Luxembourg Insurance Firm Dumbfounded By French Money Laundering Inquiry

by Ulrika Lomas, Tax-news.com, Brussels

01 May 2001

According to French newspaper Journal du Dimanche, France has launched a judicial inquiry into international tax fraud and money laundering said to centre upon a Luxembourg life insurance firm headed by Gaston Thorn, the former prime minister and a former European Commission president

The inquiry centres on PanEuroLife, through which a number of French citizens are said to have taken out insurance policies. Journal du Dimanche reported that fifteen people in France have been questioned by Parisian judge Dominique de Talance and four jailed last week for "organised (money) laundering".

EU citizens are permitted to take out life insurance policies in different countries - provided they are declared to tax authorities - under an EU law on the free movement of capital. However, the Journal du Dimanche said the French financial research and investigations brigade (BRIF) suspected hundreds of French shopowners and small businesses of using PanEuroLife to evade tax and to filter suspect money.

The alleged wrongdoings of a number of French citizens first came to the fore after the French Post Office alerted the BRIF in 1997. Journal du Dimanche said financial transactions were usually made in cash via the postal cheque account of an unnamed French bank based in the La Defense business district of Paris, which then forwarded the money to Luxembourg. The paper reported: 'Several hundred million francs are at stake and the French fiscal administration is planning an impressive series of additional tax demands.'

Banking secrecy is said to have been the real appeal of Luxembourg in the PanEuroLife affair, plus the fact that the tiny country is host to a very high number of insurance companies, so taking out a policy with one of them would not have appeared as anything out of the ordinary.

Meanwhile, PanEuroLife has confirmed in a statement that a legal investigation into its operations and its employees in France has been launched but reiterated that the company is a well-known and established organisation in Luxembourg and its activities subject to strict regulation. When PanEuroLife learned of the French action, its managing director Jacques Drossaert immediately went to Paris to be questioned by the French authorities and was promptly detained himself.

The inquiry - which was not discussed beforehand with either the Luxembourg authorities or the company itself - has left PanEuroLife completely dumbfounded, especially given that the company has always co-operated with the authorities and responded to any questions. It says the detention in France of its director and other staff is illegal and it is working towards their release, and the company will fight to clear its name.

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