Ethics and governance in the European Financial centers

Luxembourg was congratulated by Angel Gurria. Great.

 

Its bankers applaud the Luxembourg government for its swift implementation of the OECD standards and for getting Luxembourg removed from the so-called grey list. They state that the government has not only proven that Luxembourg’s presence on such a list was completely unnecessary in the first place, but has also demonstrated its commitment to ensuring a global level-playing field. Great.

 

The Luxembourg tax administration has displayed online the conventions and the exchange of letters.

 

To be accepted, a request shall have to specify:

 

(a) the identity of the person under examination or investigation;

(b) a statement of the information sought including its nature and the form in which the applicant State wishes to receive the information from the requested State;

(c) the tax purpose for which the information is sought;

(d) grounds for believing that the information requested is held in the requested State or is in the possession or control of a person within the jurisdiction of the requested State;

(e) to the extent known, the name and address of any person believed to be in possession of the requested information;

(f) a statement that the request is in conformity with the law and administrative practices of the applicant State, that if the requested information was within the jurisdiction of the applicant State then the competent authority of the applicant State would be able to obtain the information under the laws of the applicant State or in the normal course of administrative practice and that it is in conformity with this Convention;

(g) a statement that the applicant State has pursued all means available in its own territory to obtain the information, except those that would give rise to disproportionate difficulties.

 

This only does not comply with what Pascal Saint-Amans, Head of division for the co-operation and tax competition, quoted by L'Expansion said : "Il faudra seulement fournir l'identité d'une personne soupçonnés de fraude, et c'est tout" (free translation : it will only be required to provide with the identity of a person suspected to commit fraud and that's all) all the more than Swiss professionals admitted that "Il sera, en pratique, très difficile pour les autorités fiscales étrangères qui appliquent les standards de l’OCDE de fournir ce degré de details" (free translation: “It will be, in practice, very difficult for the foreign tax authorities which apply the OECD standards to provide this degree of details”)

  

The OECD is being fooled or it is fooling the audience.

 

 

 

 

 

 

Two leaders, one in in Switzerland and one Luxembourg expressed the same idea, but they used to different words that make the difference.

 

Last year, Lucien Thiel, who is the former chairman of the ABBL and founder of the LIGFI, stated that “Ce n'est pas notre devoir de contrôler si le contribuable a été honnête” (free translation : it is not our duty to control if the taxpayer was honest)

  

Today Eric Sarasin, from Banque Sarasin in Switzerland is quoted in Le Temps. He stated that “Nos gérants n’ont pas pour mission de demander à leurs clients s’ils ont payé leurs impôt” (free translation: Our managers do not have the mission to ask their clients if they paid their taxes)

  

That the same idea but they use a different word that makes the difference: the word “Duty” for Lucien Thiel and the “Mission” for Eric Sarasin.

 

"Mission means" “4 a :  a specific task with which a person or a group is charged”  (See Merriam Webster)

 

"Duty means" “3 a: a moral or legal obligation b: the force of moral obligation (See Merriam Webster)

 

 

To avoid troubles with foreign tax administrations, why not introduce in the legislation a control of the client and refuse the money of tax evasion with a criminal liability for the banker that would help tax evasion provided that there is no loophole like the word “knowingly” in the Luxembourg AML legislation. This may be a new mission for bankers in Switzerland.

As far as Luxembourg is concerned, the word “duty” definitely raises a problem of a moral nature all the more than Luxembourg is member of the European Union.

 

 

As far as the implementation of financial regulations and the fight against tax evasion are concerned, it seems that there is another Member State that is not a fair European player: The United Kingdom.

But there is a huge difference with Luxembourg: in the United Kingdom, there are critics, either professionals or from the university, of the abuses.

In Luxembourg where there is the quasi-continuous presence of the Christian-social party (PCS/CVS), with the power since 1945, neither professionals nor the university, call into question the dysfunctions. Only the Cercle de Cooperation raised relevant questions.

 

 

 

 

 

Source of the picture www.michaeljournal.org - “Michael” Journal, 1101 Principale St., Rougemont, QC, Canada J0L 1M0. Tel: (450) 469-2209.

 

Switzerland is alone before the US tax admin and the US courts.

A pact existed between the jurisdictions with bank secrecy. They simultaneously accepted the OECD criteria but an unbalance was created in favor of Luxembourg because the signature of the agreements was not coordinated to leave the gray list together. Switzerland, which had affirmed the importance to coordinate points of common interest of the financial centres was fooled.

Switzerland is all the more losing vis-à-vis Luxembourg than one of its banks is blamed in the Madoff fraud. This bank acted in the framework of Luxembourg laws and regulations and of Luxembourg business practices with very high conflicts of interest.

 

Switzerland is all the more losing vis-à-vis Luxembourg than Luxembourg launched the LIGFI to improve its image without Switzerland: two Swiss (Gilbert McNeill and Rene Brülhart) are in this project but not as representative of Switzerland.

 

Switzerland is all the more losing vis-à-vis Luxembourg than its ethics is more credible than the one of Luxembourg beyond the banking secrecy: thus it was remarkably ranked by TI for the implementation of the OECD anti bribery convention whereas Luxembourg, where the criminal liabiliy legal person does not exist despite an injunction from the OECD late March 2008, was unable to provide data.

 

Know more about the differences