narcotic Control Strategy Reports 2008 observes that “the scarce number of financial crime cases is of concern, particularly for a country that has such a large financial sector” and the GRECO report Round III observes that “the number of cases coming before the courts appears to be very small”

What they state is confirmed with the disciplinary activity of auditors in Luxembourg.

Sources:
IRE Luxembourg
IRE Belgium

Reuters quoting La Tribune wrote that Switzerland, Luxembourg, Austria, Singapore and Hong Kong will be added to the OECD's list of non-cooperative tax centres.

The newspaper said the Organisation for Economic Cooperation and Development would include around 30 countries out of 84 that were examined.

As I already wrote, banking secrecy is a criterion of tax haven, so are law taxes. The determining criterion is permissiveness.

Almost three years ago, I had warned the professionals and the politicians in Luxembourg of the paragigm shift:

This is what I wrote :

To ensure the sustainability of the financial center, Governing authorities must be aware of the changes to the geopolitics and the geoeconomics : we live at a time of transparence and governance with various programs (OECD, World Bank...).

Governing authorities must ask questions and accept questions especially on compliance issues. They must tighten up the ship on issues all the more than there are alternative financial centers for investors and head offices of banks. Otherwise they weaken their international credibility.

The failure to ask or to answer questions allows these authorities (either political or professional) to operate with a distorted sense of reality. In fact, Finkelstein calls companies that are unable to question their prevailing view of reality zombies. A zombie company, he says, is “a walking corpse that just doesn’t yet know that it’s dead—because this company has created an insulated culture that systematically excludes any information that could contradict its reigning picture of reality”.


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