Tag Archives: luxleaks

Translation: Fear and Loathing about the Luxleaks process

Angsch a schrécken zu Lëtzebuerg” (Fear and Loathing in Luxembourg )is a Luxembourgian blog that publishes critical texts about current affairs in Luxembourg.  The downside is that usually most articles are in Luxembourgish  This makes it hard to share with the majority of my readers.  I thought that “Angscht a Schrecke mam Luxleaks-Prozess” would be a worthy read for more than just Luxembourgers.

Since the original article “Angscht a Schrecke mam Luxleaks-Prozess” licensed under Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License, I realized I could translate it.  I tried to keep as close to the original article as possible, which probably causes quite some Germanisms.  I don’t claim it’s a perfect translation and some things really can only be understood by knowing local culture, but still the gist should be just fine.

Obviously, my own translation, is also licensed under CC BY-NC-SA 4.0.

Edit 2016-05-01@13h31CEST: Added the bold text “funny” about the fictional product “RulingCloud”.

 

Fear and Loathing about the Luxleaks process

30 April 2016 by Joël

A good friend of mine, told me once that people shouldn’t be using the expression “Kafkaesque” so often. In this style: “I was at the supermarket and there were no Kinder Maxi King, totally Kafkaesque!”. I think my good friend is right, but there are still situations where the expression is mandated. The Luxleaks process is one of these situations. The two whistle-blowers, Antione Deltour and Raphaël Halet and the journalist Édouard Perrin are on trial, as your probably already know.

The things happening in that court, are really to be ashamed of. Of course, you can say that this is a case for justice, because private or secret documents have been stolen and then been published. However, it is hard to say that these documents don’t have a public interest. Well, for the rest of the world. Luxembourg itself doesn’t really have an interest in having the tax-rulings to be exposed to a broad public. That’s probably the reason why, in the year and a half between the accusation and the process, there hasn’t been a change in laws to protect whistle-blowers like Antoine Deltour and Raphaël Halet.

If you think that it’s only the defence who politicizes the process, you’d be wrong. At first glance it seems to be only about the misappropriation of documents, but: Deltour is being accused of having political motives. It seems as if the Luxembourgian police and the internal investigators from PCW agree, that Antoine Deltours actions are motivated by an anti-capitalistic conviction. The evidence for this are not a library filled with Marx, Engels and Lenin, but two newsletter subscriptions. One from Mediapart and another one from the Green Party. We all know that the last time the Green Party has been anti-capitalistic, nobody even knew where Chernobyl was.

This means we approach one of my currently favourite subjects: freedom of expression. It seems as if in Luxembourg is is now somehow criminal, to have an anti-capitalistic stance. So please think twice: When was is the last time that you had the idea that a system that makes the rich, richer and the poor, poorer may perhaps not be the best one.

So, only perhaps? Totally theoretically?

Yes?

Don’t say that too loud.

Think back three years ago. At that moment in time, we had a scandal regarding the secret service. That’s the reason we have a government that’s different than usual, isn’t it? Those with excellent memory, will remember that a whole bunch of organizations in the opposition were under surveillance. Since the scandal haven’t been resolved – why not, after all the government is in the government – we have no idea whether such organisations aren’t still under surveillance.

But back to the Luxleaks process: A few exciting facts have surfaced. Obviously not from official sources. Luxembourg has a very strong secrecy regarding state affairs, which allowed Guy Heintz, the director of the tax bureau, to say nothing. Because, guess what: we don’t only make deals with multinationals, who then only pay 0,5% tax, but those deals are also secret.

Raphaël Halet, the second whistle-blower, who worked at PWC in a department that prepared documents, could give us insight in how things work in Luxembourg. Every month, on a Wednesday, there was a fixed appointment between PWC and the tax bureau number six, where tax rulings would be signed. PWC printed the documents on the official stationary from the tax bureau, in order to process them more quickly. “More quickly” means in this context: About three minute per document.

From time to time a USB-Stick got lost, or a state servant forgot the password of such a stick, which caused PWC and the tax bureau to set up a Cloud in order to exchange documents. Something like a tax ruling Dropbox.

If you don’t think this is bad enough: PWC isn’t the only member of the “big four”. Next to PWC, there is Deloitte, Ernst & Young and KPMG. Every month has four Wednesdays, you can fill in the rest for yourselves.

It is sickening.

Let’s also consider: the politicians -both the opposition party CSV, and the three current ruling parties some of which were one day against such rulings- insist that nothing illegal was being done. The supposed anti-capitalism of Antoine Deltour is just a motive for our justice. The Grand Duchy is basically a failed state, where the economy has hijacked the power. A bit like in those dystopian Cyperpunk Movies, just without Punk and much less Cyber.

It totally sickening. You couldn’t even eat that much if there would be “all you can eat” roasted piglet.

There is a silver lining, though: We don’t have to worry about our “Nationbranding” any more. After the Luxleaks process, the whole world will know that Luxembourg is a deceitful piece of crap.

This episode of Fear and Loathing in Luxembourg is presented to you by RulingCloud!  RulingCloud is a start-up from “Silicon Luxembourg”.  You are a fiduciary and write tax documents that the Luxembourgian tax bureau needs to sign?  You want to enact laws that make Luxembourg an even more attractive tax haven?  RulingCloud offers you all functionality that you need for this.  Of course, using state of the art security measures with built-in leak-protection!  RulingCloud is a product made in Luxembourg.
Luxembourg: open, dynamic, trustworthy.

What I think of Luxleaks

A picture of some Euro banknotes and various Euro coins.

A picture of some Euro banknotes and various Euro coins. by Avij
Creative commons license, found on Wikipedia

TL;DR: We had it coming.

Long version: Originally I wasn’t going to say much about it, but I keep getting tagged on social media regarding this. I can understand: How many Luxembourgers do you actually know except me? Unless you live here, probably not all that many. Believe me, if something happens in the Luxleaks affair, I’ll know: Our local press won’t shut up about it. So, this post presents my opinions and thoughts about the whole thing.

General observations:

  1. Nothing of this actually surprised any citizen of my country. Well, “nothing” isn’t entirely true, but I’ll get back to that. It is fact that Luxembourg has been providing means to multinationals and big and small corporations alike to alleviate their tax levels. That this was done using “mailbox companies” was also known.
  2. Officially, “mail box companies” are sternly frowned upon. The idea was that, attracting companies to Luxembourg, would create employment. Yes, a local a secretary and local manager is two jobs more than the zero jobs that mailbox company would provide. Apparently, this was only an official stance, and did not match the reality.
  3. The existence of the so called “tax rulings” was known, even though I doubt by the general public. I most certainly never heard of it in that form, but the accountants I talked to, said they knew. Anecdote, of course.

Taxes for citizens and small businesses:

  1. Let me make this clear: we citizens of Luxembourg do pay income taxes and a plethora of other taxes. Yes, is true that we have a rather low income tax compared to other countries. As someone who is rather well-off, I (actually we: income of spouses are cumulated) end up in the second-highest tax level. There is very little I can do about that, except a few minor incentives to save for retirement or a home. The latter being totally ridiculous, as the amounts required to buy any property are so high that those saving incentives are pretty much a drop on a hot plaque.
  2. Small businesses have a bit more leeway as businesses do have more options to do tax write-offs. Nevertheless, the small business like the one of my father in law, have to pay the official taxes. There is no special ruling for them. The bakery at the corner, the plumber, the florist, they all pay the 29% corporate tax.

With this out of the way, let me state this: I was convinced that having multinationals here in Luxembourg was a good thing. I naively assumed they would indeed create employment, and while Luxembourg isn’t cheap, the lesser tax rate -I repeat: 29%-, would be enough incentive to bring business here. I thought: this is good for the country, corporations help fund the rather nice living standard we have.

However, that is not what is happening. What is happening, is that multinationals don’t pay fair taxes. As a matter of fact, some multinational companies pay less tax than me and my spouse. Other multinationals pay taxes with which you can barely buy a mid-class family car.  That is what surprised me.  That is not good for my country. We stand here as the crooks that allowed a crime, with barely any rewards. Barely any employment creation, no significant taxes paid to our countries coffers and a huge scratch in our international image. With the best of will, I cannot see how any government official would call this “positive” for our country.

In all honesty, I can not fathom why nobody is on the streets and asking for the heads of the officials that let this go through.  I can’t understand why mobs aren’t storming the headquarters of big consulting companies and lynching the suits responsible for this.
Well, yes, I can: I wouldn’t do much in the first place.

As for Antoine Deltour, the person who is accused of leaking the documents.  I personally think we can thank him.  Thank him for making public with what abject methods consulting companies work, thank him for showing the lack of transparency the Luxembourgian tax system has and thank him for trying to make this world a bit more fair.
He’ll probably be the scapegoat for the whole thing.  He’ll pay a much larger price than the thinks, literally becoming unemployable.

We all are the losers in this game, except the big multinationals, consulting companies and their respective shareholders.

Of course, it’s all legal and our elected government allowed it. We dealt with the devil and lost. We had it coming.