Dubbed OpenLux, the latest revelations began being published on Monday morning by the likes of the Süddeutsche Zeitung, Le Monde, Miami Herald, other international media and Luxembourg’s Woxx newspaper. The chief focus of the reports are Luxembourg’s anti-money laundering arrangements--investigative journalists trawled through some three million documents and records from the Ultimate Beneficial Owner register. Such is the scale of the haul that revelations are due to the published throughout the coming week.
The Luxembourg government tried to head off some of the criticism it is going to face by releasing a pre-emptive statement on Sunday evening. It also published a series of FAQs, using the openlux.lu domain name, relating to tax regimes and anti-money laundering. In its statement, the government said that the grand duchy “provides no favourable tax regime for multinational firms, nor digital companies, which have to abide by the same rules and legislation as any other company in Luxembourg.”
That argument doesn’t wash with the Süddeutsche, which says in its introduction to the series that “despite all assurances, Luxembourg remains a tax haven…”
Le Monde cites names including Cristiano Ronaldo and the King of Bahrain, as well as numerous multinational companies like luxury goods conglomerate LVMH and pharmaceutical giant Pfizer, that have opened financial subsidiaries in the grand duchy. “Luxembourg acts as a magnet for the wealth of the world,” says the French newspaper. Indeed, as Woxx reports, 266 people named on the Forbes list of the world’s 2,000 billionaires have Luxembourg entities.
But Le Monde also claims that its investigation has unveiled what it calls “questionable funds, suspected of originating in criminal activity or linked to criminals targeted by judicial investigations.” Some of the companies listed are linked to the Italian mafia and the Russian underworld, for example, the investigation says.
Following the LuxLeaks affair in 2014, when details of favourable tax rulings were leaked to the International Consortium of Investigative Journalists by former PwC Luxembourg employee Antoine Deltour, the grand duchy had sought to clean up its image. Just last week finance minister Pierre Gramegna, in an interview to be published in the March print edition of Delano, said that since coming to power in 2013, the coalition had “embraced transparency, exchange of information, not only with EU countries but with the rest of the world.”
A question of vigilance and will
However, the OpenLux investigation did not have to rely on whistleblowers. Luxembourg’s Ultimate Beneficial Owner register, which began operating in March 2019, was made public that autumn after the grand duchy became one of the first member states to apply a European directive to that effect. “In a way, it is therefore paying the price of transparency,” Le Monde says. Indeed, it seems that the main problem lies with the ability, or perhaps willingness, of the state apparatus--not only in Luxembourg, it has to be said--to be more vigilant and guarantee the reliability of the ownership registers.
Transparency International, the NGO that works to “end the injustice of corruption”, has conducted its own analysis of OpenLux documents in collaboration with the Anti-Corruption Data Collective (ACDC). It found that around 80% of private investment funds in Luxembourg “did not declare who benefits from them” and that more than 15% of those funds even “submitted conflicting information to the US and Luxembourg authorities” regarding the identity of their beneficial owners.
As ACDC co-founder David Szakonyi says, “beneficial ownership registries are a powerful tool for fighting corruption and money laundering. But they only work as intended when the data contained is complete and accurate.”