Ethics and governance in the European Financial centers

The ABBL commissioned a stydy by the TNS ILRES Institute. Findings were presented July 4th.

TNS ILRES identified four categories of employees :
- "Critics"are rather critical, therefore difficult to lead. They have a strong belief in the competitive ability of the company. They are individualistic, interested in their own professional advancement. They give impetus for change. They are ready to change jobs when the opportunity arises.
- "Drivers" have a strong identification with corporate objectives. They are highly loyal to the company. They believe in the future vision and the competitive ability of the company. They show strong initiative and willingness to cooperate inspires and motivates colleagues.
- "Residents" are very satisfied. They fulfil their work without experiencing a motivating environment. They have a stabilising effect on the company. They are security driven. They need to be directed.
- "Detached" are dissatisfied. They are disconnected from the company. They are more frustrated than dedicated and a source of contagion for negative climate. They are underutilised resources of the company.

Compared to the European benchmark, the financial centre of Luxembourg is intensely missing ‘drivers – locomotives’ (only 8% have a reference value of 21%) as well as ‘critics’ (only 4% have a reference value of 13%); instead of having 1 employee out of 3 who are motivated and convinced of the performance of the centre, the survey reveals that there is only 1 in 8.

The analysed population characterises itself with a very high proportion of ‘residents’, 56% which means 22 points more than the European average of the employees, this is not only surprising but also worrying for a sector which is of first importance to the national economy. The proportion of ‘detached’ (one third) matches the European average.

Newsletter_ABBL_Social_Matters_1_ENG.pdf



As far as business ethics is concerned, Jean-Nicolas Schaus, who is General Manager of the CSSF, (body responsible for the supervision of the Financial centre) stated in the report 2004 that "in too many cases, the persons responsible for reprehensible acts do not suffer the consequences with regard to the continuation of their occupation. The person responsible for such an act is often simply removed from management while being granted compensations, which largely exceed normal expectations. Sometimes, the impression could arise that crime pays, whichsoils the reputation of a fi nancial centre. Moreover, it can be observed on too many occasions that when such professionals seek new employment, the new employers tend to somewhat close their eyes to the problem, while knowingly taking the risk that the persons concerned could again perform reprehensible acts".
It is interesting to underline that for the General Manager of the body responsible for the the supervision of Luxembourg Financial centre there may be an acceptance of employees that are not honest in a certain limit ("in too many cases"). Otherwise the wording whould have been "in some cases" or "in many cases". This is probably a sign of the pragmatism in Luxembourg.

CSSF_abstract_annual_report_2004.pdf




This means that the average employee in Luxembourg is either a sheep or a dubious guy.

The globalisation of the world economy has led to a close linking of the financial markets and to liberalization of international financial flows. As globally oriented financial centers, these countries have a vital interest in the worldwide enforcement of internationally recognized standards to prevent abuse of the financial markets.

According to reports by members from the French parliament between 1999 and 2002, all these country offered a safe haven for terrorist money and money launderer, and their respective authorities were doing nothing about it. The respective authorities said the report relating to their Financial center was out of date, and anyway there were some progress since the release of the reports.

The blog will not be based on the findings of the French MPs’ reports, but on facts that can be observed on public/official sources to assess the life of law and regulation that are said to be implemented : in other words, standards may not be in force and effect, there may not be a full and proper implementation of all necessary measures and the system in place may not be effective.

The more a Financial centre communicate that self policing is working and that the integrity and ethics are abide by, the stricter will be the conclusions on what is obviously actually going on that do not comply with the statements.

This blog is intended to share informatiuon that I am gathering to prepare a course I gonna provide to Students in the framework of a Master in Criminal Sciences (specialisation fraud and anti money laundering) to tell them about tax haven.

Most states that are said to be tax haven do no accept this qualification.

Actually, there are two cumulative conditions to determine whether a country is a tax haven or not :
- on the one hand there must be advantageous tax and banking conditions : nevertheless, this condition is necessary but not sufficient,
- on the other hand and especially a permissive climate that normalise bad management and bad governance increasing the risk of illegal activities in the country may be traced and provide the country with "bad money" for its growth despites controls that may be in place but that cannot detect every case.

The purpose of the following blog is as well to provide investors and banks head offices with facts that occur in European financial centers to assess ethical values that are stated by the states' authorities either govermental or professional. This blog may as well provide international assessors (IMF, GRECO, OECD...) with information.

The blog wioll focus on the following financial centers :
- Luxembourg,
- Switzerland,
- Great Britain, Gibraltar and the territories of the Crown,
- Liechtenstein,
- Monaco,
- Malta,
- Cyprius

Facts will be based exclusively on public and official sources i.e. legal, judicial, administrative... either national or international.

Therefore both investors and banks head offices will be able to make up their mind to determine the Financial Center that is best for low risks and especially reputation.