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09/12/2016

Parliament shuns committee of inquiry into Luxleaks

Euro & Finance

Parliament shuns committee of inquiry into Luxleaks

The Greens were disappointed at the Parliament's decision not to open a committee of inquiry into Luxleaks.

[greensefa/Flickr]

The all-powerful Conference of Presidents of the European Parliament decided on Thursday (5 February) that there would be no committee of inquiry into the Luxleaks scandal, giving it less clout in ongoing investigations of tax avoidance at the European level. EurActiv France reports

Calls to set up a special inquiry committee followed revelations in November that hundreds of multinational companies had secured secret deals from Luxembourg to slash their tax bills.

The scandal, quickly dubbed ‘Luxleaks’, embarrassed European Commission President Jean-Claude Juncker, who was Prime Minister of Luxembourg from 1995-2003, during which these tax arrangements took place.

In the European Parliament, a request to open a special committee of inquiry into the Luxleaks scandal had been signed by 188 MEPs.

But the three main Parliament groups – which all supported Jean-Claude Juncker’s appointment as Commission President – instead decided yesterday to launch a special committee on tax evasion, with no investigative powers.

>> Read: MEPs urge Schulz to set up inquiry committee on tax evasion

Two days previously, the legal service of the European Parliament had recommended that the political group presidents refuse the creation of an inquiry committee on the grounds that the proposal was ill-conceived.

The experts judged that the proposal failed to specify the object of investigation and lacked clarity in identifying the offences to be examined. The Greens saw this as nothing more than legal quibbling, and believed another expert could have said just the opposite.

“The legal service could have used this argument to refuse to open any committee of inquiry,” said the Belgian Green MEP Philippe Lamberts.

The legal argument allowed Martin Schulz, the President of the European Parliament, to avoid the issue in the Parliament’s plenary session, which will vote next week on the creation of the special committee on tax avoidance.

When supporters disappear

The request to create a committee of inquiry was launched by the Greens and supported by the radical left, and a certain number of MEPs from across the political spectrum.

A total of 194 MEPs had originally signed the petition to open the enquiry, but some later withdrew their signatures. On 5 February, the final count was 188.

A source within the European Parliament said “members of the EPP group [European People’s Party] came under great pressure from their party to withdraw their signatures, and most of them did so”.

The centre-right EPP group is the largest in Parliament and nominated Juncker as its candidate for the European Commission Presidency during the European elections campaign last year. After winning the elections, the EPP formed a ‘grand coalition’ with the Socialists & Democrats, in a job carve up that saw Juncker and Schulz respectively take the Commission and Parliament Presidencies.

Speaking after the decision, Martin Schulz, said, “The Conference of Presidents has decided by majority vote that a special committee would have more powers and would be better suited to deal with this subject.”

>> Read: Pro-Juncker coalition blocks committee of inquiry on Luxleaks

Reduced powers but a broader field of investigation

The proposed special committee would investigate the tax practices of countries like Luxembourg, the Netherlands and Ireland, both today and in the past.

But a special committee has less power than a committee of inquiry, although it can investigate a broader range of subjects. A committee of inquiry would have access to all national documents, while a special committee can only examine European documents.

The President of the European Parliament said he was “very optimistic that a special committee can bring real improvements”.

The Greens see red

This decision left the Greens and the radical left disappointed and frustrated.

Belgian Green MEP Philippe Lamberts said “we fought, and it was a long fight, because the committee of inquiry is the strongest tool against the administrative problems of the EU”. “The three large groups did not want to give the minority what they wanted.”

“I am very disappointed with this result. I am furious that the rights of the minorities in the European Parliament should be scorned to this extent. It is an attack on European democracy!” said the German Green MEP Sven Giegold. 

Background

More than 300 companies, including PepsiCo Inc, AIG Inc and Deutsche Bank AG, secured secret deals from Luxembourg to slash their tax bills by billions of euros, the International Consortium of Investigative Journalists (ICIJ) reported on 5 November, quoting leaked documents.

The companies appear to have channelled hundreds of billions of dollars through Luxembourg and saved billions of dollars in taxes, the group of investigative journalists said, based on a review of nearly 28,000 pages of confidential documents.

Commission President Jean-Claude Juncker, who was prime minister of Luxembourg from 1995-2013, has rejected all accusations of having orchestrated large-scale tax evasion and has even announced a new EU initiative to tackle tax evasion.

Juncker's defence was to deny any wrong-doing and to promise his full cooperation with the Competition Commissioner Margrethe Vestager, who is currently investigating four cases of tax evasion (two in Luxembourg, one in the Netherlands and one in Ireland). 

Further Reading

European Parliament

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