June 2016 could be a crucial moment for whistleblowers’ protection

Added 16 Jun 2016
November 2014 was momentous month in the fight for global tax justice due to the Luxembourg Leaks (LuxLeaks) revelations by the International Consortium of Investigative Journalism. The scandal showed up how EY, Deloitte, KPMG and in particular PricewaterhouseCoopers, helped multinational companies (MNCs) to obtain tax rulings – also known as sweetheart deals – in Luxembourg that reduced their tax payments dramatically. These revelations would not have been possible without the role played by the two whistleblowers that exposed the scandal, Antoine Deltour and Raphaël Halet. They, and Edouard Perrin – the journalist who first published the information – have been on trial in Luxembourg since April, and the prosecutors have demanded 18 months for the two whistleblowers and a fine for Perrin. The final verdict is going to be delivered on 29 June, and now more than ever they need your support , including your signature. 

The impact of LuxLeaks

As a consequence of LuxLeaks, the European Parliament (EP) created a Special Committee on Tax Rulings , also known as ‘TAXE’ or simply the ‘LuxLeaks committee’. In a report of the Committee released on November 2015, the European Parliament asked the European Commission (EC) “to propose, by June 2016, an EU legislative framework for the effective protection of whistleblowers”. The Greens European Free Alliance in the EP took it one step further by tabling a concrete proposal for a Directive - “Whistleblower protection in the public and private sector in the European Union” - that was presented in May. All are now waiting for the EC to present its proposal. The deadline set by the Parliament – end of June 2016 – is very close, but so far there has been no sign of action. 

The LuxLeaks revelations also injected new life into the ‘movement’ to push EU institutions to shed light onto these secret tax arrangements or ‘sweetheart deals’. After several meetings and hearings with different actors, the EP’s TAXE committee stressed in its final report the need for public disclosure of the key elements of these tax rulings (para 111). This demand for transparency was also shared by several civil society organisations including Eurodad. However, despite these calls, the EC and the EU Member States decided that ‘sweetheart deals’ shall remain secret to the public. Instead, the EC proposed amendments to the Directive 2011/16/EU on Automatic Exchange of Information in the field of taxation, and after some negotiations and amendments this was adopted by the Council. What this proposal means in practice is that instead of public access to information about ‘sweetheart deals’, the information will be exchanged between EU tax administrations in a highly confidential manner. Meanwhile, the phenomena of ‘sweetheart deals’ seems to have become a major trend among Member States, as shown in a Eurodad analysis on tax rulings earlier this year.

What next for whistleblower protection? 

In conclusion, LuxLeaks put the issues of sweetheart deals and whistleblower protection at the top of the public agenda. Meanwhile, the importance of leaked information and whistleblowers became even more evident, with the release of Panama Papers, which was also only possible due to leaked information. But despite a strong push from the European Parliament, we have still not seen the political change that has been called for.
On 29 June we will hear the judge’s crucial decision on the LuxLeaks case. This decision will essentially examine whether disclosing the tax arrangements between a government and MNCs is considered a crime or an action in the public interest. 

Furthermore, June is when the EC is supposed to react and present a proposal to improve whistleblowers’ protection. Therefore, June 2016 will one month be remembered in one of two ways. It will be either the moment when whistleblowers were punished for disclosing the malpractices of an EU government and several MNCs, while the EC remained silent about it, or the moment when public interest was prioritised above tax dodging by multinationals and the EC took a vital step forward in the protection of whistleblowers. The latter will set the European Union on a better path towards a fairer future.