Ethics and governance in the European Financial centers

As I said in a previous article the Luxembourg regulator is doing a much better communication on Madoff than the Irish regulator in a context of both jurisdictions are in question because of their investment funds.

The feeling of this better communication on the Madoff case is confirmed by a google search on the keyword "Madoff" with site:.ie and site:.lu.

The result is today the following :

- site:.ie : 3 200 results for a country of 70 283 km² (+ 14 148 km² for Northern Ireland)
- site:.lu : 5 430 results for a country of 2 586 km².

In my opinion this may be an indicator that the debate on Madoff is more active in Luxembourg than in Ireland despite the wording of the law of transposition of the UCITS directive is morefaithfull in Ireland than in Luxembourg.

Peter Macfarlane has reported that last week Nicolas Sarkozy relaunched attacks on the two tax haven principalities bordering France: Andorra and Monaco, as well as the Grand Duchy of Luxembourg. He said that would “review its relations” with neighboring financial havens such as Luxembourg, Andorra and Monaco. The Sarkozy announced that he and German Chancellor Angela Merkel would be attending a summit in London in early April at which the matter would be discussed further
As I already said President Sarkozy is co-prince of Andorra and it was not fair to criticise Luxembourg without taking into account Monaco and above all Andorra. It is like the “Stop tax Haven Abuse Act” (that does not identify Monaco and Andorra as tax havens) that does not quote Delaware as a tax haven.

Paris dispatched an envoy Christian Fremont to Andorra to put further pressure on the Andorran government, who have otherwise been distracted this week by record snowfalls, reports our man in Andorra. Peter Macfarlane observed that Andorra is the only European country with bank secrecy written into its constitution, and has been blacklisted as “uncooperative” by other European authorities in the past, along with Liechtenstein, another mountainous tax haven principality.

Senator Patrick Leahy (D-Vt.) and Senator Chuck Grassley (R-Iowa) introduced legislation the day before yesterday to provide the federal government with more tools to investigate and prosecute financial fraud. The Fraud Enforcement and Recovery Act makes necessary changes to federal criminal laws, including criminal fraud, securities law, and money laundering laws, increases the funding available to the federal law enforcement agencies to combat mortgage fraud and predatory lending, and also revises the False Claims Act to ensure that the government can recover taxpayer dollars lost to fraud and abuse.

The Leahy-Grassley bill will:

- Amend the definition of “financial institution” to extend federal fraud laws to mortgage lending business not directly regulated or insured by the Federal government
- Amend the major fraud statute to protect funds expended under the Troubled Asset Relief Program (TARP) and the economic stimulus package
- Authorize funding to hire fraud prosecutors and investigators at the Department of Justice, the FBI, and other law enforcement agencies, and authorize funding for U.S. Attorneys’ Offices to help staff FBI mortgage fraud task forces.
- Amend the federal securities statute to cover fraud schemes involving commodities futures and options
- Amend the criminal money laundering statute to make clear that the proceeds of specified unlawful activity include the gross receipts of the illegal activity, and not just the profits of the activity
- Improve the False Claims Act to clarify that the Act was intended to extend to any false or fraudulent claim for government money or property, whether or not the claim is presented to a government official or employee, whether or not the government has physical custody of the money, and whether or not the defendant specifically intended to defraud the government.


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