11/03/2009
Switzerland suspends tax deal with Italy
Euronews has reported that Switzerland suspends tax deal with Italy because of a series of raids by Italian police on Swiss banks across Italy last week.
"Switzerland wants to negotiate with other EU member states, but these countries must behave correctly towards Switzerland", Filipppo Lombardi said.
This is a very bad reaction. Who did not behave correctly towards other jurisdictions in the first place?
07:25 Posted in Switzerland | Permalink | Comments (0)
11/02/2009
Luxembourg is a “secrecy jurisdiction” of bad faith: response to the ABBL response to Tax Justice Network jurisdiction report on Luxembourg
As I expected, ABBL issued a press release to state that Luxembourg is not a “secrecy jurisdiction”:and respond to the Tax Justice Network jurisdiction index that ranks Luxembourg the as second secrecy jurisdiction.
As I said they are not asking the right question that is "What is to be done to solve issues that harm the reputation" : they are trying to fool (once more) the audience with a very bad faith that I can demonstrate.
A couple of paragraphs wants commenting.
ABBL states "the report argues that because there is apparently no data available on the number of lawyers and accountants that “Luxembourg may exhibit a significant number of lawyers and accountants when compared to other secrecy jurisdictions”. Not only is the reasoning itself undertaken in bad faith, but a simple web search would have revealed that the data on lawyers and accountants is very much publicly available, since anyone exercising any of these professions in Luxembourg is required to register with the Luxembourg Bar or the Order of Accountants, respectively (lawyers are listed on www.barreau.lu, while accountants are listed on www.oec.lu).
TJN is based in England. As far as I know, in England and Wales, "lawyer" is used loosely to refer to a broad variety of law-trained persons. It includes practitioners such as barristers, solicitors, legal executives and licensed conveyancers; and people who are involved with the law but do not practise it on behalf of individual clients, such as judges, court clerks, and drafters of legislation.
TJN defines a lawyer as a person providing advice on the law, who prepares legal agreements or who pursues disputes through the legal system of a jurisdiction. The use of the term and the entitlement to practice as a lawyer is regulated in many jurisdictions
The word lawyer is used with this meaning in the Luxembourg corporate registration and ABBL cannot ignores that.
Examples:
In 2008
English text: "The Meeting elects Ms. Charou Anandappane, lawyer, residing professionally in Luxembourg as Scrutineer"
French text: "L'Assemblée désigne Mlle Charou Anandappane, lawyer, juriste, de résidence à Luxembourg en qualité de scrutateur"
Ms. Charou Anandappane is not a lawyer listed on www.barreau.lu
In 2009
English text: "here represented by Claire Benedetti, Lawyer, with professional address in Luxembourg"
French text: "représentée par Claire Benedetti, Juriste, avec adresse professionnelle à Luxembourg"
Claire Benedetti is not a lawyer listed on www.barreau.lu
As far as accountants are concerned an accountant is a practitioner of accountancy, which is the measurement, disclosure or provision of assurance about financial information that helps managers, investors, tax authorities and other decision makers make resource allocation decisions.
TJN defines an accountant as a person, usually but not always qualified by examination, who prepares accounts, offers taxation and commercial advice and who may audit the accounts of companies and other limited liability entities when that is required by law
As anyone can be a statutory auditor in Luxembourg, of which accountants, one cannot knows the number.
Minister Krecke raised the issue of accounting jobs 10 years ago. The problem remains.
ABBL states "The report fails to point out, however, that there are no trusts in Luxembourg. And while it is true that trusts can be managed out of Luxembourg, this is also the case in many non-reviewed jurisdictions (like Germany or France, for instance, which has its own trust law). Moreover, banks in Luxembourg keep track of beneficial owners"
There are many Luxembourg-registered companies where the shareholder(s) is(are) from secrecy jurisdictions and only exist in Luxembourg. So there are many statutory auditors from secrecy jurisdictions and that only exist in Luxembourg.
Controls are very weak.
ABBL states "we strongly oppose is the accusation that Luxembourg does not participate in the European Savings Directive. Just because TJN believes that only those countries that apply an automatic exchange of information participate in the European Savings Directive, does not make it so. Not only does Luxembourg apply one of the systems foreseen by the European Savings Directive, namely a withholding tax, the jurisdiction also offers clients the possibility to opt for tax declarations"
Automatic exchange of information is only part of the problem.What about the procedure initiated by the European Commission?
What does LIGFI think of the above regarding the principles of fairness, transparency, responsibility and accountability?
17:30 Posted in Luxembourg | Permalink | Comments (0)
11/01/2009
Madoff: a challenge for LIGFI
As LIGFI is calling to recruit member, I state again that I do not believe that LIGFI is a sincere initiative.
There are many red flags that it is actually an economic intelligence operation born by both Luxembourg professionals in or close to the financial sector and the government of Luxembourg:
1. Most LIGFI founders are Luxembourg people, live and work in Luxembourg, in or close to the financial sector.
2. LIGFI states it is engaged in recruiting members and partners within and outside the global financial sector, but it only explicitly calls for banks, other financial services and service providers to the financial sector to join the association (in bold)
3. Academe have ridiculous voting rights whereas those who have the money (financial institutions) have the most rights.
Statutes, Art. 28. Charter members have eight voting rights each; public and private institutions have four voting rights each; financial sector and professional services have two voting rights each, and academe have one voting right each
4. Critics and those who are not right-minded are excluded or will be excluded and loose their money
Statutes, Art. 10. The board of directors has final decision making power over all written membership requests. A denied application need not be substantiated.
Statutes, Art. 11. Any member who jeopardizes the interests of the a.s.b.l. or who fails to meet his due obligations may be excluded.
Statutes, Art. 12. The exclusion of a member may only be decided under the cases prescribed by the articles of incorporation by the general meeting under a two third majority.
The member resigning or being excluded retains no right on the assets of the a.s.b.l. and he cannot claim his subscription fee back. Any member shall be deemed to have resigned if he fails to pay his membership dues within three months of the date of payment of such dues.
5. LIGFI ignores powerhouses in the debate on financial integrity
GFIP and TJN are ignored despite they are leading organisations in the debate. They have just published the Financial Secrecy Index.
The Grand Duchy of Luxembourg ranks number two on the index. While not such a big player in private banking as Switzerland, Luxembourg hosts a massive hedge fund activity which attracts investors from around the world. TJN recently visited the Grand Duchy and met various bankers. Like their counterparts in other secrecy jurisdictions, they like to portray themselves as guardians of privacy. What they do not say is that it is the privacy of rich élites that they care about – that is, élites in other countries who want to evade paying their taxes.
As I said there is knowingly a lack of transparency in Luxembourg, where professionals have an abnormal influence on the regulator and the government, which was confirmed by a recent ALFI brochure: “Your bridge between Europe and China: Luxembourg” that was online last week.
This brochure states page 2: "Shape regulation. An up-to-date, innovative legal and fiscal environment is critical to defend and improve Luxembourg’s competitive position as a centre for the domiciliation, administration and distribution of investment funds. Strong relationships with regulatory authorities, the government and the legislative body enable ALFI to make an effective contribution to decision-making through relevant input for changes to the regulatory framework, implementation of European directives and regulation of new products or services." (Source: Alfi)
I would paraphrase what this means for LIGFI:
Shape ethics. An up-to-date, innovative ethical framework is critical to defend and improve Luxembourg’s competitive position as a financial centre. Strong relationships with LIGFI enable ABBL and ALFI to make an effective contribution to decision-making through relevant input for changes to the ethical framework, implementation of directives and regulation of new products or services.
However I want to give a chance to LIGFI to corroborate it is a sincere operation when it states that the principles of integrity governing the activities and behavior of the Luxembourg Institute for Global Financial Integrity are those of fairness, transparency, responsibility and accountability.
As I demonstrated the UCITS directive was definitely not faithfully transposed in Luxembourg law and regulation, which opened the drift with Madoff.
Why it was not faithfully transposed? Because of the ALFI effective contribution to decision-making through relevant input for changes to the regulatory framework, implementation of European directives and regulation. Quod Erat Demonstrandum, thanks to ALFI.
A recent significant change in the wording gives up the so-called “faithful transposition”.:
“Our opinion is that Luxembourg transposed the directive as it was needed”, Claude Kremer, Chairma ALFI said in September. He is a smart lawyer. He perfectly knows the meaning of words. Before, the communication was that Luxembourg transposed the directive “failthfully”. Claude Kremer said “as it was needed”, which is not the same meaning as “faithfully” and complies with the truth: the transposition was done as it was suggested by ALFI in its effective contribution to decision-making through relevant input for changes to the regulatory framework, implementation of European directives and regulation.
My challenge for LIGFI:
LIGFI should recommend on the model of Luxakpha (http://www.luxalphainliquidation.lu) a special database available online for free that would gather every document relating to every fund and sub-fund that were impacted directly or indirectly by the case linked to Bernard L. Madoff as identified by CSSF, and especially prospectuses and annual reports including the 2008 or 2009 report disclosing losses based on having invested in Madoff.
There is already a good database in the jurisdiction (www.finesti.com) : this is a free service for private investors that have a limited access whereas professionals have a chargeable service with access to the full range of data and documents on the Finesti site. Unfortunately many documents relating to undertakings for collective investment (UCIs), respectively UCI sub-funds of Luxembourg law which were impacted directly or indirectly by the case linked to Bernard L. Madoff, are not available.
I wonder why nobody in Luxembourg already suggested this idea (What was LIGFI contribution the last six months?) for stakeholders.
Maybe because Luxembourg is a secrecy jurisdiction, where the collective business culture is not compatible with the principles of fairness, transparency, responsibility and accountability.
06:39 Posted in Luxembourg | Permalink | Comments (0)