Raymond Doherty 15 Mar 2017 05:11pm

Luxleaks whistleblowers have sentences cut

The two former PwC employees at the centre of the Luxleaks scandal have had their sentences reduced today by a Luxembourg appeals court

Antoine Deltour received a six-month suspended sentence and a €1,500 (£1,306) fine, reduced from a 12-month sentence, and Raphael Halet was ordered to pay a fine of €1,000 in place of a nine-month jail term, according to reports.

The Luxleaks scandal erupted in 2014 with a leak of almost 28,000 papers which showed how more than 1,000 businesses had tax avoidance schemes approved by the government in Luxembourg, many with paperwork prepared by Big Four firm PwC.

Some 340 companies from around the world – including Pepsi, Ikea, JPMorgan, and Fedex – are also shown to have arranged boutique tax agreements with Luxembourg tax officials, with unique deals designed for each business.

Complex agreements were arranged in which company headquarters from across the globe would set up local subsidiary companies alongside branches of domestic HQs in Luxembourg.

These would use minimal staffing operations, but allow interest to pass between the primary company and local subsidiary unnoticed. Once in the Luxembourg HQ branch, the sums of money could be filtered back into the business without the knowledge of domestic tax authorities.

ActionAid head of advocacy, Charlie Matthews, said today, “The Luxleaks whistleblowers acted in the public interest to reveal corporate tax avoidance, so today’s verdict is a disappointing outcome for advocates for transparency.

“Luxleaks helped reveal the secretive deals which enable companies to avoid paying their fair share of tax. The world’s poorest countries are the biggest losers when companies don’t pay the right amount of tax and leave key public services underfunded.

“The information revealed in the Luxleaks scandal should never have been secret in the first place. The EU and UK should make sure this never happens again by ensuring companies reveal how much tax they pay in every country where they operate.”

Jean-Claude Juncker, who was Luxembourg's prime minister at the time of the tax deals, faced a vote in the European parliament to declare him unfit for the position.