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PanEuroLife Executives Still In French Gaol Without Charges

by Ulrika Lomas, Tax-News.com, Brussels

08 May 2001


'You may have heard that some of PanEuroLife's operations in France are being reviewed by French Authorities. We are cooperating with them and we want you to know that our service to you will be unaffected.'

Thus says the web-site of PanEuroLife, the Luxembourg life insurance company eleven of whose executives are languishing in the historic La Sante prison in Paris while the French authorities try to work out whether and how French nationals have been using the company to launder money or evade tax.

The company is chaired by Gaston Thorn, the former Luxembourg prime minister who then headed the European Commission from 1981 to 1985. Although the company says he plays no part in day-to-day operations, he is surely pulling every lever at his command, especially since the French also arrested his chief executive Jacques Drossaert when he travelled to France to find out what was going on.

So far no charges have been laid against the incarcerated executives, and it will be interesting to see what crimes are alleged against them if, as seems likely, they have done no more than act as passive conduits for French nationals to place their money in Luxembourg financial assets. The French nationals may or may not have evaded tax: that is not within the competence of PanEuroLife officials to know or check. The company insists that it warns its clients to abide by the tax regulations of their own countries.

PanEuroLife's Luxembourg-based products include investment funds in an insurance 'wrapper', and the company goes to some lengths on its web-site to explain why the accumulating income and capital in such funds is not subject to tax or information exchange, and won't be, even if the EU Feira agreements are implemented.

The company made a statement to the press at the end of last week:

'PanEuroLife is a highly regarded life insurance company based in Luxembourg, where financial security is guaranteed by law, and insurance companies are subject to strict regulations. It sells life insurance products inside the European Community, where investors have free access to the various European life insurance providers operating under regulations known as the "Freedom to Provide" service regulations.

'PanEuroLife representatives learned that, on Tuesday, April 24, 2001, French legal authorities conducted a search of the private residences and professional facilities of several PanEuroLife employees who reside in France, and detained them pending further investigation. After learning of these actions, Jacques Drossaert, PanEuroLife General Manager, voluntarily travelled from Luxembourg to Paris, to answer questions by the authorities, whereupon Mr. Drossaert was also detained.

'News of this investigation came as a complete surprise to PanEuroLife. In fact, the company has before these events, always co-operated with the French authorities and has consistently agreed to answer any questions asked.
PanEuroLife also understands that the French authorities did not consult the appropriate Luxembourg authorities before acting, and that there is no corresponding investigation in Luxembourg where PanEuroLife is headquartered.

'In this context, PanEuroLife considers that the detention of Mr. Drossaert and the other PanEuroLife employees is totally unjustified. The detention of Mr. Drossaert who voluntarily appeared in France to answer questions is particularly appalling. Therefore, all efforts are carried out to obtain their immediate release.

'At this stage of the investigation, no charges have been demonstrated against PanEuroLife or any individual, and they are presumed innocent under French law.

'PanEuroLife will continue to co-operate with all relevant authorities and will defend itself vigorously against any charges by all legal means.'

Apart from an extensive analysis of the application of the EU's plans for cross-border taxation of interest on savings, the company's web-site also explains why the income accumulating in its insured funds is not covered by the US 'Qualifying Intermediary' regulations, so that its US policyholders would not be subject to information disclosure under the QI regulations.

Whatever the outcome of the affair, Europe's financial institutions will think twice in future before opening offices in France, and their executives may find good reasons not to travel through Charles de Gaulle if they can possibly avoid it!

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