Ethics and governance in the European Financial centers

PwC Luxembourg put recently online a video clip, which is an ad for CSR, to show its involvement in Corporate Social Responsibility actions.

The company does definitely a lot for the community.

But when looking carefully the video there is a question: To what extent another company with money and that is not an auditor would do other things?

In other words the video does not focus on what CSR implies actually for an auditor.

Five values are quoted in an agenda:
- Market place
- Environment
- People
- Culture
- Ethics

Ethics should have been the first value .


Let's analyse the film with the time allocated for each topic (time of the start of the topic):

Introduction : 00:00
Agenda : 00:32
Market Place : 00:37
Environment : 01:26
People : 02:13
Culture : 04:13
Ethics : 05:26

Ethics is given 00:04 seconds in the videoclip. Topics coming after 05:30 have nothing to do with ethics especially for an auditor : These are :
- People Survey (05:30) : The picture of the "Code of conduct" appears a fraction of second at 05:39
- Staff day (05:44)
- PwC serving the city of Esch/Alzette (05:45)
- Brainstorming with Nicolas Vanier (05:51)
- CSR rôle-play (05:58)
- PwC for nature (06:00)
- Staff Satisfaction (06:05)


Conclusion : 06:20
End : 07:03

We can conclude that the whole film has a duration of 423 seconds (7:03 minutes) of which 4 seconds (5 with the picture of the "Code of Conduct") are relating to ethics but just to show a title : there is unfortunately no examples of implemented and proved ethics for the auditor in the framework of CSR.

I hope ethics concerns are not allocated only 0.012% (5/423) of the time in the framework of audit assignments.

PwC is definitely a good company but I find it a pity that they should not realise the risks in a business world with more and more transparency and where dysfunctions will be less and less tolerated all the more than they are public and official and take place in a small country where everybody knows everyone. Furthermore Luxembourg is no longer a sanctuary : other countries may involve auditors in Luxembourg.

I wish I could help them. I sent many applications with no result. I must be too faithful for the business. But I think I would abide by the "Code of conduct" and help staff to respect it, provided that it is not a charade.





Video

Know more about actual CSR

Since December 2005 I have been publishing on a regular basis on Luxembourg. I wrote a book in French the title of which is Vus, pas pris : essai sur les risques du monde des affaires au Luxembourg (Seen not caught : essay on the risks of the business world in Luxembourg). The book is sold online.

I have contacted many officials, politicians or professionals of the financial sector to work on public and official issues that weaken the credibility of the country and therefore its sustainable development as they are the visible part of the iceberg.

But issues officially do not exist in this country where everybody knows and support everyone for the growth and repudiate those who dare question.

There is like a "fuite en avant" (Flight forward) at a time when
1) the financial sector is no longer credible in its ethics compared to other centers despite a communication that will not change the facts that do not comply with statements for ethics or deontology,
2) the attractiveness for tax reasons (VAT) did not to last long.

It is not too late to change policies and behaviours: it depends on the political and professional will.

But there is no choice unless they want to be responsible for the collapse of the center.

Last February AOL France was fined by the French fiscal administration because of its hub in Luxembourg.
As I already wrote I am not certain such hubs are the interest of the financial center as they feed a bad reputation of tax haven.

Le Jeudi, a couple of days ago published an article stating that AOL would leave in April 2008. The article does not explain the problem with the French fiscal administration.

The MP Claude Meisch AOL.pdfasked a parliamentary question the wording of which demonstrates how people in Luxembourg are upset despites it is good news for the core financial center that is weakened by tax stories.

Furthermore, as Sheila Killian wrote about Ireland but is is true as well for Luxembourg, the center is becoming the victim of its own success. Prosperity has brought high wages, impossible property prices and inflation. This has become an expensive place in which to live and do business. Basic products can be manufactured more cheaply elsewhere, and basic manufacturing jobs are beginning to move to Eastern European and developing countries. The low rate strategy was simple, effective, and inherently unsustainable. Tax competition produced a “race to the bottom” in terms of tax rates, and average rates tumbled across the EU. Ireland’s tax rate is still among the lowest at 12.5 per cent, but Poland’s 19 per cent may be more attractive to a company that can make more profit there."

The Irish Tribune has reported large companies, like Dell, are already quitting Ireland lis AOL is leaving Luxembourg.

As Richard Murphy explained "The simple fact is that capital tends to locate where the best returns are and tax competition can at best only put a temporary blip in this process in favour of one location over another before rates must be lowered again".





Parliamentary question (in French)