Infamous for exposing the multi-billion dollar tax avoidance scandal known as the Luxembourg Leaks, or LuxLeaks, two whistleblowers and a journalist began trial on Tuesday for allegedly violating trade secrets and other theft charges. Although Transparency International has called for a dismissal of their case, Luxembourg does not consider the defendants to be whistleblowers.
In November 2014, the International Consortium of Investigative Journalists (ICIJ) revealed hundreds of major corporations had secured secret deals from Luxembourg, allowing them to hide billions of dollars in taxes. Pepsi, IKEA, Burberry, AIG, Heinz, Coach, Procter & Gamble, JP Morgan, FedEx, Deutsche Bank, Abbott Laboratories and nearly 340 other companies were caught channeling hundreds of billions of dollars through Luxembourg in order to evade paying billions in taxes between 2002 and 2010.
A month after the initial leak, a second leak exposed 35 more firms, including Disney, Koch Industries, and Skype, seeking tax rulings from Luxembourg. Although the initial leak named PricewaterhouseCoopers (PwC) as having helped corporations obtain at least 548 tax rulings in Luxembourg, the second leak also named Ernst & Young, Deloitte, KPMG, and other accounting firms of brokering tax deals alongside PwC.
While working at PwC, Antoine Deltour allegedly accessed the accounting firm’s database and copied 28,000 pages of documents shortly before leaving the company in 2010. Instead of selling the documents, Deltour asserted that he acted in the public interest when exposing these tax evasion schemes.
Another former PwC employee, Raphael Halet, has been charged with carrying out the second leak along with French journalist Edouard Perrin. Accused of manipulating Halet and taking an “active role” in the leaks, Perrin has been charged with complicity in the violation of professional secrecy laws, as well as possession and dissemination of confidential papers.
Stemming from a complaint filed by PwC, Deltour was charged with theft, violating Luxembourg’s professional secrecy laws, violation of trade secrets, and illegally accessing a database. If found guilty, Deltour faces up to ten years in jail and a fine of up to €1,250,000 (US $1.4 million). Halet faces the same charges.
“Deltour should be protected and commended, not prosecuted. The information he disclosed was in the public interest,” said Cobus de Swardt, Managing Director of Transparency International. “Therefore, we have asked PwC Luxembourg to withdraw their complaints.”
Despite the fact that the LuxLeaks scandal was the largest exposure of corporate tax evasion documents prior to the Panama Papers, the government of Luxembourg does not recognize Deltour and Halet as whistleblowers, nor does it recognize Perrin’s journalistic freedom. In a recent statement, Transparency International wrote, “Under the Luxembourg law, Deltour is not considered a whistleblower because the legislation is limited to corruption offenses. In addition, it only protects whistleblowers against dismissal, not against prosecution. Therefore, Luxembourg should revise its legal framework.”
Due to the fact that most corporate tax evasion scams are legal, Deltour and Halet do not qualify as whistleblowers under Luxembourg law. In response to Perrin’s charges, the European Federation of Journalists said, “It is shameful that the Luxembourg authorities are going after a journalist who has acted entirely in the public interest to publish the information. The authorities must drop the charges against Perrin immediately.”
Beginning on Tuesday, their trial is expected to last until May 4.
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