EU fight against tax-evasion and money laundering blocked by Britain

Maria Fekter, Austrian Federal Minister of Finance. (EC Audiovisual Services).

Maria Fekter, Austrian Federal Minister of Finance. (EC Audiovisual Services).

The informal Ecofin and Eurogroup councils that took place in the Dublin Castle this weekend had only one victim; the bank depositors. Tax evaders got away, with Algirdas Šemeta the EU Commissioner responsible for Taxation and Anti-Fraud, running after them brandishing only his “appetite for progress and action”.  In reality no real progress or action against tax-evaders was visible in the Irish horizon, despite the perfect view from the Dublin Castle. Let’s follow the facts.

This weekend’s informal Ecofin and Eurogroup councils, which regroup the ministers of Finance of the 27 EU member states and the 17 euro-area countries respectively, had two major tasks to accomplish. Contain tax evasion and decide over bank rescues. While the first one is the newest ‘baby’ in Brussels, the second one is already almost entirely shaped.

In confronting tax evasion the 27 ministers had to start with the construction of the tools needed for this giant operation. In this direction the first step was the very ambitious creation of a mechanism, which would open automatically the bank accounts of all citizens in all 27 member states, at the request of any tax or judiciary authority of the Union.

The tax-haven islands

This could have been a major breakthrough in fighting tax-evasion, if it was for real. Actually it looked as pragmatic until this weekend. It seemed like an honest effort, because the issue got a lot of publicity during this past week, with Germany exerting a lot of pressure on Luxemburg, an allegedly major EU centre, where tax evaders could hide their money. The pressure bore fruits and Luxemburg’s Prime Minister Jean-Claude Juncker said his country will relax its bank secrecy laws. Then everybody turned against Austria, another EU country with very strict legislation protecting bank accounts. Until this weekend the entire Europe was pressing Austria to join the rest 26 EU countries, which allegedly were ready to open all bank accounts held in their territory by EU citizens on the demand of any EU tax authority.

In view of this and given that Britain was supposedly between those 26 countries ready to open their banks accounts, some Brussels insiders not believing their ears, had been asking themselves if London knew about all that? As things turned out they were right, because Britain by joining the anti-tax evasion club didn’t mean to touch its money laundering and tax evasion paradises in the ‘independent’ Channel Islands. A look in Wikipedia’s List of the banks with a large presence in the Jersey Islands and the Isle of Man, will convince the non-believers that London is the largest and most effective and reliable money laundry and tax paradise in the world.

Obviously all that is common knowledge and the direct financial connections of the Channel Islands with the London markets don’t need any special proof. In contrast Austria provides protection to bank accounts, but not of the “numbered” anonymous kind, as Britain offers in the Channel Islands. For all those reasons Austria’s minister of Finance, Maria Fekter (plus her explosive character) couldn’t swallow this hypocrisy, watching London accuse Vienna of, God forbid, protecting tax evaders and offering money laundering.

Fekter on her way to Dublin promised to her compatriots to “fight like a lioness” to protect her country and its banking industry. Before that however Fekter all along last week had been very loudly accusing Britain of being the largest island money laundry and tax evader protector of the world. She actually lamented over poor little Cyprus being punished for something that Britain does by the trillions. As a matter of fact the whole world was informed by Fekter how good a money laundry and tax evaders’ haven is London and Britain. Clearly these facts are not all secret but the whole of Europe and the rest of the world to be loudly ‘reassured’ about that by an Austrian minister, was too much.

The result was that Fekter won the game. Returning home from Dublin yesterday night she proclaimed victory in the fight of Austria against all the other 26 EU countries. Who could resist her screams in the Ecofin and the Eurogroup councils, demanding honesty to prevail and English hypocrisy to be condemned? Understandably nobody wanted to protect Britain on that account and that is why there was no decision taken.

For the same reason the stony faced Commissioner Šemeta had nothing concrete to say afterwards, apart that as he put it, “a highly engaging discussion we had on tax evasion”. It was obvious that Britain had initially tried to ‘hide’ the Channel Islands form this discussion, but when it became clear that this was not possible, London blocked the whole affair. On tax matters EU decisions have to be unanimous. In any case it will be very interesting to see how this story will develop. For one thing the drive against tax evasion seems real in many countries, due to the large fiscal deficits. Some more taxes would be a great help, especially coming from tax evasion.

Bank rescues

The second important issue Ecofin and Eurogroup councils had to confront was Europe’s failing banks. Speaking after the meeting on the procedure to be followed about the rescue or the resolution of failing banks or about to fail banks Commissioner Michel Barnier very clearly confirmed what was already known. That is failing or about to fail European banks will be bailed-in by their deposits above the secured benchmark of the €100,000, exactly as it happened in Cyprus.

In detail the line of the assets to be used in the bail-in will be first the shares, then the uncovered bonds and thirdly the unsecured deposits. If all that prove not enough, then the national government will be called to contribute. Only then the European Stability Mechanism will be called to intervene in order to accomplish the rescue or the resolution of the bank in question.    

Portugal and Ireland

Last but not least the Ecofin and the Eurogroup reached an agreement to extend Portugal’s and Ireland’s EFSF and ESM loans by an average of seven years. Presiding in the Ecofin council the Irish minister of Finance Michael Noonan said, “The agreement reached to adjust the maturities on Ireland’s and Portugal’s loans by a maximum average of seven years is a significant step on Ireland’s and Portugal’s journey to a full and sustainable return to the markets.”

 

 

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Banning caged farming in the EU: Hearing on the European Citizens’ Initiative

Coronavirus: EU strengthens action to tackle disinformation

Drawing scenarios for drifting Britain; elections or May’s deadlock?

10 tonnes of trash was taken off Everest – and repurposed

State aid: Commission approves €6 billion German measure to recapitalise Lufthansa

Beating cancer: MEPs react to the EU Plan for joint action

270 million people are migrants, who send home a staggering $689 billion

Media and entertainment in flux: it’s time for the close-up

Pandemic: another look at the self

What is systemic racism, and how can we combat it?

Europe had a record year for Measles – and it’s partly down to anti-vaccine campaigners

How we measure stakeholder capitalism will determine our recovery

Children suffering ‘atrocities’ as number of countries in conflict hits new peak: UNICEF

Agreement reached on new EU Solidarity Corps

World in grip of ‘high impact weather’ as US freezes, Australia sizzles, parts of South America deluged

2019 Innovation Scoreboards: The innovation performance of the EU and its regions is increasing

Why do medical students have to emigrate to become doctors in 2017?

We need to give voice to ‘We the Peoples’, says UN chief

Here are four steps SMEs can take for long-term success

The priority for workplaces in the new normal? Wellbeing

Commission imposes a fine of €561 million on Microsoft

Innovative finance tools could protect cities from climate change

How to make sure tech doesn’t leave people behind

The world is too complacent about epidemics. Here’s how to change

What UK and EU risk if Brexit “wins” these elections

TTIP 9th Round marked by American disappointment: Will some optimism save this trade agreement?

Are we at risk of a financial crisis? Our new report takes a look

Main results of Foreign Affairs EU Council, 16/07/2018

Paradise islands of Pacific increasingly vulnerable to climate change, as UN boosts resilience

Plants, the ‘core basis for life on Earth’, under increasing threat, warns UN food agency

De-stigmatizing a mental illness: importance of individual and collective representativeness

EU founding values: Commission starts legal action against Hungary and Poland for violations of fundamental rights of LGBTIQ people

6 steps every country must take now to prevent coronavirus deaths: WHO Director-General

Radio still a powerful worldwide tool for ‘dialogue, tolerance and peace’: Guterres

Why building consumer trust is the key to unlocking AI’s true potential

Racial abuse of England players exposes deep societal fractures and the need for change

It’s getting harder to move data abroad. Here’s why it matters and what we can do

European Green Deal: Commission proposes new strategy to protect and restore EU forests

Why the next step for antiracism is transportation

COVID-19: EU countries should harmonise testing procedures and frequency

Opponents of constitutional change in Burundi face torture and execution: UN investigators

6 data policy issues experts are tracking right now

Commission refers Denmark to the Court for failing to fulfil its obligations in relation to the name “Feta”

Quality education an ‘essential pillar’ of a better future, says UN chief

What slums can teach us about building the cities of the future

The banks dragged Eurozone down to fiscal abyss

Trade, entrepreneurship and the future of ASEAN’s economy

Is this the way to finally beat corruption?

Renewable energy could power the world by 2050. Here’s what that future might look like

EU-Vietnam trade agreement enters into force

Here’s how we make the internet safer for children

4 ways leaders are driving innovation in the public sector and revolutionising governance

Mental health: these songs are proven to reduce stress

Mediterranean migrant drownings should spur greater action by European countries, urge UN agencies

New poll shows what people think coronavirus will do to their economies

Macron leads EU-wide minimum wage call as Merkel, Medvedev warn of global injustice

Trump fines China with $50 billion a year plus some more…

Europe’s moment: Repair and prepare for the next generation

Q and A: This is how stakeholder capitalism can help heal the planet

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s