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They make a molehill out of a mountain

The CSSF has yesterday published a press release (in French) about its investigation.
Olivier Sciales translated the findings :

The CSSF ordered UBS (Luxembourg) S.A. within a three-month-period :

1) to put into place the necessary infrastructure (i.e. all sufficient human and technical means and internal rules in order to carry out all the duties and tasks related to the function of custodian bank of a Luxembourg undertaking of collective investment in accordance with the law of 20 December 2002 on undertakings of collective investments, as amended from time to time (the "Law of 2002") and Circular IML 91/75. UBS (Luxembourg) S.A. is required to provide evidence of such adequate guarantees to the CSSF within a period of 3 months as of the date of notification of the decision of the CSSF to UBS (Luxembourg) S.A. It is important to note that the CSSF mentioned that the wrongful execution of the obligation of "due diligence" constitutes a serious breach of the supervisory duty (devoir de surveillance) of a custodian bank and can consequently constitute a violation of a contractual obligation in view of the legal provisions imposed by the Law of 20 December 2002. Article 36 of the Law of 2002 provides that "the depositary shall, be liable, in accordance with Luxembourg law to the shareholders for any loss suffered by them as a result of its wrongful improper performance thereof".

2) to analyse and rectify all the structures and procedures in place in relation to its supervisory duty (obligation de surveillance) as custodian bank and UBS (Luxembourg) S.A. shall pay damages in case of breaches to the above-mentioned supervisory duty as custodian bank imposed upon by Luxembourg law, without prejudice to any contractual provisions to the contrary and/or as the case may be any court decision.

The CSSF said it continues to probe the Madoff affair and is looking at depository banks and verifying that every intermediary have conducted their business according to Luxembourg law.

Nothing about the CSSF itself
Nothing about the auditor
Nothing about the perfectibility of the Luxembourg law

07:43 Posted in Luxembourg | Permalink | Comments (0)


"It is not the banker who started"

The RTBF diffused a report carried out with a hidden camera in a Luxembourg bank a couple of days ago.
Questioned by Medhi Khelfat, Jean Jacques Rommes, director of the ABBL (The Luxembourg Bankers Association) rose: "This is the case of an alleged customer who comes and says “we will defraud the tax department, how to make? ”. It is the starting assumption. The banker has an answer which I would not have made if I had been in his place. It is not the banker who started. ” If a Luxembourger presented himself in a Belgian bank, in the same situation as the one of the report, it would do the same thing exactly, according to Jean-Jacques Rommes: the applicable rules are the same ones in the two countries.
The greatest tax havens of this world are the United Kingdom, the United States and especially the State of Delaware in the United States. Does somebody one speak? I do not have of it anything considering”

For Jean-Jacques Rommes, "saying that small states are tax havens and large states are the victims of the tax havens is a way of presenting the things that is a complete manipulation."

A couple of comments:

I agree with Mr Rommes when he raises the question of the UK and of the United States and especially the State of Delaware that is not quoted as a tax haven in the Stop tax Havens Abuse act.
I agree with him when he states that saying that small states are tax havens and that large states are the victims of the tax tavens is a way of presenting the things that is a complete manipulation.

But, the RTBF experiment reminds me of the documentary carried out by the German TV about the Luxembourg subsidiary companies of German banks a few months ago.

Above all when the business doctrine of Mr Rommes predecessor, who chairs the special parliamentary commission “economic and financial crisis, is that “It is not our duty to control if the taxpayer was honest”, one should not expect another behaviour.

Noone in Luxembourg repudiated the doctrine that definitely favours frauds.

I do not think that we will be able to find in another jurisdiction a leader who standardises fraud, thanks to the legendary luxembourgish pragmatism : therefore applicable rules as implemented are not the same ones in both countries.

13:30 Posted in Luxembourg | Permalink | Comments (0)


Luxembourg vis-a-vis its destiny

I can see five simultaneous major risks for Luxembourg:

1. The subprimes, which still will hold surprises in the coming months as most auditors did not do their prudential duty
2. The banking secrecy called in question as the internal pressure is growing
3. The international fight against offshore jurisdictions as the Corporate Registration is a mess with dubious firms and dubious statutory auditors including auditors from the BVI, the Seychelles and other exotic jurisdictions
4. Madoff/UBS-Luxalpha as the Luxembourg authorities deceived.
5. The risk of Sanctions for violation of “Qualified Intermediary” in the USA as the American justice will not appreciate if American citizens' assets were hidden

The behaviors as well of the politicians as of the professionals are not worthy of stakes.

18:21 Posted in Luxembourg | Permalink | Comments (0)