Ethics and governance in the European Financial centers

The BBC published very interesting country profiles.

It explains that Luxembourg's prosperity was formerly based on steel manufacturing. With the decline of that industry, Luxembourg diversified and is now best known for its status as a tax haven and banking centre. But Luxembourg's strict laws on banking secrecy mean the system can be exploited for the purposes of tax evasion and fraud.

The qualification of "tax haven" is used neither for Switzerland nor for the UK. But it is for Liechtenstein .

About Liechtenstein : "Much of its wealth is based on its status as a low tax haven. Around 75,000 companies have their nominal "letter box" offices in Liechtenstein, where business tax rates are very favourable".

About Switzerland : "A landlocked, majestically-scenic country, Switzerland's long-standing neutral status has given it political stability that has helped it become one of the world's wealthiest countries where banking is a key industry."

Royaume-Uni : "The economy - one of the largest in the world - is no longer manufacturing but services-based, with e-commerce of growing significance. The City of London is a global financial centre."


Is the BBC right ?

Probably yes to a certain extend as the UK and Switzerland demonstrate more transparency on their dysfunctions than Luxembourg or Liechtenstein do. Especially the media actually play the role of watchdog and an organisation like Transparency International observes the jurisdiction in the UK and Switzerland.

The QI program has recently been the focus of several discussions involving the IRS, the US legislator and some
international accounting firms. The much broadcasted purpose was to set up potential enhancements to the Qualified Intermediaries (QI) regime in order to prevent tax avoidance techniques used by certain US taxpayers. As a result, revised QI rules are expected before the year end.
PwC Luxembourg proposes a review of activities and procedures to comply.

Luxembourg does not have a balance sheets database ("centrale des bilans") despite a project since a long time and the fact that such system exists elsewhere.
Professionals, either companies or auditors, acutally are not in favor of such transparency of their accounts.

In a country where
- the Chamber of Commerce and the bankers' association state that "offences such as forgery, use of forgery, false balance sheets, use of false balance sheets or unauthorised use of corporate property are vague offences”
- big four firms do not repudiate such statement while being members of the bankers' association
- many professionals communicate on their "strong balance sheet"
- big four firms (especially PwC and Ernst & Young) condone the issue of economic crime by not participating to their brand's studies on the topic
- CSR ignores business ethics
- liability of legal persons does not exist
- etc.

the delay is comprehensible and as the STATEC explained "the obstacles met do not concern its competence"