Ethics and governance in the European Financial centers

Ten years ago the OECD published its report on Harmful Tax Competition: An Emerging Global Issue. This was followed by a series of concrete measures designed to limit some forms of harmful tax competition, such as preferential regimes in OECD countries and offshore tax havens. The OECD initiative has met considerable resistance and in some ways has fallen short of its goals.

Reuven S. Avi-Yonah, from the University of Michigan - Law School, argues in a paper that it has been a worthwhile effort and has achieved some measure of success and outlines some future directions for the project.

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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.

The Washington Post has reported that a report accuses Bank Officials of helping clients hide money from the IRS.
"The iron ring of secrecy around tax haven banks and their deceptive banking practices enable and encourage tax cheats to hide assets from the United States," Sen. Carl Levin (D-Mich.), chairman of the investigations subcommittee, said in a statement issued upon release of the report. "Congress needs to enact strong penalties on tax haven banks that help U.S. taxpayers avoid paying taxes to Uncle Sam."

Read Senator Levin press release