Ethics and governance in the European Financial centers

TJN-USA Chairman testified before Senate

noreply@blogspirit.com (jturquey) — Fri, 06 Nov 2009 05:59:07 +0100

Jack Blum, Chairman of TJN-USA and GFI advisor, has been called before the Senate Homeland Security Committee to testify on the Incorporation Transparency Act.

Mr. Blum, the former Head of the United Nations Experts Group on Asset Recovery and a former investigator for the Senate Committee on Foreign Relations Subcommittee on Narcotics, Terrorism, and International Operations, stressed both the economic and national security benefits of shutting down US shell corporations.

Read the testimony

Luxembourg : facts

noreply@blogspirit.com (jturquey) — Thu, 05 Nov 2009 06:14:20 +0100

Greg Gordon, McClatchy Newspapers, has observed that "Underscoring the role of tax havens as a Wall Street marketing tool, a Treasury Department report found that as of June 30, 2008, $164 billion in U.S. mortgage-backed securities were held in the Cayman Islands and $22 billion more were held in Luxembourg, another tax-friendly zone".

Know more

OCTA 2009

noreply@blogspirit.com (jturquey) — Thu, 05 Nov 2009 05:54:00 +0100

The fourth European Union Organised Crime Threat Assessment (2009 OCTA) was just published. "The OCTA is a core product of the intelligence-led law enforcement concept and its drafting is one of Europol’s top priorities", Rob Wainwright, Director of Europol, said.

It is a general overview of crimes. I wish they assessed a country risk.

Draft of new legislation against .S. corporations with hidden owners

noreply@blogspirit.com (jturquey) — Thu, 05 Nov 2009 05:43:07 +0100

Senator Carl Levin, D-Mich., have introduced new legislation to stop the formation of U.S. corporations with hidden owners. It is subject of a Hearing before the Senate Committee on Homeland Security & Governmental Affairs.

Read draft

Reactions about TJN Index : UK v. Luxembourg

noreply@blogspirit.com (jturquey) — Thu, 05 Nov 2009 05:37:00 +0100

If bankers and politicians (that are their servants) in Luxembourg denies TJN's findings, in the UK, David Taylor, Member of Parliament for North-West Leicestershire, asked:

"The Tax Justice Network has done the world a great service in producing its global index of secrecy, which reveals the most secretive financial centres—the City of London being the fifth worst. Why cannot we take an international lead in tackling tax avoidance by first ending the clandestine and corrupting culture that permeates the City of London?"

Tax call: Jersey will not act in isolation

noreply@blogspirit.com (jturquey) — Thu, 05 Nov 2009 05:30:56 +0100

Jersey Evening Post has reported that both Jersey and Guernsey have opposed the move, saying that to sign up to the EUSD before their competitors could damage the finance industry.

Jersey’s current position is that it will do so when everyone else does – when there is a ‘level playing field’ – but the report states that Jersey should get on with it, and calls on the UK to put pressure on other countries to sign up too.

A "level playing field" ? This is the concept that seems to have been launched by Luxembourg, you know the jurisdiction where economic and financial crime does not exist according to officials and bankers but was ranked number 2 on the Financial Secrecy Index. "The smooth functioning of the internal market should not be forgotten and we must ensure there is a level playing field for the principal financial centres.” , Luc Frieden said late October.

Swiss Bankers Association and TJN index

noreply@blogspirit.com (jturquey) — Wed, 04 Nov 2009 08:01:00 +0100

The Swiss Bankers Association, which is the leading professional organisation of the Swiss financial centre, did not communicate (yet ?) on the Tax Justice Network index that was released a couple of days ago.

Because of a bad behaviour of Swiss banks in the USA every banker in Switzerland is in the spotlight with suspicion.

But as I wrote last year, there are visible differences between both European jurisdictions that may explain the delta of their respective score:

Switzerland has a Financial Secrecy Index Value of 513.40.
Grand Duchy of Luxembourg has a Financial Secrecy Index Value of 1127.02.

Communication of big four firms on fraud, corruption and other criminal business behaviours

PwC et E&Y in Switzerland participated to « Global Economic Crime Survey » for PwC and « Corruption or compliance – weighing the costs » for E&Y.
They are free to talk about criminal business behaviours.

PwC et E&Y in Luxembourg did not participate to « Global Economic Crime Survey » for PwC and « Corruption or compliance – weighing the costs » for E&Y.

PwC Luxembourg, the audit leader, focuses on the growth in a way that does not comply with IFAC.

Communication of the regulatory body

FINMA largely and regularly communicates on its investigations, its sanctions and cases law especially in the Bulletins.

The CSSF communicates only once a year in its annual report with no details. The small number of sanctions is telling. The CRF, the Luxembourg FIU, does a pretty good job and does not hide issues. The CSSF and the CRF do not describe the same situations.

Communication of judiciary judgements in general

They are available on www.bger.ch in Switwerland.

They are not available in Luxembourg. What exists currently officially is a selection of jurisprudence considered as interesting (Cf. parliamentary question Nº2550 dated 21 May 2008 and Minister of Justice’s answer dated 2 July 2008).

Number of declarations of suspicion while the center is growing

It increased in 2007 in Switzerland (Cf. MROS report dated 2008).

It decreased in 2007 Luxembourg (Cf. Minister of Justice report 2007 pp. 136 to 140)
“Although Luxembourg has steadily enacted anti-money laundering and terrorist finance laws, policies, and procedures, the lack of prosecutions and convictions is telling, particularly for a country that boasts such a large financial sector”. (International Narcotics Control Strategy Report, US Departement of State, March 2007)
“The scarce number of financial crime cases is of concern, particularly for a country that has such a large financial sector.” (International Narcotics Control Strategy Report, US Departement of State, March 2008).

Freedom of media and NGOs as watchdog

Media and NGOs play the role of watchdog in Switzerland.

Because of a public financing the press does not act as a watchdog in Luxembourg all the more than because of conflicts of interest due to the small size there is a pressure. There is no culture of investigation.
This was stated by the GRECO in a report early 2001: “the press, which has strong political affiliations, does not seem to exercise its role of public watchdog with the same vigour as in other countries. ” (GRECO Report dated 15 June 2001).
This was stated as well by the OECD in a report in 2004 : “The “watchdog” role of the media is also very limited in Luxembourg, although in some cases they have played a part, when detailed information fell in to their hands, in bringing to light suspicious behaviour. (…) According to media representatives interviewed, the shortage of financial and human resources available to the Luxembourg media generally preclude investigative journalism and consequently prevent the revelation of bribery cases” (OECD Report dated 28 May 2004).

The censorship like what happened with Rainer Falk's study about Luxembourg would not be possible in Switzerland.

Liability of legal persons

GRECO took a particularly positive view of the seizure and confiscation system and of criminal liability on the part of legal persons (See GRECO Evaluation report dated 4 April 2008).

Luxembourg urgently needs to establish liability against legal persons for foreign bribery and put in place sanctions that are effective, proportionate and dissuasive, according to a report by the OECD's Working Group on Bribery (SEE OECD report dated 20 March 2008)
Nothing is enforced as their is no will.

Transparency International

There is a TI Chapter in Switzerland
1 % of respondents in Switzerland reported they paid a bribe to obtain a service (Cf. TI Global Corruption Barometer 2007)

There is no TI Chapter in Luxembourg