Edouard Perrin, French reporter, charged for role in Luxembourg tax-scheme leaks
Documents exposed secret deals to slash global tax bills of multinational companies
A French journalist has been criminally charged in Luxembourg for his role in exposing how hundreds of multinational companies used secret deals with the European duchy’s government to slash their global tax bills — a scheme that CBC News revealed last year was also being used by a pension arm of the Canadian federal government and Bombardier.
• Federal pension board used offshore ‘scheme’ to skirt taxes
• Bombardier’s Luxembourg tax scheme exposed
• Luxembourg kills EU tax haven crackdown
Edouard Perrin, a former reporter for France 2 television, was charged Thursday for being a “a co-author, if not an accomplice” in the leak of 16 corporate tax returns from the files of global accounting giant PricewaterhouseCoopers, according to a statement from Luxembourg’s Justice Ministry.
Perrin told a French newspaper he was questioned the day before for four hours.
Two other former PwC employees, both French nationals, have already been charged with five counts each as part of the investigation.
“Perrin’s reporting on Luxembourg’s secretive tax practices has been critical in triggering official European inquiries and opening significant, widespread debate about the fairness of tax policies,” said Gerard Ryle, director of the Washington-based International Consortium of Investigative Journalists, of which Perrin and several CBC reporters are members.
“For a founding member of the EU to bring charges against a journalist in relation to reporting that is clearly in the public interest shows a lack of respect for the important role journalism plays in holding the powerful accountable.”
Rulings sparked outrage
Investigators allege two separate sets of corporate documents were stolen from PricewaterhouseCoopers offices between 2010 and 2012: the corporate tax returns, and a raft of secret tax rulings by the Luxembourg government.
The rulings gave approval to complicated accounting and legal structures set up by PwC, which hundreds of multinational companies were using to shift profits to low-tax Luxembourg from the higher-tax countries where they’re headquartered or do business.
The revelation of the tax rulings sparked global outrage at how companies like Ikea, Pepsi or Fedex could exploit tax loopholes to sometimes cut their global effective tax rate to below one per cent.
While Perrin began reporting on some of the leaked documents in 2012 for France 2, the bulk of them weren’t publicly exposed until two years later, when CBC News joined a global consortium of investigative journalists to report on the leak.
Abusive tax practices
Those reports revealed that Canada’s Public Sector Pension Investment Board, the federal agency that invests civil servants’ and RCMP officers’ pensions, avoided taxes in Germany by using a Luxembourg-based tax plan devised by PwC consisting of a web of European shell companies.
The pension fund acquired 69 mixed residential and commercial buildings, totalling nearly 4,500 suites and units, in Berlin in 2008 for nearly $390 million. The purchase was routed through a dozen corporate entities in Luxembourg to exploit a loophole in Germany’s land transfer tax and avoid a $20-million tax bill.
PricewaterhouseCoopers’s own experts referred to this kind of setup as a tax “avoidance scheme.”
The revelations called into question the Canadian government’s own denunciations of the complicated, abusive tax practices that see multinational corporations route their profits through letterbox companies in tax-friendly jurisdictions.
Just days before the first CBC report about the offshore pension scheme, Revenue Minister Kerry-Lynne Findlay had told the House of Commons: “One of our government’s key areas of concern is the issue of international tax evasion and aggressive tax avoidance.”
Quebec-based transportation company Bombardier also used totally legal fiscal manoeuvres in Luxembourg to slash its tax bill, according to documents from the leak.
