On trial for plums: what is judged whistleblowers of tax schemes Luxembourg

On Tuesday, April 26, a former accountant with PricewaterhouseCoopers (PwC) Antoine Deltur appeared before the court of Luxembourg on charges associated with the exposure received in the media called LuxLeaks. In 2012 he handed over to the journalists about 28 million pages of documents relating to 340 companies worldwide that received from the Luxembourg authorities various tax incentives. Among the companies that was mentioned in connection with these documents, were Apple, IKEA, Gazprom, Deutsche Bank, “the alpha-Groups” and several others. Deltur, and his colleague at PwC Rafael Ale, are accused of theft of information and violation of professional secrecy. On the dock were also French journalist Edouard Perrin who first published the documentation PwC.

Deltoro threatens from 5 till 10 years of prison and a fine of $1.4 million.

Considered debt

Deltur, in 2010 became the owners of the documents, which related to the schemes of large companies regarding the withdrawal of assets in Luxembourg — thus the Corporation has reduced the tax burden. As the said former Junior accountant in a Financial Times interview, he decided to submit the documents at the disposal of the French journalists. According to Deltora, he “considered it my duty to keep this information was made available to the public.”

After leaving the company in 2010, Deltur handed the documents to the journalist of TV channel France 2 Edward Perrin from the program Cash Investigation. Thus, according to Deltora, transferring materials, it was made a condition not to publicize participation in the PwC scheme, as well as those companies that withdraw funds in Luxembourg. It was possible to tell only about the scheme of tax evasion.

In may 2012 Perrin in the program reported the scheme to withdraw money to Monaco, mention and PwC. Almost immediately thereafter, the company filed a claim for the theft of documents.

Having at its disposal the materials, Perrin invited to cooperate with the international consortium of investigative journalists (International Consortium of Investigative Journalists, ICIJ), which published its own investigation on the matter in October 2014.

Name the third person involved in the process, But, also held an accounting position at PwC, became known only last week. He is suspected in the leak of another package of documents of the auditing company.

Tax haven

Journalists published data suggested that a number of large companies (in total about 340) have signed confidential agreements with the Luxembourg authorities to grant them favorable tax treatment. ICIJ has published 548 letters PwC for the period from 2002 to 2010, which were addressed to the tax office of Luxembourg. They auditor on behalf of his clients argued the provision of a particular firm of a beneficial tax regime. Justification of investments were in the Duchy, as well as registration with the Luxembourg subsidiary and parent companies. Among the companies that used the services of PwC in collaboration with the Luxembourg tax authorities, called Apple, Microsoft, PepsiCo, Walt Disney, Deutsche Bank, IKEA, and several others. Among the defendants were LuxLeaks and Russian companies — Sberbank, Alfa Group, Evraz, Gazprom and Home Credit.

The total savings of the clients of PwC are estimated to ICIJ, eight years could be as high as $1 trillion. In some cases, firms reduced tax rates to 1%.

LuxLeaks has provoked a political crisis in the structures of the European Union and the Luxembourg. The European Parliament passed a vote of confidence in the President of the European Commission Jean-Claude Juncker, in the years 1995-2013 who served as Prime Minister of Luxembourg. Juncker was forced to make excuses, and to assure that he was not involved in the “Luxembourg problem”. Heads of financial departments of Germany, Italy and France, Wolfgang Schaeuble, Pierre Carlo Padoan and Michel Sapin called LuxLeaks “turning point” and acknowledged that cooperation between European countries on tax supervision is at a low level. In October 2015 head of financial institutions Europe adopted a Directive on the exchange of tax information.

Protection for whistleblower

The trial of Deltora caused intense public debate. “Deltur worthy of protection and praise, and not of the court. The information he revealed was public interest,” — said on the eve of the trial the managing Director of the human rights organization Transparency International cobus de Swardt. In 2015, Deltur even was nominated for the Sakharov prize by the European Parliament gives for the protection of fundamental freedoms, development of democracy and respect for international law.

Transparency but notes that the legislation of most European countries do not include protection for whistleblowers. In Luxembourg, the protection for insiders-whistleblowers at the legislative level exists, but is limited only to those cases where we are talking about exposing corruption. In addition, Luxembourg law only protects whistleblowers from dismissal, not from prosecution. In this regard, Transparency indicates the need for urgent amendments to legislation.

“If the whistleblowers, without whom we would not even be talking about the fight against tax evasion, go to jail, it will have extremely serious consequences for tax justice,” — said the Deputy of the European Parliament from the German party “the Left” Fabio de Masi. The Deputy is a member of the initiative group in support of Deltora. On the website petitions Change.org for that, Deltur escaped punishment, expressed by Tuesday night more than 139 thousand people.

Some members of the European Parliament are set to appear in court in support of Deltora. According to one of them, Sven Giegold, “the name LuxLeaks confusing — actually it is the exposure of uncovered European system of transactions on favorable terms, concerning not only Luxembourg”.

Large-scale public campaign in support of Deltora deployed and in its native France. In particular, the newspaper Le Monde in an editorial raised the question about necessity of protection for whistleblowers who act in the public interest. In defense of Deltora expressed also leader of the far-right party “national front” marine Le Pen.

As the Financial Times, citing the opinions of lawyers, Deltur, is likely to be sentenced to a small prison sentence — maybe less than two years. Deltur, he hoped that the prison term he will be able to avoid. “I am fully aware of its responsibility. But I’m not a Martyr” — he said FT.