European Commission President Jean-Claude Juncker has tried to knock back calls for him to resign over the “Lux Leaks”, an investigation which revealed how Luxembourg arranged secret deals with hundreds of companies to avoid tax.
At a bizarre impromptu press conference in Brussels the IB Times reported he told journalists he was “politically responsible for what happened in each and every corner of the Duchy of Luxembourg while prime minister” – but not for the tax deals which raked in huge figures for the Duchy’s exchequer.
Juncker was the longest serving European leader at the time he resigned from the position of Prime Minister in 2013 after it was revealed the state secret services had been involved in phone tapping and corruption.
He said that despite being the premier for 19 years, he was “not the architect of what you call the Luxembourgish model”, euphemistically referring to the regime which allowed multinational companies to save millions in tax.
The companies in question used Luxembourg-based shell companies to hide their profits.
He said: “I can’t explain to you what my Luxembourg government was doing on this issue, it’s up to Luxembourg government to explain to you,” he said in a completely contradictory statement, before adding that the “tax administration in Luxembourg acts autonomously, but I am politically responsible for these deals”.
He fought back at accusations he had behaved improperly saying that “everything that has been done was in compliance with national and international rules”.
In line with his firm beliefs in further integration for member states of Europe, he said the problem was due to insufficient tax harmonisation between countries and denied the tax arrangements were against the “spirit of Europe.”
The tiny Duchy became ‘home’ to at least 340 multinationals including Ikea, Pepsi, Deutsche Bank and AIG; companies which were paying as little as 0.25 percent tax in Luxembourg and nothing where their businesses were active.
Mr Juncker is facing a mounting opposition to his leadership, which only formerly started on the 1st November. Along with key eurosceptic groups, socialists, greens and liberals in the European Parliament – who traditionally back the Commission to the hilt – have called on him to step down.
Michael Theurer, the Germany Liberal MEP, told EUObserver “In view of the recently published Luxembourg Leaks, we have the duty to investigate the legality and the legitimacy of tax avoidance. If a cooperation between governments and big enterprises leads to tax avoidance, this has to be addressed in a broader context which goes beyond just Luxembourg.”
And Conservative MEP Daniel Hannan wrote in the Daily Telegraph saying:
Look, I hate to say “I told you so,” but… actually, sod it, no I don’t. Sometimes it needs saying. Mr Juncker’s lack of suitability for the top job was plain to see, and it is discreditable that so many MEPs and so many national leaders voted for him despite his manifest flaws. I mentioned at the time that you could barely find a single politician or official who was privately prepared to defend him.
Facing MEPs in Brussels today, the Commission President was also taken to task by UKIP Deputy leader Paul Nuttall:
“When Mr Juncker was campaigning for the post he stood on a platform of stamping out aggressive tax avoidance by multinational corporations across the EU, yet it is now clear from recent revelations that he had not practiced what he was preaching.” he said before referencing the infamous ‘Santer Commission’ which resigned en masse in 1999.
“Under his tenure Luxembourg was a “magical fairy land” for multinational corporations where tax rates were as little as one percent paid on profits.”
“Mr Juncker, you said that this was within the rules, but equally I say it is morally bankrupt. When asked by one of my UKIP colleagues back in July how you could justify tax standardisation across the EU whilst overseeing a tax haven in Luxembourg, you simply dodged the question and now we know why.”