Luxembourg is feeding new issues to the Centre for Investigative Journalism CIJ

My Orchids. Phalaneopsis "Investigation".
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Luxembourg is feeding new issues to the Centre for Investigative Journalism CIJ

Luxleaks got a grotesque after play. Luxembourg prosecutors brought charges against a French journalist, Edouard Perrin, who used documents from Price Waterhouse that were obviously obtained without the knowledge of the company. PwC has brought charges against a former employee for stealing confidential documents. Edourd Perrin is now suspected to be an “accomplice” in the infractions committed against PwC.

While Luxembourg has otherwise an ongoing effort underway to refurbish its name through a vast “Nation branding” effort, it doesn’t miss an opportunity to poison that effort.

After years of struggles to defend a bank secrecy that obviously could not be defended, it finally got out of the “Schmuddelecke” to cite the former President of the bankers association. This was the infamous machine for tax evasion. It is off the table, and the discussion is over.

The problem at hand is tax avoidance. This is another animal than tax evasion, as there is a semblance of legality to it. The only problem attached is political: how to justify a scheme that certainly hurts others in the world community. Luxembourg has agreed to discuss. So the problem was going away. Actually, who still talked about Luxleaks?

As the dust cleared, it became visible that many others practiced what they criticized in Luxembourg, maybe in a more restrained fashion. Belgium, the Netherlands, Ireland and many others covered their sudden nakedness. Even toxic French tax regulators have practices such as Crédit d’ Impôt. And New York State has some. And the list goes on.

Basically, though no documents were circulating, the Luxembourg rulings were for years well known as a principle: you go to see Marius Kohl, the ruler, and your world will be OK.

The discussions to have is why are people fleeing the tax hells, and what is good behavior in international tax competition? There will eventually be rules, agreed upon by countries with physical borders, to be applied to international corporations that are virtual countries without borders, advised by the Big Four without borders. Who is poised to win this game?

Meanwhile it is incomprehensible why the Luxembourg prosecutors re-ignite the cold ashes from Luxleaks with the Perrin case. And get exposed for its not so liberal interpretation of freedom of Press. It is probably because the Luxembourg government lost control over its judiciary. In this case, it is bad timing for the Nation branding. However, Montesquieu’s separation of powers must finally have arrived in Luxembourg.