My Orchids. Phalaneopsis. Not yet Branded. Photo ET
Is Luxembourg a
Judicial Haven?
Memorandum
to the Minister of Justice
Everyone
knows that the Luxembourg Justice is unacceptably slow to the point of not
really delivering justice. "Justice delayed is justice denied," says
the proverb. It has been criticized also for its softness in general, and its
ways and its gentleness towards Finance. The aggrieved investor (especially from
abroad) learns it the hard way: you cannot win against the Bank in Luxembourg!
And criminal penalties are so moderate that financial crime may be worth the
try, and is a good investment. But the Luxembourg public tends to look away, as
the general thinking is, that the justice system will never be one of their concerns.
Court cases only happen to someone else. Yet this serious failing of the
Luxembourg judicial system affects all of us, by the perverse effects it will
simply have on the standard of living of all Luxembourgers.
When the
financial center does well, everybody does well
Today
Luxembourg is a gift of Finance, as Egypt is a gift of the Nile, to paraphrase
a wise old man. The financial sector is critical to the living standards of
Luxembourg. It represents about 38% of GDP, 25% of state revenue (our
commission if I may), and occupies 63,000 people directly and indirectly. It
owes its growth since the '70s largely to its reputation to accommodate tax
evasion. Fortunately financial services have diversified beyond aid to
organized tax evasion, which is nearing its end due to policy changes. Already
the center barely pays for our standard of living. New financial services are
not sufficient yet to compensate for the shortfall from the loss and extinction
of the tax haven scheduled for 1 January 2015. But Luxembourg's international
acceptability is back, thanks to the implementation of the automatic exchange
of tax information, imposed on us from abroad. This new found respectability
comes with an important price, the loss of the golden tax niche, hence income
for the State. Most revealing of those shortcomings is the sudden increase of the
public debt of € 12.5 billion.
Looking
at this from the angle of the loss of tax revenue, it will be a serious mistake
not to address the threat represented by the judicial (and regulatory) haven, the
twin brother of the tax haven. This brother however is a self-inflicted wound,
causing much damage without providing a single benefit to Luxembourg. It will
chase away the honest customer and it already attracts the fraudster. Soon it
will also be in the cross fire of the international community. Many initiatives
bearing down on judicial or regulatory excesses and shortcomings
internationally are originating from the U.S. Congress, and for sure it has all ready to
go texts about "judicial havens" in its drawers. The impunity of criminal activity,
the arrogance and immunity of financial institutions by word of mouth will
scare the investors and embolden criminals. The way zero taxation once attracted
investors worldwide, the negative connotation of the judicial haven makes them
flee, ruins a reputation, and thereby inevitably revenues. But scammers take
note of this new country of opportunity.
Madoff,
Landsbanki, BCCI and 1,500 others
At
the automn 2011 reception for the return of the judicial corps, after yet
another endless 2 months summer vacation, the Attorney General Robert Biever
confirmed what all criminals and their victims know: Luxembourg is a judicial haven,
because Justice does not have the resources to accomplish its mission. (Nor the
time left between 2 vacations). According to the Attorney General, particularly
when it comes to financial crimes and money laundering, 1,500 cases have been classified and shelved due to the lack of resources from 1990-2011! Worse, the
Luxembourg government is regularly sentenced as a recidivist by the European
Court of Human Rights for failing to provide justice within a reasonable time.
What
conclusions can you draw from these facts, you, the thousands of victims of the
Luxembourg fortress and its fraudsters such as Madoff, Landsbanki, BCCI also called "Bank of Crooks and Criminals"? Well, you're not out
of the woods yet. For the first victims, whose story only started 5-6 years ago,
be prepared to wait a few more years. Yes, years. I have a case that has lasted
10 years already and no end is in sight. Maybe 13 years is a realistic
expectation? You now know that your rights are violated by a recidivist
government. At the end maybe you will also learn that the Bank or Madoff's underlings and purveyors, will get reduced sentences due to the slowness of the
Luxembourg courts, or worse, the cases might just get shelved for lack of
resources. In any case, I do not wish you the BCCI treatment. Because that case
has been going on for over 20 years. It affects 250,000 former customers in
over 70 countries. Those, if they still live, no longer will invest a single
penny in Luxembourg.
Luckily
for you the victims, you are organized, such as the group of victims of
Landsbanki, victims of BCCI, or at the Luxembourg watchdog Protinvest. You have
allies such as Judge van Ruymbeke in France or celebrities like Enrico Macias,
the famous French singer who lost a fortune in a shaky investment structure. For
the time being you have know that in Luxembourg justice is delayed, thus
denied, or worse, your case might be shelved for lack of resources and
political will. For a financial center, that is a disastrous reputation.
The
new government is working on a project of "nation branding". Priority
should be to produce a pretty picture of its financial center. The over-used
"best kept secret" slogan for Luxembourg no longer can mask the
shortcomings and is even counter-intuitive in a world that claims transparency.
Nation branding, not a cover-up of ugly circumstances, but rooted in deep
reality requires deep reforms in the legal and regulatory system.
Based
on a long career in public service, I would like to see the branding around the
concepts of stability, reliability, honesty, transparency and outstanding
organization and infrastructure. If we add truthfulness, then we cannot only
say those things, but do those things. A Luxembourg member of Parliament,
Justin Turpel, just to made a start in addressing this one cancer in Luxembourg
politics, the proliferation of directorships among officials and civil servants
on the Boards of private companies. I know, for our Anglo-Saxon friends, this
is outright corruption. And it is, a system where those officials appear to be
the guardians, not of public interest, but the guarantors of general immunity during
conflicts of interest, in a system where supervised supervise the supervisors.
As
for you, my dear Minister, you're in a lot of luck! You have the unique
opportunity to clean the stables, and you get a reputation of a demigod in
doing so. And at the same time you save the main industry of the country, the
financial center from mafia threats and decline, and you save Luxembourg from
the disastrous disappearance of the main source of their living standards: the
financial center.
Meanwhile,
back to the question in the headline. The answer is a Yes!
