Facing up to 10 years in prison for exposing the multi-billion dollar tax avoidance scandal known as the Luxembourg Leaks, or LuxLeaks, two convicted whistleblowers received suspended prison sentences this week. Charged with violating secrecy laws and disseminating confidential papers, one of the journalists who initially reported on the leaked documents was acquitted on Wednesday.
In November 2014, the International Consortium of Investigative Journalists (ICIJ) revealed hundreds of major corporations had secured secret deals from Luxembourg, allowing them to hide billions of dollars in taxes. Pepsi, IKEA, Burberry, AIG, Heinz, Coach, Procter & Gamble, JP Morgan, FedEx, Deutsche Bank, Abbott Laboratories, and nearly 340 other companies were caught channeling hundreds of billions of dollars through Luxembourg in order to evade paying billions in taxes between 2002 and 2010.
A month after the initial leak, a second leak exposed 35 more firms, including Disney, Koch Industries, and Skype, seeking tax rulings from Luxembourg. Although the initial leak named PricewaterhouseCoopers (PwC) as having helped corporations obtain at least 548 tax rulings in Luxembourg, the second leak also named Ernst & Young, Deloitte, KPMG, and other accounting firms of brokering tax deals alongside PwC.
While working at PwC, Antoine Deltour accessed the accounting firm’s database and copied 28,000 pages of documents shortly before leaving the company in 2010. Instead of selling the documents, Deltour asserted that he acted in the public interest when exposing these tax evasion schemes.
Another former PwC employee, Raphael Halet, was charged with carrying out the second leak along with French journalist Edouard Perrin. Accused of manipulating Halet and taking an “active role” in the leaks, Perrin was charged with complicity in the violation of professional secrecy laws, as well as possession and dissemination of confidential papers.
“This is a trial that should not have happened in the first place. Antoine, Raphael and Edouard should all have been applauded and thanked for their roles in bringing the issue of corporate tax avoidance to the public’s attention, not dragged through the courts and punished,” ICIJ director Gerard Ryle wrote in a recent statement. “Without the courage of the whistleblowers and the dedication of the journalists who worked on the documents, Europe would not have seen the important debates and tax policy advancements of the past 18 months. This information was clearly in the public interest, and has been of enormous benefit to the citizens of Europe.”
Although Perrin was acquitted of the charges against him, Halet was sentenced to nine months in prison and fined €1,000. Convicted on charges including theft and violating secrecy laws, Deltour received 12 months in prison and fined €1,500. Both whistleblowers received suspended sentences.
“While it is heartening to see that Luxembourg has chosen not to criminalize journalism, I am deeply concerned that the conviction of these whistleblowers could have a damaging long term effect on press freedom and on transparency – both of which are pillars of democracy,” Ryle continued. “Whistleblowers and sources should be protected so they can continue to help journalists uncover information that would otherwise be swept under the rug.”
In a statement following the verdict, Deltour warned, “Sentencing the citizens at the origin of LuxLeaks revelations is equivalent to sentencing the regulatory advancements which have been triggered by these revelations and which have been widely acclaimed across Europe. This is also a warning towards future whistleblowers, which is detrimental to citizens’ information and the good functioning of the democracy.”
Both Deltour and Halet reportedly plan to appeal the verdicts against them.