Ethics and governance in the European Financial centers

TJN and Financialtastforce have reported that Eva Joly, the recently elected EU deputy and former anti-corruption prosecutor and currently advisor is Iceland, denounced French Bank BNP’s offshore financial activities which have enabled African leaders to amass unreported oil-money in tax havens.  “We would like to know how much BNP earned from its two subsidiaries in Cyprus, 27 subsidiaries in Luxembourg and 21 subsidiaries in the Cayman Islands.”, she said reported Le Monde.

BNP Paribas, one of the largest European banks, has 189 subsidiaries located in tax havens, more than any other French firm.

An example of African leaders that was able to amass unreported money in tax havens was given in a report that was prepared by by Kroll Associates UK Limited a couple of years ago to expose details of the massive corruption perpetrated by former Kenyan President Daniel arap Moi and his two sons, including drug dealing, money laundering, and kickbacks. The report was intended to be confidential for the private an exclusive use of the client but it is available online now.

As Nick Wadhams observes advertisement Kroll refused to comment on the authenticity of the report.

The suspicion has always been there but to put a number of that magnitude to it is quite a revelation," said David Ndii, a research adviser with the Kenya branch of Transparency International quoted by Nick Wadhams . "The regime saw a lot of corruption, there are people locally who enriched themselves unjustly, that we know. But concrete information of that nature has never been in the public domain."

What is said in the report about Luxembourg is worth reading.

The Study by the Cercle de Cooperation may be inaccurate in the figures (but how to be accurate when transparency is not a hallmark in the jurisdiction: banking secrecy, poor communication on sanctions...), but it is not the unhealthy combination of gratuitous assertions, hearsay, half-truths and concocted lies that was presented with threats on the financing of NGOs in Luxembourg and censorship.

To comment the turn over of names of suspected U.S. tax dodgers who have held 4,450 secret accounts at banking giant UBS,  "It's like a dog that's tasted the blood of its first victim (...)It's clear that the concept of a perpetually safe tax haven is a fantasy that no longer exists" said Ron Geffner quoted by Washington Post. He is a former enforcement attorney at the Securities and Exchange Commission who now heads the financial services group at Sadis and Goldberg.

Let's read what said the Department of Justice to comment the agreement:

The Swiss Government has agreed to review and process additional requests for information from other banks regarding their account holders to the extent that such a request is based on a pattern of facts and circumstances equivalent to those of the UBS case.

Associated Press has reported that Swiss banking giant UBS AG agreed today to turn over to the IRS the details of 4,450 accounts suspected of holding undeclared assets by American customers, ending an intense trans-Atlantic legal fight. UBS had feared that it might be forced to hand over as many as 52,000 clients.

In return, US authorities are to abandon their lawsuit against UBS in the US.

Despite the agreement is for only 8.5% of the target, it is a turmoil for banking secrecy.

The deal will give the Internal Revenue Service thousands of long-sought account names, and is expected to provide even more UBS clients who voluntarily disclose their financial details. UBS's American customers have until September 23 to confess to the IRS about offshore bank accounts

"This issue is not going away, and people hiding assets and income offshore will find themselves increasingly at risk due to our efforts in this area," IRS Commissioner Doug Shulman said.