Sven Giegold, German Member of the European Parliament (MEP) and financial and economic policy spokesperson of the Greens/EFA group, has today testified as a witness at the so-called LuxLeaks trial.

Ahead of today’s session, Giegold told The Accountant that it’s an "absurd situation" to have reached this point where the whistle-blowers are being punished for doing the right thing:

"The ones who informed the public about tax wrongdoings on a massive scale are threatened with prison and fines; while the ones who made these loopholes possible and exploited them beyond any limit go unpunished."

Giegold, who attended the first session of the trial on Tuesday as an observer, told The Accountant that the atmosphere in the court was cold and very frightening.

He said: "PwC has massively violated its own code of ethics. I’ve read it in their website [PwC’s summary of ethics question to consider]"

1. Is it against PwC or professional standards?
2. Does it feel right?
3. Is it legal?
4. Will it reflect negatively on you or PwC?
5. Who else could be affected by this (others in PwC, clients, you, etc.)?
6. Would you be embarrassed if others knew you took this course of action?
7. Is there an alternative action that does not pose an ethical conflict?
8. How would it look in the newspapers?
9. What would a reasonable person think?
10. Can you sleep at night?

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"If you apply that to the selling of these manufactured tax structures in Luxembourg and elsewhere, which in some cases allowed corporates to bring their tax rates down to even less that 1%, of course "it doesn’t feel right"," Giegold said quoting the second of PwC’s summarising questions of its code of conduct.

According to Giegold, PwC is to blame for prompting the State of Luxembourg to initiate the ongoing criminal case in the first place.

He believes the case should have been settled internally and the firm should have abstained from causing any proceedings, precisely because the LuxLeaks revealed how the firm’s own "ethics code was violated so strongly" procuring aggressive tax avoidance.

Giegold added: "If the whistle-blowers go to prison they will become a public symbol. They will probably be the first tax justice’s prisoners of conscience. This will backfire on PwC. Is this what PwC would like to have linked to their name?"

The Accountant asked a global PwC spokesperson if the firm will press charges or seek damages against its two former employees (Antoine Deltour and Raphael Halet) and/or the journalist Edouard Perrin whose TV show reported on the scandal.

The spokesperson said PwC won’t make further comments than those included in the statement below.

PwC Luxembourg statement

"Following the discovery of breaches of confidentiality they were reported to the relevant authorities who decided to prosecute the two former PwC employees who took the documents and the journalist involved.

"PwC Luxembourg stands by the advice it provided to the clients in question, all of which was given in accordance with applicable local and international tax laws and agreements and also in accordance with the PwC Global Tax Code of Conduct.

"PwC takes client confidentiality very seriously and regrets that these breaches occurred. PwC Luxembourg conducted a thorough review of its security systems and processes in 2012 and has taken steps to further reinforce its security measures to protect the confidentiality of its client information.

"Given this matter is now the subject of a criminal trial it would not be appropriate for us to comment further."