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May 10, 2016

Prosecutors demand jail for ex-PwC’s whistleblowers Deltour and Halet

During the last hearings of the LuxLeaks trial, prosecutors have asked for a 18-month jail sentence for Antoine Deltour and Raphaël Halet, both ex-PwC accountants who blew the whistle over the accountancy firm’s role in brokering sweetheart tax deals between their clients and the then Junker-led Luxembourg government.

The judgement of the court is not expected until three to 10 weeks after this hearing, Phillipe Penning, Deltour’s lawyer in Luxembourg, told The Accountant. The written judgement will be published some days after the announcement.

"Our main argument is that he is a genuine whistleblower, and therefore needs protection," Penning told The Accountant, emphasising that Deltour’s motivation has been to act for the common good and he has spurred a necessary debate on tax avoidance issues.

As a result of the LuxLeaks, the European Parliament set up in 2015 a Special Committee on Tax Rulings (TAXE committee) aimed at investigating tax rulings and aggressive avoidance in the EU.

Later the European Commission proposed a Tax Transparency Package of measures to fight tax avoidance, notably the automatic exchange of tax rulings between member states.

At the time of the second hearing, Michel Sapin, France’s Finance Minister showed his support for Deltour and said at the French parliament:

"I would also like to express all our solidarity to Antoine Deltour. I asked this morning the Ambassador of France in Luxembourg and theConsulate General to help him if necessary during this difficult time in which he defends the general interest and during which he has nevertheless to stand before a criminal court in Luxembourg.

"Thanks to [Deltour], we could put an end to the opacity that prevented European countries to know the exact tax situation of a number of large companies in Luxembourg."

Sven Giegold, German Member of the European Parliament (MEP) and financial and economic policy spokesperson of the Greens/EFA group, testified as a witness on 28 April.

He told The Accountant ahead of the hearing: "If the whistleblowers go to prison they will become a public symbol -probably the first tax justice’s prisoners of conscience".

But the court heard today the prosecutors argue that Deltour and Halet have broken the law as their actions are not covered by Luxembourg’s whistleblower laws (which only offer protection to those who expose illegal activities — tax avoidance is yet legal).


Asked if it will press charges against Deltour, Halet and Perrin, or if it will seek damages against them, a global PwC spokesperson told The Accountant that the firm 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."


Commenting on the case, Prem Sikka, professor of accounting at the University of Essex, told The Accountant:

"Client confidentiality is all very well, but the leaked papers beg questions about accountants’ duty to the public."

Sikka made reference to the inquiry of the UK Parliament’s Public Accounts Committee that subjected PwC’s UK head of tax, Kevin Nicholson to a two-hour interrogation over the firm’s involvement in the LuxLeaks scandal.

From the LuxLeaks emerged 548 letters with PwC headed paper, whereby a number of complex tax structures were set up for multinationals such as Dyson, Amazon or FedEx.

MPs described this as PwC’s "mass-marketing" of tax avoidance "on an industrial scale", an activity the firm denied being involved with.

Sikka says: "Not one of the PwC headed paper letters say anything on ethics or the effect of the advice on the public, government finances or anything else.

"Clearly, the boundaries between what is public or private need to be redrawn and whistle-blowers need to be protected from the pressures suffered by Antoine Deltour".

 

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