Politics weekly: Fayot’s fees, space spending, “unshell” unlisted

Economy minister Franz Fayot (c.), pictured during a May visit to Bangladesh, this week shot back against claims he had spent taxpayer money on private dinners during his trips abroad Photo: MAEE

Economy minister Franz Fayot (c.), pictured during a May visit to Bangladesh, this week shot back against claims he had spent taxpayer money on private dinners during his trips abroad Photo: MAEE

Economy and development cooperation minister Franz Fayot this week got into hot water over his spending while travelling on official business. Finance minister Yuriko Backes meanwhile defended Luxembourg’s opposition to an EU directive aimed at shutting down empty shell entities.

Read about these and more headlines in our summary of the week’s goings-on in the world of Luxembourg politics.

What’s the big deal?

Economy minister Franz Fayot Franz Fayot (LSAP) on Tuesday responded to claims that he had paid for elaborate dinners with taxpayer money while on official business abroad. News outlet Reporter.lu had analysed a swathe of bills accrued by the minister on trips he undertook in his roles as minister of the economy and development cooperation.

Fayot in a statement detailed how the examples listed by Reporter,lu constituted professional business. For example, a €276 dinner in Costa Rica included EU ambassadors to the country. A dinner in Rome, where the minister spent €360 on three bottles of wine, was hosted to debrief with embassy staff, he said. The minister said that it is normal for members of the cabinet to pay for some meals while travelling and in an interview with RTL reiterated that he had done nothing wrong.

Still, the government is looking at reviewing spending rules for international trips, a spokesperson told the Luxembourg Times after Fayot’s €92,000 bill for 2021 and 2022. Responding to allegations of a conflict of interest with his fiancée accompanying him on some of the trips, Fayot said public and private expenditure had been strictly separated.

Top stories

·      Activists pushing for due diligence rules for companies in Luxembourg have teamed up with members of parliament for déi Lénk and the Pirate Party. The MPs on Tuesday submitted a proposal for a draw law to parliament, which would obligate larger companies to evaluate their supply chains for their impact on human rights, the environment and climate, as well as establishing mechanisms for victims of violations to seek redress and a regulator to ensure standards are met.

·      Interior minister Taina BofferdingTaina Bofferding (LSAP) this week banned a Luxembourg City ban on begging. The capital’s administration under mayor Lydie PolferLydie Polfer (DP) in March had outlawed begging in most public spaces in the city between 7am and 10pm. But Bofferding on Tuesday said this ban violated Luxembourg and international law. Polfer and first alderman Serge WilmesSerge Wilmes (CSV) said the city would file an appeal against the decision.

·      In the battle for medical scans being more widely available in the country, health minister Paulette LenertPaulette Lenert (LSAP) on Wednesday announced that she had agreed extending operating hours of MRI machines at Luxembourg’s four hospitals to Saturdays and, in the case of Esch-sur-Alzette, Sunday. A debate on whether private practices can also purchase such machinery and offer service to patients is still ongoing after the state council shot down a proposal by the minister to limit their use to hospital infrastructure.

From parliament

·      Lawmakers this week approved a €195m budget for Luxembourg to invest in medium Earth orbit satellite capacity for a period of ten years. The money will count towards the grand duchy’s Nato spending bill, which the country is planning to increase to 1% of GDP by 2028. All Nato members in 2014 pledged to move towards a 2% of GDP spending target.

·      Quickly following the vote, the Chamber of Deputies is hosting the Nato parliamentary assembly from 19 to 22 May, which brings together more than 450 delegates from 31 member countries and allied countries such as Sweden and Ukraine. The assembly is set to discuss Ukraine, its positioning in the Baltic and Black Sea regions and securing critical infrastructure and supplies, but also China and its friendship with Russia. The parliamentarians are set to adopt a series of recommendations for the Nato summit in Vilnius in July.

·      In more domestic matters, 24 petitions newly opened for signature this week, including a ban on gynaecologists and obstetricians issuing documents certifying a girl of woman’s virginity, raising the legal age to buy tobacco products to 21, as well as allowing workers who spent more than 30 years on shift duty or night shifts to retire two years earlier. A full list is available on the Chamber of Deputies’ website.

Tweet of the week

Brussels calling

The EU’s so-called “unshell” directive is disproportionate, finance minister Yuriko BackesYuriko Backes (DP) told Radio 100,7 this week after the item was pulled from the agenda of a meeting of EU finances ministers. The directive aims to combat empty shell entities that exist only on paper using indicators such as income, staff and premises.

This could prove a problem for Soparfis (Société de participations financiéres), the the most common vehicle dedicated to holding and financing activities in Luxembourg. There were more than 45,000 Soparfis registered in the grand duchy in 2018, according to data from the International Monetary Fund, generating around a quarter of the financial sector’s corporate income tax revenue.

While they can be used to hide money, they are set up by companies as subsidiaries to manage projects and financial flows. A real estate company, for example, might decide to set up a Soparfi for each building in its portfolio for legal reasons. However, this also means that many don’t have registered employees as these work for the parent company.

Backes told 100,7 that Luxembourg doesn’t want to protect empty shells but that it has problems with the current wording of the text, along with other EU members.


·      Campaigning for Luxembourg’s local elections officially kicked off on 15 May with parties allowed to put up posters from 13 May onwards under a fair elections agreement. The deal limits campaigning to four weeks but parties are already accusing each other of violating the terms of the gentlemen’s agreement, which does not come with any legal obligations.

·      Prime minister Xavier BettelXavier Bettel (DP) meanwhile downed hopes for non-nationals to gain the right to vote in parliamentary elections. The prime minister said the result of a 2015 referendum had been loud and clear, when more than three quarters of voters rejected the proposal.

·      The 11 June local elections and 8 October parliamentary elections in Luxembourg are set to be swiftly followed by the next ballot for the European parliament, which has been scheduled for 6 to 9 June 2024. Luxembourg nationals will have to vote for their members of the European Parliament, while citizens of other EU countries living in Luxembourg can choose whether they want to vote for the representatives of the grand duchy, their home country or skip the vote altogether.