Wednesday

17th Jul 2019

LuxLeaks trial to be whistleblower showcase

  • Luxembourg office tower: Whistleblower protection law only covers people who denounce corruption (Photo: Sven Graeme)

Five years ago, Antoine Deltour quit his job at PwC, the global auditing company, in Luxembourg. But before leaving his desk for good, the French employee copied 28,000 documents of sweetheart tax deals between companies and the Luxembourg authorities to an external drive. Then he leaked them to the press.

His former employer filed a complaint. The trial begins Tuesday (26 April) in Luxembourg’s Cite Judiciaire. Antoine Deltour is charged with theft, violating trade secrets and secrecy laws as well as illegally accessing a database.

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  • Deltour (l) leaked 28,000 documents on Luxembourg's sweetheart tax deals (Photo: europarl.europa.eu)

Two other French people will also stand before the court: Raphael Halet, another PwC whistleblower, and investigative journalist Edouard Perrin. According to the court, Perrin is charged for inciting the second leak, rather than for journalistic activities.

They are the only people that have been prosecuted in the wake of the scandal, which was the world’s largest leak until the Panama Papers recently upped the ante.

The authorities found no infringement of law behind the divulged “tax rulings” - written interpretations of tax law issued by Luxembourg to companies and individuals.

Some 343 companies, including Apple, Amazon, Ebay, Heinz, Pepsi, Ikea and Deutsche Bank, used them to reduce their tax bills to as little as one or two percent of their income.

Public interest

“Antoine acted for the public good,” said Romain Deltour, the defendant’s brother.

“His revelations shed light on the issue of tax rulings. They led to parliamentary inquiries and changed EU legislation, which would never have made such progress without him.”

Romain Deltour spoke to this website on behalf of his brother’s support group of 300 members, who will be in Luxembourg throughout the trial. Some 1,000 people have contributed to finance the costs of the his defence and more than 125,000 have signed a petition demanding that Deltour should not be punished.

He risks, however, 10 years in prison and more than €1 million in fines.

EU involvement

Beyond Deltour's case, the trial raises the issue of the status and protection of whistleblowers and journalists.

European commissioner for competition Margrethe Vestager has been invited by Perrin’s lawyers to participate as a witness.

Last year, she sentenced coffee company Starbucks and automaker Fiat to pay back between 20 and 30 million euros in taxes to Luxembourg and the Netherlands, using LuxLeaks as evidence.

”We are still thinking about it,” a commission spokesperson commented on Monday (25 April).

Green MEP Sven Giegold is going to testify on behalf of Deltour.

Hungarian MEP Benedek Javor, a political ally of Giegold, attended a solidarity gathering in Luxembourg on the eve of the trial.

“Tax avoidance is a major problem for the EU,” Javor told EUobserver.

“Around 80 percent of government revenue - depending a bit on the member state - comes from VAT and income tax that is paid by normal people who can’t avoid them.”

He hailed Deltour and said it was unacceptable that the whistleblower was in court, but those involved in tax avoidance were not. The lawmaker said informants must be better protected.

“Despite the crucial role they play in protecting public interest, whistleblowers are very often prosecuted for harming business interests and suffer from different sanctions by their employees,” he said.

Green law proposal

The Greens will unveil a legislative proposal in that spirit on 4 May, the last day of Deltour's trial. They hope the European Commission - the EU’s only institution that has the right to propose new legislation - will be inspired to follow suit.

Is there a need to strike a better balance between the protection of public and private interests?

“In some cases, yes,” says Benedek Javor. ”However, there are also many examples where tax avoidance practices are illegal.”

He recalled that the German region of North Rhine-Westphalia has managed to retrieve €5 billion from companies using similar tax arrangements in Switzerland.

“I am a bit sad that EU institutions haven't been more active on this matter,” he added.

Luxembourg is one of EU member states with the strongest whistleblower protection law. But Deltour falls outside its scope, as the legislation only covers people denouncing corruption cases.

EU trade law could criminalise whistleblowers

A new directive passed by the European Parliament Thursday to protect European companies from corporate espionage could lead to preventing information on business wrongdoings, critics argue.

Tax breaks for the big hit the smallest

Tax breaks awarded to multinationals like Apple and Starbucks in Luxembourg allow their businesses to prosper, often at the expense of Europe's 23 million smaller firms.

LuxLeaks whistleblowers fined and put on probation

Antoine Deltour and Raphael Halet, former employees at PricewaterhouseCoopers (PwC) who revealed how corporations hid away profits, were fined and given suspended sentences by a court in Luxembourg.

Stalling on VAT reform costing billions, says Commission

German media outlet Correctiv, along with other newsrooms, have revealed how criminals annually cheat EU states out of billions in VAT fraud. The EU Commission says solutions exist - but member states refuse to budge on tax unanimity.

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