Luxleaks and the Whistleblower

Last November, the International Consortium of Investigative Journalists (ICIJ) began publishing stories based on Luxleaks, a whistleblower's 28,000-page disclosure of tax avoidance schemes flacked by the government of Luxembourg. Through so-called 'comfort letters,' the Luxembourg Treasury informed multinational, multi-billion-dollar corporations that their profits are safe from high tax rates if moved into the country through specified transfer pricing schemes, which, many charge, are equivalent to illegal state aid.

And that's not all. Until the scandal broke, the man apparently behind the schemes -- Jean-Claude Juncker, then Prime Minister of Luxembourg and now President of the European Union Commission -- had made repeated pledges to ensure equal tax rates and rules across Europe. He has denounced the beggar-thy-neighbor low-tax schemes that governments like Luxembourg, Liechtenstein and Switzerland use to draw capital toward their own coffers.

It turns out that Juncker -- who is, after all, a politician -- was less than sincere. In essence, he apparently allowed companies to avoid taxes in his country, thus depleting other EU countries of financial resources. And now, as President of the Commission, he heads the organization investigating Luxembourg's low tax schemes. The EU Commission was already investigating Amazon and Fiat subsidiaries for tax avoidance/evasion privileges in Luxembourg that amounted to illicit aid. Now more corporations are under scrutiny: Disney, Ikea, Koch Industries, AIG, Pepsi, Accenture, Burberry, Procter & Gamble, Heinz, JP Morgan and FedEx. Leaked papers pointing to the Coach handbag firm, Abbott Labs and Deutsche Bank have also been exposed.

Not surprisingly, Juncker sees no conflict of interest as he heads up an investigation into his own conduct. And he defends himself by pointing out that he did nothing illegal.

But the whistleblower? He's in a world of pain. Antoine Deltour, an auditor at PricewaterhouseCoopers/Luxembourg, was arrested and charged with theft, violation of professional secrecy, violation of trade secrets and illegally accessing a database.

In brief, the man who exposed what are at the very least unethical tax avoidance plots is charged as a criminal, but the man who orchestrated the whole sorry mess has done nothing illegal. At least not so far as we know -- or are ever likely to find out -- because he himself is in charge of the investigation into Luxleaks.

At the Government Accountability Project in Washington, where we work with whistleblowers, we have a poster on our conference room wall that reads: "It must never be a crime to report a crime." We're working hard to decriminalize whistleblowing, whether it happens in the intelligence community, the private sector, government contractors or the government itself.

But Luxleaks confronts us all with a new problem: What happens when it's a crime to report a scheme that isn't a crime, but it ought to be?

Bea Edwards is Executive & International Director of the Government Accountability Project, the nation's leading whistleblower protection organization. She is also the author of The Rise of the American Corporate Security State.