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The Whistleblowers Behind the LuxLeaks Scandal Are On Trial In Luxembourg

Three men accused of whistleblowing on tax dodging schemes that saved multinational companies millions of dollars could face up to five years in jail and a €1.25 million euro fine.
Antoine Deltour leaves court on the first day of the LuxLeaks whistleblower trial in Luxembourg, 26 April 2016. Photo by Julien Warnand/EPA

The trial of three men accused of being behind one of the largest leaks in corporate history has begun in Luxembourg.

The accused are two former employees of auditing giant PricewaterhouseCoopers, Antoine Deltour and Raphael Halet, as well as a Edouard Perrin a documentary maker who was the first journalist to publish a report on the tax scandal, which later became known as the "LuxLeaks." The leak ultimately resulted in investigations by media outlets in more than 20 countries, spearheaded by the International Consortium of Investigative Journalists (ICIJ).


The men on trial are all French citizens and face a variety of charges relating to violating professional secrecy as well as stealing, possessing and disseminating more than 20,000 documents that revealed multinational corporations such as Amazon, Apple, Heinz, Ikea, Pepsi and others were funnelling profits through Luxembourg in order to save millions of dollars in tax.

While Deltour and Halet are accused of being the ringleaders behind the leak, journalist Perrin is alleged to have been their accomplice.

Perrin's documentary originally aired in 2012 but prosecutors claim he and the other two accused were also complicit in a second leak of more than 28,000 pages of sensitive documents revealed in 2014. Among the confidential papers released were tax rulings and returns that implicated dozens more companies in dodgy tax practices, including the creation of complex tax structures.

Luxembourg, one of Europe's smallest sovereign nations and the world's only remaining grand-duchy, has denied any wrongdoing although the deals it struck with big businesses, allowing them to benefit from its income tax cap of less than one percent, have effectively hurt other countries in Europe and beyond by depriving them of tax revenue.

The charges against Deltour, Halet and Perrin follow a complaint filed against them by PricewaterhouseCoopers and carry a maximum penalty of five years in prison as well as fines of up to 1.25 million euros ($1.4 million).


Speaking on Tuesday, Deltour's lawyer said that his client's actions were not premeditated act of theft and that he had stumbled across the documents while searching for training files.

A third round of leaks — this time of files obtained from Ernst & Young, Deloitte, KPMG and other auditing and consultancy firms — released weeks after the 2014 "Luxleaks" implicated yet more companies in dodgy tax dealings in Luxembourg. Among them were McDonalds, accused of dodging a €1 billion tax bill between 2009 and 2013, and Disney, which was found to have divided itself into 24 subsidiaries that loaned each other money in order to absorb profits in countries with high taxation rates and move money to countries with lower taxation rates. However, no one is currently on trial for releasing this set of papers.

Whilst many of the corporations implicated in the scandal have not technically broken the law by funnelling profits through a tax haven, the "LuxLeaks" scandal has drawn European leaders' attention to the loopholes that allow multinational corporations to hugely boost their profits by dodging the tax collector, and have driven global demands for reform.

As part of a subsequent crackdown on tax avoidance, the EU Commission — the executive arm of the European Union — ruled last year that a so-called "sweetheart" tax deal struck in private between Starbucks and Dutch tax officials was "unlawful state aid." The world's biggest coffee chain was ordered to pay back €30 million in tax that it had avoided.


Fiat, an Italian carmaker, has also been ordered to pay back €30 million in taxes it dodged by striking a deal with the Luxembourg authorities. Similar cases investigations into Amazon and Apple tax dealings in Ireland and Luxembourg respectively are still ongoing, although a preliminary conclusion by the European Commission found the online book seller had received favurable and selective tax treatment amounting to a illicit state subsidy.

As well as exposing the tax dealings of 340 big firms, the "Luxleaks" scandal also put pressure on the European Commission President Jean-Claude Juncker, who was the prime minister of Luxembourg at the time that many of the tax avoidance deals were taking place in the country.

In an interview with French daily Libération last year Juncker, who was forced to face a vote of no-confidence in his first month in office over the scandal, claimed that "everyone was guilty" in the endemic lack of response that enabled multinationals to use Luxembourg as "dark room" for avoiding tax, but also admitted he had been personally "weakened."

"Luxleaks" was until recently the largest-ever corporate leak, but was overtaken last month by the Panama Papers which saw a whopping 11.5 million documents containing information on 214,000 offshore companies associated with law firm and corporate service provider Mossack Fonseca handed over to journalist for examination.

The case against Deltour, Halet and Perrin has drawn widespread condemnation from rights groups who say that the men are whistleblowers in need of protection, not prosecution.

In a statement published ahead of the start of the trial Transparency International said that Deltour, who was awarded a Citizens' Prize from the European Parliament for contribution to the common good, should be "commended not prosecuted". The NGO also expressed concern that the case would deter future whistleblowers from coming forward with information that was in the public interest.

While the Luxembourg has laws protecting whistleblowers, these do not extend to those behind the LuxLeaks as the practices revealed were not illegal according to the country's authorities.

Meanwhile The Centre For Investigative Journalism decried the charges against Perrin "a clear attack on press freedom" and the European Federation of Journalists called the decision of the Luxembourg authorities to prosecute him as "shameful."