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Calls for reform and a resignation over LuxLeaks

Audit firm opens new offices, Juncker stares down a censure motion, and authorities announce investigations using Lux Leaks documents.

Juncker at Parliament

Jean-Claude Juncker has survived a vote on his leadership after the controversy surrounding his alleged role in Luxembourg's tax policies, as revealed by the Luxembourg Leaks investigation.

Juncker, a former Luxembourg prime minister who became president of the European Commission just weeks ago, has been under pressure since ICIJ and its media partners published stories detailing secret Luxembourg tax deals that save some of the world’s biggest companies hundreds of millions in tax.

After a week of silence following the release of the secret documents, Juncker eventually faced media and fellow parliamentarians to defend his role in the tax policies of the tiny European Duchy during his long tenure as finance minister and prime minister.

Last week far-right and anti-EU groups within the European Parliament collected enough support to force a censure motion against Juncker. The motion was put to a vote on Thursday, but was easily defeated by 461 votes, thanks to Juncker's support from the large centrist parties.

Earlier in the week Juncker endured tense debate on the floor of the European Parliament in the lead-up to the vote, as British, French and Italian MEPs spoke out against his record on Luxembourg’s tax policy.

UK Independence Party MEP Steven Woolfe called the LuxLeaks revelations “an ugly tax scandal that will not go away,” and Front National Party leader Marine Le Pen from France expressed doubts about Juncker’s promise to reform tax at a European level.

"It would be like appointing Al Capone as head of the ethics committee,” she told Parliament during the debate. “You have become the symbol of the Europe of fraud and greed, that ensures the poor suffer to the advantage of the rich.”

Italian MEP Marco Zanni told Juncker “if you had a crumb of dignity you would resign.”

But Juncker hit back against the claims that he was a friend of big corporations, and said that the problem was a European one, rather than being isolated to just Luxembourg. He also spoke out against the censure motion, and expressed frustration at the debate.

“If you want me to go, say so and I will leave,” he challenged.

“May I ask you to stop insulting me,” he said. “I would rather get on with my job.”

PwC uninvited journalists

Meanwhile in Luxembourg accounting and audit firm PricewaterhouseCoopers, the company responsible for negotiating the deals detailed in the Luxembourg Leaks investigation, held an official opening event for their new office in the Grand Duchy.

Originally due to be a public event to which journalists were invited, PwC decided to make it a private function instead.

The opening of the 30,000 square metre office, part of a new real estate development in Luxembourg, was attended by about 500 invited guests, including Luxembourg's Prime Minister Xavier Bettel and Finance Minister Pierre Gramegna, both of whom spoke at the event.

Over the weekend two prominent Luxembourgers publicly denounced Luxembourg's tax practices, as revealed by the Luxembourg Leaks documents, in a piece that was published in newspaper Luxemburger Wort.

United Nations diplomat Luc Dockendorf and University of Luxembourg historian Benoit Majerus blamed the offhore model for increasing inequality in the world, and called for the tiny country to rethink its model.

"We would like to submit a simple statement: what’s been done in our name all these years isn’t right," the pair wrote in a piece that has been published in English, French, German, Portuguese, Spanish, and Luxembourgish.

"Even if something is legal, it can also be profoundly unjust.

"We've been living at the expense of others. Not just other states, but other people, like ourselves, who have been paying their taxes, while corporations in their own countries have been dodging them. It is no longer possible to pretend that the Luxembourgish model has no negative consequences for other countries."

PwC's new Luxembourg office

Germans call for reform

In Germany Finance Minister Wolfgang Schaeuble criticized the German companies who kept Luxembourg subsidiaries for tax purposes, and said they were damaging German society.

"The list of those that have institutions in Luxembourg with the aim of saving taxes is a Who's Who of the German economy," he said in an interview.

"If certain groups do not participate in financing the public budgets in an adequate manner, something is going wrong.”

Schaeuble has begun lobbying the European Commission to move quickly on establishing better rules for the exchange of tax information between countries.

Authorities to use LuxLeaks docs for investigations

European Commissioner for Competition Margrethe Vestager last week confirmed that the EU will make use of the leaked documents as it evaluates possible courses of action regarding Luxembourg’s tax policies.

"We consider the Luxembourg Leaks as market information. We will examine it and evaluate whether or not this will lead us to opening new cases," she said, adding she does “admire the journalistic work” behind the Luxembourg Leaks investigation.

Danish tax authorities also confirmed they would examine the leaked documents for any potential breaches to Denmark’s tax rules.

In Belgium there will be a hearing in parliament over the Luxembourg Leaks revelations later this week.

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