While the European Parliament was demanding a clamp down on tax havens, many of its own MEPs were using their monthly office allowances to finance a luxury pension scheme that held corporate assets in the Cayman Islands, Bermuda and elsewhere.
The investments, including in large banks requiring bailouts, were made at the height of 2008-2010 financial crisis that had ushered in mass unemployment and austerity cuts affecting ordinary Europeans.
Among those were 16,000 shares of Cayman Islands based Teck Resources Ltd, Canada’s largest diversified mining firm. The shares were held shortly before the European Parliament passed a resolution slamming the role played by tax havens in encouraging and profiteering from tax avoidance.
“When investments take place through jurisdictions such as Cayman Islands and Bermuda, it should definitely make the alarm bells go off,” said Tove Maria Ryding of Tax Justice advocacy group.
Ryding said that although not all investments through these jurisdictions are problematic, they should definitely be a reason for introducing extra precaution and high standards of transparency.
The latest revelation also comes at a time when the European Parliament is trying to regain public trust in the wake of the Qatargate corruption scandal, where one of its now former vice-presidents is awaiting trial wearing a police ankle monitor.
The investments were made on the behalf of a so-called voluntary pension fund, a Luxembourg-based scheme that is currently running a €379m actuarial deficit and which may require a taxpayer bailout as as early as next year. MEPs at the time only had to contribute two years into the fund in order to then receive a pension for life.
The parliament’s secretive leadership, known as the Bureau, is currently scrambling for solutions in the hopes of avoiding another public relations disaster ahead of the 2024 European elections.
The issue has riled critical MEPs who have for years been piling on pressure for the Bureau to come up with answers but to no avail. Among them is Monika Hohlmeier, a German centre-right MEP who chairs the powerful budgetary control committee.
“The Voluntary Pensions Fund has been causing me serious headaches for some time now,” she said, in an email.
“When I now hear that the investment strategy included assets in tax heavens such as the Cayman Islands, then it just adds to the ever-growing list of problems this fund accumulated”, she said.
Coal mine shares aside, the fund also held numerous shares in the Bermudas, as well in other tax havens like Hong Kong, Singapore, and Switzerland. The fund eventually bounced back to pre-global financial crisis figures, noted asset managers in a 2011 report.
EUobserver obtained the list of investments spanning 1994 to 2010 from the Luxembourg business register.
But the breakdown of individual investments stops post 2010 with the European Parliament refusing to release any further details.
“The voluntary and complementary pension fund for MEPs was created in 1990, when there was no single statute for MEPs,” said a spokesperson from the European Parliament.
“The fund was closed in 2009, when the new MEPs’ single statute entered into force,” she said, noting the fund is a non-profit association governed by Luxembourgish law.
Although no longer open to MEPs since 2009, the fund is still making investments today on their behalf.
Asked about those investments, she said the European Parliament was unable to comment because the fund is a “third party”.
This comes despite the fund’s board being composed of sitting MEPs, including Janusz Lewandowski and European parliament vice-presidents Othmar Karas and Roberts Zile.
Zile is the parliament’s document gatekeeper. Late last year, he refused a freedom of information request filed by EUobserver to disclose additional information on the voluntary pension fund.
And earlier this month, the European Parliament passed its budget report and called upon the Bureau to clarify the entitlements of current and past MEPs stacking up multiple pensions.
The Greens had tabled an amendment demanding MEPs withdraw from the voluntary pension fund if they already receive another pension.
But that amendment was voted down 272 against 203. Among those rejecting it were Lewandowski, Karas, and Zile. The latter two are beneficiaries of the voluntary pension fund.
Other notable beneficiaries include the EU’s foreign policy chief Joseph Borrell as well as former European climate commissioner Miguel Arias Canete and others.
