#LuxLeaks appeal verdict: tax justice heroes convicted again

The #LuxLeaks whistleblowers appeal verdict is in and once again it demonstrates what an upside down world we’re living in, when whistleblowers on the frontline of tax justice find themselves convicted for a second time for exposing information that was so clearly in the public interest. Disclosure of such information can be decisive for driving political change, and this is exactly why tax deals in Luxembourg were brokered behind closed doors. Now it’s time to swing the spotlight onto accountancy firm PwC not only for the disgraceful way they treated these whistleblowers, but to hold them to account for their role the whistleblowers exposed in siphoning off tax revenue from so many EU member states. You can read about the less known but truly shocking treatment of whistleblower Raphael Halet in detail here.

The Tax Justice Network’s John Christensen says today,

“This is a disgraceful verdict when you consider that the real villains are accountancy firm PwC and the Luxembourg tax authorities who should never have negotiated these secret tax deals which go against the grain of free trade and all of which will almost certainly be found to constitute illegal state aid.”

We condemn this appeal verdict and for anyone who wishes to support these tax justice heroes, they do need financial help with their legal fees. You can do that by clicking here and here.

As the Tax Justice Network CEO Alex Cobham says in this RFI radio interview these people have performed a great public service. We ask, in whose interest have these trials of these tax justice heroes been? Not the citizens and domestic companies of Luxembourg, for whom no secret deals were on offer. Not the Luxembourg state, which should be addressing the shocking failures of governance that have been revealed. PwC, the big 4 accounting firm is at the heart of this story. They should be hanging their heads in shame for the tax abuses they have commissioned and profited from.

While some worry about what this means for future whistleblowers, such as in this tweet:

The #Luxleaks verdict is a major setback for tax transparency. No one will dare speaking up after seeing the treatment of the whistleblowers

— TP Week (@TPWeek) March 15, 2017

Alex Cobham says,

“I think Luxembourg is trying to send a message that they will still protect financial secrecy even where it’s being used to cover abuse but I think the wider public reaction to this should give encouragement to other whistleblowers. While this verdict is bad news for these whistleblowers, other jurisdictions may now think twice about taking such action.”

Antoine Deltour’s supporters have released the following statement:

“For the first time, a European national judge recognises the legitimacy of violating professional secrecy for the general interest. It is an unquestionable moral victory. However, this decision from the Luxembourgish justice confirming its previous decision, although with a reduced sentence, still presents a disturbing contradiction: it recognises the whistleblower’s role and the public interest of the revelations but anyhow concludes on a condemnation. Antoine Deltour was a whistleblower when he transmitted the documents to the journalist, but is convicted for their acquisition. Once again, private financial interests seem to take priority over the collective interest and the rights for information. This sentence is therefore far from the expected change of era in Europe regarding tax issues, whistleblowers’ protection and the right of information.”

Antoine Deltour said today:

“This disappointing judgment constitutes an additional argument for going ahead with recent European initiatives towards whistleblowers’ protection”

And on that subject we quote here MEP Fabio De Masi:

“It is scandalous that those who did an invaluable service to society, risking their careers, have again been found guilty while the rich and powerful that rob hundreds of billions of euros from citizens in the EU through tax avoidance and tax evasion face no consequences.”

“The European Commission has failed to propose a framework for the protection of whistleblowers despite repeated calls by the European Parliament and concrete suggestions on the table. This is also a personal responsibility of Commission President Jean-Claude Juncker who promised at the LuxLeaks committee hearing in 2015 to address the question at European level – without result so far.“

“Our parliamentary group will request the topic again to be put on the next plenary agenda and maximise pressure on the Commission. We will support Deltour and Halet in any further legal steps – also at the level of European courts.”

Given the lack of legal protections, (yet seemingly no consequences for those involved in brokering tax deals that constitute illegal state aid) it makes all the more essential whistleblower schemes such as EU Leaks where people of conscience can blow the whistle without leaving an electronic trail.

On the other hand, the attention of the international media has been intense and very uncomfortable for Luxembourg, and no doubt, for PwC.

We share here the reaction to today’s verdict from our friends and colleagues at Eurodad:

Although the new sentences (six months’ suspended jail and a €1500 fine for Deltour and a €1000 fine for Halet) are less harsh than those imposed at the first trial, where the former PwC employees were sentenced to twelve and nine months’ suspended jail terms respectively, Eurodad still finds it unacceptable that whistleblowers who acted in the public interest will have to face punishment.

Journalist Edouard Perrin, who helped break the story, walked free after his original acquittal was confirmed.

Eurodad’s Policy and Advocacy Manager for Tax Justice Tove Maria Ryding says,

“Corporate tax dodging is costing billions of euros every year. These whistleblowers deserve praise – not punishment. Although the Luxembourg court has reduced their sentences, the fact remains that they are being punished for acting in the public interest. This is deeply unacceptable.”

“The information revealed in the LuxLeaks scandal should never have been secret in the first place. Citizens should be allowed to know where multinational corporations do business and what they pay in taxes,” said Ryding. “We’re calling for protection of whistleblowers and for transparency around what multinational corporations pay in taxes. No one should have to go to trial for revealing that multinational corporations are dodging taxes.”

Finally, we share with you a recent article from the Dublin Inquirer entitled What’s the Point of the Big Four Accounting Firms? which is worth a read. Also, always worth a read is THE PIN-STRIPE MAFIA: HOW ACCOUNTANCY FIRMS DESTROY SOCIETIES. You can hear author Professor Prem Sikka interviewed on our podcast the Taxcast here.