Ethics and governance in the European Financial centers

Persian Letters (Lettres persanes) is a satirical work, by Charles de Secondat, baron de Montesquieu, recounting the experiences of two Persian noblemen, Usbek and Rica, who are traveling through France. In Paris, the Persians express themselves on a wide variety of subjects, from governmental institutions to salon caricatures.

 

As this is summer time, I would like to offer some goodies on this blog with a couple of Venezuelan letters. These will be an exchange of e-mail between two Venezuelans, the first one, Manuel, residing in Venezuela and the second one, Jose, travelling in Europe.

 

 

 

Read First Letter

Read second letter

Read third letter

 

 

 

From: Manuel

To: Jose

Sent: Sunday, August 16, 2009 3:25 PM

Subject: European UCITS Directive

 

Dear Jose,

 

I have vaguely heard about this issue of the UCITS directive. But you know our media are not covering the topic.

 

Can you tell me what the problem is?

 

Cheers.

 

Jose

 

 

From: Jose

To: Manuel

Sent: Sunday, August 16, 2009 11:25 PM

Subject: RE: European UCITS Directive

 

Dear Manuel

 

The problem is that France, which is a competitor for the investment funds industry, is jealous of Luxembourg’s success in the development of investment funds.

 

Madoff is firstly an American affair where the control system by the public authorities undoubtedly failed. (http://www.agefi.lu/mensuel/Article.asp?NumArticle=11177) .

 

As part of the  Financial power, the Luxembourg Investment Fund Industry has regularly had a very close and direct say on the evolution of the Luxembourg prudential regulatory environment governing the collective Investment Industry as well as on the introduction of new legislation in this specific field of financial products. Those efforts were always undertaken with the sole aim to enhance the attractiveness of Luxembourg in an industry sector which, based on the tremendous success experienced over the past decade, has become of essential importance to the Luxembourg economy as a whole.

 

This influence has been exerted directly and indirectly by the lobbying initiatives taken on the level of the different professional associations, be it ALFI or ABBL, but also and more importantly, trough a direct association with the Luxembourg Supervisory Authorities by means of a number of standing committees. It is in those Committees which have proven instrumental in providing pragmatic and timely solutions to the evolution of the industry.

 

Critics that are ill-informed would see potential conflicts of interest which may result failures control system by the public authorities . But it is normal that the business community decides of the legislation and regulation to be enforced, including sanctions that are applicable to those from the business community who do not restect the rules.

 

Anyway, as the Chairman of the ABBL said in the Wort (the newspaper that is close to Juncker’s party) to reply to an ill-informed Frenchman, nothing makes it possible to affirm in law that Luxembourg would have to be inspired by legislation in other European country.

 

It was definitely up to the Luxembourg business community and its clever professionals to decide of the depositary duties and of the regulatory duties. As far as auditors are concerned, in the framework of the transposition of the 8^th Directive, auditors will be controlled by the CSSF which is a very good thing for the coherence of the system: the financial institutions controls the regulator through its influence and the regulator is gonna control auditors. This way the auditees from the financial institutions will practically control the auditors, which is normal as auditees pay for the audit service.

 

Cheers

 

Jose

 

 

 

Persian Letters (Lettres persanes) is a satirical work, by Charles de Secondat, baron de Montesquieu, recounting the experiences of two Persian noblemen, Usbek and Rica, who are traveling through France. In Paris, the Persians express themselves on a wide variety of subjects, from governmental institutions to salon caricatures.

 

As this is summer time, I would like to offer some goodies on this blog with a couple of Venezuelan letters. These will be an exchange of e-mail between two Venezuelans, the first one, Manuel, residing in Venezuela and the second one, Jose, travelling in Europe.

 

 

Read First Letter

Read second letter

 

 

 

From: Manuel

To: Jose

Sent: Saturday, August 15, 2009 8:18 PM

Subject: Leadership

 

Dear Jose,

 

Thanks for all these explanations.

 

I understand now the reason why Hugo Chavez expelled foreigners critical of Venezuela. “No foreigner, whoever he may be, can come here and attack us. Whoever comes, we must remove him from the country. I'm talking about some gentlemen who come here for conferences.”, he said.

 

In Luxembourg, the will is the same.

 

The experience of Luxembourg demonstrates that Venezuela is a democracy and Chavez a great politician.

 

However it is not by chance that he has been awarded so many honorary degrees: Honorary Doctorate in Political Science (Kyung Hee University), Honorary Doctorate in Jurisprudence (Autonomous University of Santo Domingo), Honorary Doctoral Professorship (University of Brazil), Honorary Doctorate in Economics (Beijing University)…

 

Cheers.

 

Jose

 

 

From: Jose

To: Manuel

Sent: Sunday, August 16, 2009 7:45 AM

Subject: RE: Leadership

 

Dear Manuel

 

These degrees remind me of Prime Minister Juncker: he has the honorary title of doctor honoris causa by the philosophy department of the Westfalian Wilhelms-University in Münster. He is doctor honoris causa in law by the Democrite University of Thrace, doctor honoris causa by the University of Pittsburgh (Pennsylvanie), doctor honoris causa by the University of Strasbourg…

 

I don’t think that President Sarkozy has got so many prestigious university titles that demonstrate political experience and leadership.

 

That is the reason why when Prime Minister Juncker states that Luxembourg is not a tax haven, he is more credible than the French President who does not have such international university recognition.

 

That is the reason why when Prime Minister Juncker states that Luxembourg transposed faithfully the UCITS directive, he is more credible than the Ministry of Economy in France and than Commissioner McCreevy that both do not have such international university recognition.

 

Cheers

 

Jose

 

 

 

 

 

Persian Letters (Lettres persanes) is a satirical work, by Charles de Secondat, baron de Montesquieu, recounting the experiences of two Persian noblemen, Usbek and Rica, who are traveling through France. In Paris, the Persians express themselves on a wide variety of subjects, from governmental institutions to salon caricatures.

 

As this is summer time, I would like to offer some goodies on this blog with a couple of Venezuelan letters. These will be an exchange of e-mail between two Venezuelans, the first one, Manuel, residing in Venezuela and the second one, Jose, travelling in Europe.

Read First Letter

 

 

 

From: Manuel

To: Jose

Sent: Monday, August 10, 2009 4:12 PM

Subject: Democracy

Dear Jose,

Thanks for your e-mail.

 

I did not think that a state under the rule of law worked like that and I am happy to live in a state under the rule of law.

 

I have investigated on the internet about Luxembourg to know more about how a democracy works with the example of Luxembourg.

 

Jean Claude Juncker and Hugo Chavez were born in 1954 and use the same flamboyant public speaking style, which is notable for its abundance of colloquialisms.

 

Prime Minister Juncker has been leading the government since 1995 whereas Hugo Chavez has been leading the government since 1999.

 

But Junker’s party has been leading the government for longer time.

 

Cheers.

 

Jose

 

 

From: Jose

To: Manuel

Sent: Friday, August 14, 2009 11:02 PM

Subject: RE: Democracy

 

Dear Manuel

 

Before I came in this great country I did not realize that the lack of political alternation is not of concern in a democracy.

 

In this very democracy, there are only a few electors compared to the number of residents from other states (44% of foreign residents according to Statec).

 

In this very democracy the main power is the Financial Power. The executive, the legislature, and the judiciary are under the influence of the Financial Power: the Executive proposes draft laws for which the Financial Power influences the wording (sometimes the Financial Power requests legislation), the Legislature votes the laws and the Judiciary applies the laws because the jurisdiction is a state under the rule of law.

 

The press does not have to act as a watchdog. People don’t talk about issues, so issues do not exist, which is the reason why there are so little criminal issues before the courts and everyone is happy except when there are ill-informed accusations, such as those relating to the country being a tax haven that favours tax evasion; accusations that are still all too frequently levelled against Luxembourg

 

Fortunately as I said in my previous e-mail, the Financial Power is strong enough to hush up the issues and make dissidends kneel down to preserve quietude.

 

Moreover they have adaped to their needs a famous procedure that was en vogue in the democracy of democracies: the Athenian democracy. A citizen could be expelled from the city-state. While some instances clearly expressed popular anger at the victim, ostracism was often used pre-emptively. It was used as a way of defusing major confrontations between rival politicians (by removing one of them from the scene), neutralizing someone thought to be a threat to the state. In the jurisdiction all those that are critics are blacklisted and have to leave the job market.

 

It is really a modern democracy, as Roger Cayzelle Chairman of the Economic and Social Council of Lorraine in France) wrote in a recent book.

 

I am looking forward to hearing from you soon.

 

Cheers

 

Jose