Ethics and governance in the European Financial centers

The Wort has reported that members of the Chambre des Députés in Luxembourg are today in Paris to meet their colleagues in order to support the financial center of Luxembourg by discussing what they think is misunderstanding.

Their concern is not to correct the reason why Luxembourg is perceived a a tax haven, banking secrecy and law tax being not determining in themself.

What is determining is the deep culture of professionals and politicians as expressed by the head of the ABBL :
- former head Lucien Thiel, for whom it is not the duty of the center to verify is the taxpayer was honest : he is one of the delegates in Paris,
- current head Jean-Jacques Rommes, for whom when clients are committing fraud it is not the banker who started : but the banker was helpful to commit fraud and went even further by proposing a scam through the jurisdiction of Panama.

They definitely never ever repudiated the recurrent behaviour of Luxembourg bankers in favor of fraud and foreign fraudsters.

Recurrent, as demonstrated the German TV and more recently the Belgian TV.

And this is the way the center have been growing for years. The use of secrecy to commit fraud as well as the abusive use of secrecy for actions of obstruction to justice.

This is the reason why Luxembourg is definitely a "tax haven". Not because of banking secrecy and low taxes. But because of a business culture on the field with one single rule : business over ethics.

Bloomberg has reported that BNP Paribas SA, France’s biggest bank, lost two lawsuits seeking to force UBS AG to release a combined 2.5 million euros ($3.1 million) that had been invested with two funds linked to Bernard Madoff.
UBS has won four straight rulings over investors seeking the immediate return of their funds since the bank lost the first case filed by French fund manager Oddo & Cie. seeking 30 million euros from the LuxAlpha fund. Since then, court’s have supported UBS’s arguments that it can’t release money to investors until all investor claims have been filed. UBS appealed the ruling by ordering it to reimburse a French fund-management company €30 million ($38.6 million) that had been invested with New York financier Bernard Madoff. The decision is pending.

All cases are relating to redemption requests which took place before Madoff was arrested.

Luxembourg cannot inspire confidence.

So cannot inspire confidence the CSSF, that took measures "in order to protect the interests of investors" as it said only a couple of weeks after the begining of the Madof Case.
- 03/03/2009, Withdrawal of the sicav Luxembourg Investment Fund from the official list,
- 11/02/2009, Withdrawal of the sicav HERALD (LUX) from the official list,
- 03/02/2009, Withdrawal of Luxalpha Sicav from the official list.

It is as if we had an infringement to the traffic regulations: someone burns a stop, and only three months later the whistle of the policeman is heard.

The reality is that the rules in the jurisdiction are so confused that there is an actual legal insecurity.

Europe's Commissioner for Taxation Laszlo Kovacs has blasted Austria's banking secrecy laws and urged Vienna to lift them or face consequences, in an interview with an Austrian magazine.

"Banking secrecy should not protect fraudsters," Kovacs told the weekly Format in an interview to be published on Friday.
"It is unacceptable that banking secrecy in one (EU) member state can hamper the tax authorities of other member states," he added.

Kovacs warned of serious consequences if Austria did not lift its banking secrecy soon, as other states have already done.

Austria is supported by Luxembourg, that should be warned in the same way as both states were recently in agreement to refuse. On 25 February, Luxembourg minister for justice and budget Luc Frieden said in Austria that Luxembourg and Austria were ready to take part constructively in a discussion in the EU and the OECD [Organisation for Economic Co-operation and Development] on how to improve international co-operation on cross-border tax evasion, but banking secrecy is not up for negotiation.

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