LuxLeaks whistleblower loses Strasbourg appeal

Raphaël Halet helped lift the cover off Luxembourg’s favorable, secret tax regime for multinational companies, but the European Court of Human Rights, by a 5-2 vote, upheld his conviction for doing it.

The Strasbourg court said that Luxembourg did not violate whistleblower Halet's freedom of expression rights when the country’s courts found the former employee of international audit firm PwC guilty of theft for downloading tax records on a work computer.

Those documents, later released to journalists, showed how major companies, including Apple, Amazon and IKEA among others ducked higher taxes in their home countries by shuttling money to the Grand Duchy.

But two dissenting judges said that punishing Halet for lifting the veil of secrecy around the businesses’ tax affairs, and his employer's role, will chill potential whistleblowers from doing the same.

Halet and another whistleblower, Antoine Deltour, initially shared PwC documents with investigative journalist Edouard Perrin, who conducted a 2012 probe of the country for French TV.

That reporting led Perrin to collaborate with the Washington, D.C.-based ICIJ in 2014. The LuxLeaks investigation then saw journalists around the world hexamining the documents.

LuxLeaks identified 343 worldwide businesses making private deals with the government of Luxembourg, many of which were concluded during the tenure of Jean-Claude Juncker as Prime Minister. Juncker had just become the European Commission President, when LuxLeaks appeared. The investigation put both tax avoidance and the protection of whistleblowers firmly on the EU agenda.

Thanks to the profile of LuxLeaks, the actions of Deltour and Halet resulted in many European governments – notably excluding Luxembourg – promising to end confidential deals allowing major corporations to pay less than 1 percent tax in some cases.

Controversy about Luxembourg’s role in tax avoidance has continued. Earlier this year, Le Monde’s OpenLux investigation found that Luxembourg is used by 55,000 offshore companies managing assets worth at least 6 trillion euros ($7.3 trillion). The investigation, produced with 10 media partners, claimed many of these are "phantom companies" without offices or employees.

LuxLeaks had significant repurcussions for the whistleblowers involved. Halet and Deltour were threatened with 18 months in jail, but while Deltour was eventually acquitted, Halet – who was fined $1,200 – appealed to the EU's highest human rights court arguing his right to free expression was violated.

Despite recent advances in whistleblower protection in Europe, the court did not uphold Halet’s appeal. The court said his conviction “struck a fair balance,” between protecting his freedom of expression and the rights of PwC, a $43 billion firm and that Halet’s contribution was not unique.

The case has produced warnings from dissenting judges Judges Paul Lemmens and Darian Pavli that the courts are setting an unrealistic standard for whistleblowers, that reduces the effectiveness of legal protections.

Corporate tax avoidance will not stop after one leak or one investigation, said the justices:

“In some cases, it takes decades of argumentation and counter-argumentation before public or private behavior really changes,” the judges wrote, adding that the court’s decision “is likely to have a significant deterrent effect on future whistleblowers in the private sector, because a person who is considering disclosing information that he believes corresponds to the public interest may face great uncertainty in determining whether this information will be considered to meet the much higher standard.”