- French trio accused of delving into secret tax documents
- PwC documents cataloged fiscal deals with multinational firms
As aftershocks from the Panama Papers revelations rumble on from Reykjavik to Santiago, three men went on trial in Luxembourg on Tuesday in a case that may determine the role of whistle-blowers in global tax scandals.
Two former PricewaterhouseCoopers LLP staffers Antoine Deltour and Raphael Halet risk as long as five years in jail for allegedly stealing hundreds of private documents cataloging tax pacts between big companies and Luxembourg authorities. Journalist Edouard Perrin, another French national, is also accused of urging on Halet in his search for secret files at the firm.
While PwC and prosecutors argue that the so-called LuxLeaks documents were private property and revealing them was a criminal offense, the trial is seen by critics as an attack on press freedom and efforts by whistle-blowers to shine a light on the murky world of tax dodging. The revelations sparked a global outcry and led to calls for a crackdown on tax avoidance.
“Shutting off whistle-blowers, without whom we would not even be talking about cracking down on tax avoidance, would be immensely harmful to the public campaign for tax justice,” said Fabio de Masi, a left-wing German member of the European Parliament who’s part of a group backing Deltour. “If they are found guilty, and potentially even sentenced to prison, this could have enormous effects in Luxembourg and beyond,” he said.
Global attention has now switched to the mass leak of documents known as the Panama Papers, but Luxembourg is still picking up the pieces after LuxLeaks hit the country like a “tsunami” in 2014. The same group of investigative journalists who revealed the Panama Papers, also published the LuxLeaks data with thousands of pages of data showing sweetheart tax deals for companies including Walt Disney Co., Microsoft Corp.’s Skype and PepsiCo Inc.
The ripple effects sped beyond Luxembourg, causing European Union regulators to expand a tax subsidy probe and propose new laws to fight corporate tax dodging, while EU lawmakers created a special committee to probe fiscal deals across the 28-nation bloc.
“The name LuxLeaks is a bit misleading,” said Sven Giegold, a German Green member of the EU Parliament, who will speak at the trial in support of the defendants. The leaks revealed “a European system of sweetheart deals, and an ignorance toward existing legislation to exchange such information. They were not specifically about Luxembourg.”
Politicians and business leaders came under attack once more this month when the emergence of millions of pages of financial records from the Panamanian law firm Mossack Fonseca exposed billions of dollars in assets that world leaders to prominent business people had hidden in tax havens around the world.
The latest revelations led to a string of resignations, a threat by the Group of 20 economies to penalize havens, and a commitment by EU finance ministers last week to work together as they face populist demands over inequality and austerity measures.
It was Deltour, a 30-year-old Frenchman, whose copies of hundreds of confidential tax agreements led to LuxLeaks. The criminal probe stems from a complaint filed by PwC in June 2012, after it noticed the theft of documents revealing hundreds of confidential tax pacts between the Grand Duchy and multinational companies.
Deltour was charged in 2014 with “domestic theft, violation of professional secrecy, violation of business secrets, laundering and fraudulent access to a system of automatic data treatment.”
Halet, whose name was revealed this month, was charged on the same counts in January 2015. Perrin was charged in April 2015 over his role as “co-author, if not an accomplice, in the infractions committed by a former employee of PwC,” which prosecutors later clarified was Halet.
Deltour’s support group said Friday he was apprehensive about the trial. He declined to comment further in order to avoid “over exposure.”
PwC declined to comment, as did the Luxembourg finance ministry and prosecutors. Lawyers for Perrin and Halet didn’t immediately respond to requests for comment. The trial is set to last six days.
The trial may bring up some unexpected guests too. EU Competition Commissioner Margrethe Vestager got an invite to appear at the trial, as she continues to probe the tax affairs of Apple Inc. in Ireland and Amazon.com Inc. in Luxembourg.
She is still considering the request, the EU authority said on Monday. Vestager last year ordered the Netherlands and Luxembourg to recover as much as 30 million euros ($34 million) in back taxes from Starbucks Corp. and a Fiat Chrysler Automobiles NV unit.