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December 21, 2015
Antoine Deltour -- The LuxLeaks Whistleblower
by Teri Sprackland

Full Text Published by Tax Analysts®

Luxembourg's long-hidden role as a secret tax haven in the very heart of the European Union has been shattered by one man who happened to be in the right place at the right time to do what he thought was the right thing. Antoine Deltour brought to light how the Grand Duchy had for years quietly, but on an astounding scale, offered the best tax arrangements in Europe to scores of multinational companies.

Many people had to have known about Luxembourg's secret tax rulings -- from government officials to hundreds of company executives and staff to a battalion of tax lawyers and accountants. Yet only one man, a 24-year-old auditor barely two years into his career at PricewaterhouseCoopers LLP, decided that although legal, the private rulings were just plain wrong. He then showed the rest of Europe what those in the know had kept so quiet for so long. For that, he was awarded the European Parliament's 2015 European Citizen's Prize, which one Luxembourg politician has publicly called a national humiliation. Finance Minister Pierre Gramegna called the scandal "the worst attack Luxembourg has experienced in its history."

But Deltour has paid a price for his actions. The French citizen is facing a long ordeal in the Luxembourg court, where charges of theft and breach of corporate confidentiality are pending. If convicted, he could be sentenced to five years in prison and fined over €1 million. His supporters are many and varied, without whom the legal costs alone would be insurmountable. Yet the case still rests on the shoulders of one young man, who will turn 30 this month.

Birth of a Scandal

Deltour made the decision five years ago to copy documents he found in the training materials located on PwC's computers. In October 2010 he was not happy with his job, he was uncomfortable with the business practices he saw in Luxembourg, and he wanted to go home to Épinal in northeastern France, a small town about 100 miles from Luxembourg, where he had lived most of his life. (Épinal is perhaps best known for 19th century lithographic images still prized by collectors and for the nearby American military cemetery where over 5,000 American casualties from World War II are buried.)

Eric Garault/Pasco and coHis decision to leave was not unusual. The turnover for new hires at PwC was notably high. As in many professions, the early years as an auditor, accountant, or tax attorney are arduous. Deltour had been recruited straight out of a two-year program in the "École Supérieure de Commerce" in Bordeaux, France. A former student who had become a manager at PwC had come back to make the pitch to join the company. Deltour was in the PwC training program from January to April 2008, and then was offered the position as auditor in September 2008.

He was assigned to work in a department that specialized in real estate clients and in holding companies investing in private equity. Almost all auditing departments at PwC Luxembourg also audit investment funds, which are the biggest finance activity in Luxembourg.

Deltour did not like what he saw and was not enjoying the work. He decided to quit.

However, the available company training materials were extensive and could help him continue his professional education on his own. On the advice of another trainee, he searched the computerized training materials. Deltour said that he had never thought to look for materials specifically related to the tax rulings.

What he found was far beyond anything he had imagined -- all just sitting there in the readily available training documents, with no particular effort to conceal their contents. Each file opened with a copy of the binding legal agreement signed by the government of Luxembourg and the relevant company, with specific details appended. After all, the auditors have to know this information to do their jobs -- but not necessarily all of it, all at once. In that, PwC seems to have left the information door wide open. The company has since insisted that the theft caused no harm to its clients, because everything described in the documents was perfectly legal. Legal, but not intended to become public.

On the last day of his employment, a simple cut-and-paste command provided Deltour with copies of documents detailing secret tax deals made by hundreds of multinational corporations with the Grand Duchy of Luxembourg. He walked away with proof that Luxembourg had been profiting immensely from a legal, but hidden, arrangement that gave multinationals very low tax rates on profits earned elsewhere. The arrangements allowed companies to set up a Luxembourg legal entity with the requisite post office box and telephone number, hold pro forma board meetings by phone or in person in Luxembourg, and pay as little as 1 percent tax on billions in corporate profits into the Grand Duchy's coffers instead of 20 to 30 percent to the countries where the customers actually lived.

When Deltour left Luxembourg, he was unsure of how to bring this matter to public view, but that was always his goal. He did not originally intend for the full documentation to be released publicly, but rather thought that he should inform an appropriate nongovernmental entity. Then, in 2013 Edouard Perrin, an experienced journalist with the French investigative TV news program Cash Investigations, contacted him. Perrin had read some comments Deltour had written in response to an online article on taxation, in which Deltour did not identify himself as a former Luxembourg auditor, but that had convinced the reporter that Deltour was a knowledgeable source. The TV program is headed by Paul Moreira, who has a solid reputation for his investigative documentaries. Deltour thought that the program on the France 2 channel would help him reach the public, and he decided to give Perrin the story.

Going Public

The May 2012 television program revealed the reality behind the European Union's highly distorted tax administration system, where member states compete aggressively against each other for new investments and skirt the EU treaty rules against illegal state aid. However, the initial airing of the two episodes, only available in French, did not make much impact beyond France and Luxembourg. Deltour's role was not disclosed in the program. It did alert PwC to the fact that someone had taken the data. The company soon figured out who had copied the documents, and filed charges with the Luxembourg authorities. PwC fired a second employee, who has also been charged by the Luxembourg court but has maintained anonymity. In relation to the second case, the court also charged Perrin.

Soon after, Deltour hired Philippe Penning, a Luxembourg lawyer, and William Bourdon, a very well-known and well-connected French lawyer whose client list reads like an international who's who of individuals fighting legal battles with governments. Bourdon is on Edward Snowden's legal team and represents Hervé Falciani, as well as several UBS whistleblowers.

In November 2014 the story got much bigger. The data were obtained by the International Consortium of Investigative Journalists (ICIJ), which renamed the story "LuxLeaks" and pored through the data. Deltour denies giving the data to the ICIJ. The results were published by the ICIJ's media partners around the world. The Guardian released the story in London as did Le Monde in Paris. The last time Luxembourg received this much attention was during the Battle of the Bulge in December 1944.

The LuxLeaks Storms Hits

The ICIJ's story unleashed a political storm of epic proportions. "Fiscal transparency" became the new rallying cry. Jean-Claude Juncker, the finance minister and prime minister of Luxembourg during the heyday of the private rulings from 2002 to 2010, narrowly averted an effort in the European Parliament to remove him from his new post as head of the powerful European Commission. He has been forced to appear before EU parliamentary members to answer questions.

Although the Luxembourg court had not named Deltour in its December 12, 2014, indictment, referring to him as Monsieur X, secrecy was no longer his best option. He has long maintained that his deeds were for the greater good and not for personal gain. Deltour chose to give his first interview to Libération, a French newspaper founded by Jean-Paul Sartre and others in 1973. The paper had a strong reputation for standing up against government authoritarianism. The article hit the streets of Paris on December 14, 2014.

It also hit home. Épinal, with a population of about 32,000, was abuzz. In February, Deltour was asked to talk at an open town meeting. Despite the winter cold, well over 100 Spinaliens, as the inhabitants of the town of Épinal call themselves, showed up. The result was the formation on February 28 of a local support committee, a comité de soutien, which set up a website (

Soon that support became international.

Since then, the European political landscape has been irretrievably altered, the careers of European power brokers -- from Juncker on down -- have been threatened, and the European and national parliaments are gripped by passionate debates about the difference between what is legal and what is ethical. Country-by-country reporting obligations, where companies must publicly detail their sales, profits, and taxes in each jurisdiction, are being considered in the EU member states. There is renewed interest in the long-dormant effort to introduce a common consolidated corporate tax base, which corporations said would clarify their obligations. Again, the issue of national sovereignty over tax rates is at stake, but so are potentially huge tax windfalls.

The sharing of information between EU countries, through the automatic exchange of information on tax rulings, is no longer an occasional request. It has become the subject of fierce debate: Should it be applied to rulings still in force? Should it be done every six months or every three months? Repeatedly, Luxembourg officials have said that they provided any rulings requested to other member states. It wasn't their fault, they maintain, if no one asked.

Apple, Amazon, Facebook, and other multinationals are on the defensive. At first, companies simply refused to appear voluntarily in front of the European Parliament's Special Committee on Tax Rulings and other Measures Similar in Nature or Effect (TAXE committee). The corporations could quite accurately say they did not break the laws of Luxembourg. But the negative publicity --and a growing determination among members of Parliament to bar those companies from lobbying -- brought most of them to the committee's final meeting of 2015. The new year will usher in TAXE II, a new committee with a similar mandate.

What Now for Deltour?

Deltour has been hailed as the whistleblower who told Europeans, and the world, about Luxembourg's secret tax rulings. But as always, reactions to a whistleblower are mixed: hero or traitor, villainous thief or naïve fool?

Deltour's case "shows the absolute necessity to grant whistleblower protection to individuals who reveal or report illegal offenses but also unethical behavior which, without being illegal, undoubtedly harms the public interest," according to Bourdon. Legal tax avoidance and tax laws allowed companies to channel billions of euros through Luxembourg through fictitious entities. "Although it did not constitute an illegal behavior or behavior qualifying as a criminal offense as such, these tax rulings are undoubtedly unfair and unethical situations that harm the public good," Bourdon said.

Deltour's social, professional, and personal life have been seriously affected by his decision to bring Luxembourg and the MNEs in front of the court of international public opinion, Bourdon said.

Support for Deltour has grown over this year, with Transparency International leading the way in citing his example as a courageous whistleblower. The Tax Justice Network is also a supporter. He attended two conferences on tax justice and has testified at the European Parliament. He went to Brussels to receive the European Parliament's 2015 European Citizen's Award for contributions to European cooperation and promotion of common values. A public letter of support has been published, with a wide range of signatories. Many Australian organizations see parallels to their own country's difficulties with MNEs that channel profits made in Australia to Singapore or other low-tax jurisdictions.

Deltour has said that Luxembourg's private rulings damaged the public interest because democratically elected governments are having increasing difficulty financing public services, which are enjoyed by all, including the multinational companies. In the midst of current budget crises, Deltour has said, it doesn't make sense to allow the biggest international companies to escape from paying taxes while smaller businesses without international connections bear the bigger burden. Even households with very modest incomes are thus coping with increased taxes while the aggressive international tax competition promotes a "race to the bottom" that damages the ability to collect appropriate taxes from corporations, he said.

The case is unlikely to come to trial until 2017. Until then, Deltour is keeping a very low profile.

He has chosen to restrict his public comments and doesn't seek the limelight. For now, Deltour is a quiet man who is living a quiet life in his hometown. He works in the civil administration of the nearby city of Nancy. He plays the clarinet in the town orchestra. He enjoys local theater productions. Lately, his time has been filled by the new arrival in his life, a daughter born in September to him and his childhood sweetheart. That doesn't leave much time for civic affairs or keeping up with the news.

Teri Sprackland is a reporter with Tax Notes International.
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