Comment by Pam Bartlett Quintanilla, Campaigner at Access Info Europe
Madrid, 12 November 2014 – Top on the agenda of the European Parliament today is the #luxleaks scandal, uncovered by the International Consortium of Investigative Journalists through the leaking of hundreds of secret tax agreements signed between Luxembourg and large multinational companies, when Jean-Claude Juncker, the new President of the European Commission, was Finance Minister and then Prime Minister of Luxembourg.
Luxembourg is well-known for its culture of banking secrecy and for its past refusals to cooperate fully with tax transparency initiatives launched by the EU and other inter-governmental fora such as the G8, G20 or OECD.
Luxembourg is also one of only two EU countries that has not adopted an access to information law; an insipid draft law has lingered in Parliamentary committees for 14 years. The other EU country without a transparency law is Cyprus, a country regularly accused of being a haven for money laundering.
Luxembourg is currently under investigation by the EU to determine whether or not its tax agreements with Amazon and Fiat violate state-aid rules. The Duchy had stated that it would only provide the EU institutions with information about specific agreements as requested, but not on the full set. Now that thousands of these documents are out in the open, it may lead to new investigations being launched involving companies such as Ikea, Deutsche Bank and British American Tobacco.
There is a serious question as to whether or not it is appropriate for Juncker’s European Commission to lead the investigations into Luxembourg’s tax practices, given that Juncker himself was for many years the ultimate overseer of these policies. Juncker has stated that Competition Commissioner Margrethe Vestager would be responsible for any investigations and that he will not discuss the case with her to avoid accusations of conflict of interest.
The Luxembourg authorities have declared that these agreements are legal, but they are still highly controversial. For many Europeans, struggling as they are with the economic crisis, the Duchy’s secret deals permitting hundreds of multinational corporations to re-route profits through shell companies in order to pay less tax, are also unacceptable.
Anonymous or “shell” companies with opaque ownership structures permit immoral and illegal business conduct to occur without public, or even government, scrutiny. Transparency around the real or “beneficial” owners of companies is therefore essential and Access Info Europe has been campaigning with the UNCAC Coalition for the creation of public registers of beneficial owners to tackle this problem.
Access Info also leads the campaign for media ownership transparency in Europe, and we work with the Organised Crime and Corruption Reporting Project to make government-held company registers freely available to journalists and the public.
The leaked tax agreements have strengthened calls for greater fiscal transparency and accountability in the European region, where the public purse has bailed out failing banks whilst companies have exploited legal loopholes to minimise tax payments. The scandal provides further impetus to civil society campaigns for corporate transparency and economic justice, issues that will be high on the agenda of the G20 summit in Brisbane this week when it discusses growth, financial reform, tax and anti-corruption. In June 2013 the G8 made commitments to increase beneficial ownership transparency but these have not yet been acted on.
In the meantime Juncker, who has been avoiding the press since the ICIJ story broke, this morning stated that he is in favour of a common corporate tax base in the 28 EU Member States. Juncker also promised to push for greater automatic exchange of information between countries in a bid to counter tax evasion.
Access Info Europe has once again called on the Luxembourg authorities to make a genuine commitment to transparency by adopting a full access to information law in line with international standards and by signing the Council of Europe Convention on Access to Official Documents. Access Info Europe has also called on the European Commission to take the lead in ensuring sufficient fiscal and corporate transparency to prevent such scandals in the future.
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Pam Bartlett Quintanilla | Access Info Europe
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