Of the Clearstream affair, we remember the bling-bling side, the implication of Nicolas Sarkozy in the Clearstream 2 affair, also called EADS-Clearstream. This affair had as its backdrop a struggle for influence in the French arms industry and the 2007 French presidential election, and was based on listings of hidden accounts potentially held at Clearstream by personalities--including Sarkozy. These listings were passed through Denis Robert before being handed over to the courts in a slightly modified form.
But this Clearstream 2 affair was only made possible by the Clearstream 1 affair, launched in 2001 by the investigative journalist Denis Robert, who published a book entitled “Révélation$” in February 2001, whose thesis was that there existed within Clearstream--formerly Cedel International--a system of hidden accounts facilitating the erasure of transactions and thus favouring tax evasion and money laundering. This was a bombshell for the Luxembourg financial centre at a time when it was regularly criticised for its banking secrecy. That banking secrecy is in the process of disappearing, but it still contributed to the prosperity of the private banking business. And it was a source of resentment.
Clearstream defended itself tooth and nail to preserve its "honour" by taking action in various countries against Robert and the co-author of "Revelation$", Ernest Backes. By 30 November 2004, when the Luxembourg courts dismissed the allegations of systematic money laundering, Clearstream had spent more than €15 million on audit and legal fees. Not to mention the communication costs that followed to restore the institution's image.
The hidden affair
In the end, the courts sent both sides to the ropes: Clearstream did not facilitate money laundering according to the Luxembourg courts and Robert investigated according to professional standards according to the French Court of Cassation, which ruled on the case in 2011.
Is this the end of the case? Yes. With one regret: that the major lesson has gone under the radar. The lesson? The fact that Clearstream was, like all clearing houses, a notary of international financial transactions from which one could follow and trace all the operations one wanted. A possibility that did not really inspire the European financial prosecutors at the time...
Between the Clearstream 1 and Clearstream 2 cases, there was also a Clearstream 1.5 case.
When the affair broke, the mood in the company was not good. Let's take a look at the history: Clearstream was created by Cedel International in 1970. Technically, it is a central depository (ICSD, for International Central Securities Depository) whose business is settlement. It is the organisation that ensures that when a security is purchased, it is paid for by the buyer and effectively delivered by the seller. The creation of Cedel was a reaction by the banks in the financial centre to the creation of Euroclear in Brussels by J.P. Morgan. Banque Internationale à Luxembourg was the linchpin of the project, which brought together all the major banks in the financial centre, both local banks and subsidiaries of large international groups.
BIL's central role in Cedel was explained by the fact that it was more present on the markets than its counterparts. Such an activity made sense for it and for the financial centre. Moreover, among the financial institutions that made the most use of the service offered were the Italian banks, which were at the forefront of the flourishing Eurobond market in the 1970s.
A duel to the death between two personalities
All was well until the "wolf" entered the fold. In 2000, Cedel International merged with Deutsche Börse Clearing, a subsidiary of Deutsche Börse, the operator of the Frankfurt Stock Exchange, which became a 50% shareholder in the new entity. It was aiming for 100%. This was firmly opposed by the CEO, André Lussi. His relationship with Werner Seifert, CEO of Deutsche Börse and member of the board of Clearstream International was notoriously bad.
And it is in this context that the book "Révélation$" is published. The timing may be questionable...
But it was a godsend for Seifert, who took advantage of the situation to get rid of Lussi, who had been dismissed in the wake of the scandal and was embroiled in a legal investigation for misuse of corporate assets.
It was also a godsend for the local banks that were shareholders in Clearstream. In the red ink following the bursting of the internet bubble, they took advantage of the €1.6 billion paid to them by Deutsche Börse in July 2002 to take control of Clearstream and present clean balance sheets.
A good operation?
A good operation? In the short term, certainly. But the banks have also lost control of a strategic tool whose rates were very advantageous to them. They have become mere clients with no influence on strategy or pricing. For Deutsche Börse, Clearstream became the cash cow that financed its expansion. But this did not prevent the number of redundancies from increasing. And the decision-making centre moved to Frankfurt.
Lussi left Luxembourg in 2001. Under investigation by the Luxembourg public prosecutor's office in May 2001 for money laundering, lack of due diligence in the area of money laundering, forgery, balance sheet fraud and tax fraud, he had to threaten the European Court of Human Rights in order to be effectively indicted. And thus to have access to the documents in the file and to advance a procedure that has been dormant until now. Despite the scandal.
Finally cleared of all charges, he made a 'friendly' visit to Luxembourg in November 2006, invited by the Executive Club. For him, there was no doubt: his legal troubles were due to a "dirty takeover" operation conducted by Deutsche Börse. He regretted that the judicial authorities, whose conduct and competence left him bitter, had not followed up on this lead.
There was no trace of bitterness towards the shareholders. Gentleman. It must be said that when he left Clearstream, a transaction had been concluded. "One of the most important deals ever signed at the time," as a person close to the case reported at the time.