Everyone’s innocent in the €61 million Caritas fraud

A year after the €61 million Caritas fraud came to light, Luxembourg has learned very well who isn’t to blame for the scandal: the Prime Minister (kept in the dark), the Finance Minister (gagged by confidentiality), Spuerkeess (rules were followed), BGL BNP Paribas (CSSF did not disclose failings), the financial watchdog (warned in 2018), Caritas (board did not know) and the public prosecutor (cannot comment on ongoing investigations). 

Bear in mind, this is in no shape or form a small scandal. Consider the money involved. €61 million is roughly a third of the extra €187 million the state will have to find starting 2026 just to cover its share of the proposed higher pension-contribution rate.

Additionally, this is public money stolen on behalf of a charitable organisation from at least one wholly state owned bank.

And it has dealt a hard blow to Luxembourg’s reputation as a premier global finance centre. 

“It never reached my desk”

Prime Minister Luc Frieden this week said that he discovered the €4.97 million CSSF fine against state-owned Spuerkeess only at the end of July, perhaps from the regulator’s press release.

That was almost three months after the fine was imposed — and three months after bank executives told parliament’s Caritas commission (while being aware of the fine) that it was not at fault. 

Frieden even said “thank God” that not all issues end up on his desk, despite last year declaring that the Caritas affair was a top priority for him. What changed? 

This isn’t just any other mundane issue. A €5 million penalty against Luxembourg’s state-owned bank, handed down for years-long anti-money-laundering failures linked to the country’s largest charitable fraud, shouldn’t be a footnote that the Prime Minister stumbles across months later. 

It strikes at the core of three things Luxembourg claims to prize above all: financial integrity, good governance and the credibility of its public institutions. 

It desrves to be at the very top of the prime minister’s desk.

“I knew but couldn’t say” 

Finance Minister Giles Roth has conceded that he was briefed by Spuerkeess about the fine on 2 May, the day it was issued. Yet, for some reason he did not inform the Prime Minister or, as far as we know, anyone else in the government. He also appeared before the Caritas Commission and did not disclose what he knew. 

His defence was that he was legally bound by principles of “presumption of innocence” and “principles of confidentiality”. But if the CSSF had already found that the bank was at fault, why invoke “presumption of innocence”?

Additionally, Green member of parliament Sam Tanson has noted that Roth was unable to specify which law prevented him from informing the Prime Minister or, indeed, the parliament. 

Roth’s second argument was that Spuerkeess could have still filed an appeal against the decision. That appeal, it turned out, only requested that the fine not be made public.

Lets not make it public

Spuerkeess, for its part, insists it answered MPs “in good faith” during the now-famous 5 May hearing, even though it already knew the penalty existed. Asked flat-out whether the bank had made any mistakes, the reply was “no”. 

MPs later branded that answer a lie; the bank now calls the exchange a “misunderstanding,” saying it thought the question referred only to internal procedures.

A few days after the hearing, the bank proceeded to file an appeal with CSSF asking that the fine not be made public. Where would we be now if the regulator had granted that request? 

What happened with BGL?

Let’s not forget there were two banks in the room. Spuerkeess wasn’t the only lender that extended credit lines later siphoned off; BGL BNP Paribas did as well. Yet the CSSF issued no sanction against BGL.

On the very day it fined Spuerkeess, the regulator produced a single-page press release about BGL which said that inspectors had carried out on-site and off-site checks, the findings were shared with the bank, and the CSSF now “considers its intervention closed.”

What does that mean? Does it mean that no failings on the part of BGL BNP Paribas were found? Does that mean there were failings but they were not severe enough to warrant a sanction? 

We don’t know. 

When did the Caritas board know?

Let’s also not forget that the institutional failure began inside the charity itself. We’re asked to believe that a single employee could initiate every transfer, draw down fresh credit lines and shift €61 million—all without triggering so much as a cough from Caritas’s internal alarms. Apparently the money just walked out the door and nobody noticed.

Since the scandal broke, the charity’s leaders have expended far more energy timestamping blame than accepting it. Depending on whose account you trust, the board first heard about the runaway credit lines on 6 June, 25 June or 15 July. Three dates, three narratives—yet still not one person willing to stand up and own the failure.

One key question

There is at least one key question relating to what Spuerkeess did — or didn’t do — in the Caritas case that still needs answering. And the answer could point directly to where responsibility lies.

The CSSF notes in its fine that following an inspection at Spuerkeess in 2018, it identified certain irregularities and issued an injunction. The bank, in response, implemented measures to correct these failings.

Then — and here is the really crucial part — in its current investigation, the CSSF found that the transaction monitoring system still had shortcomings. And some of those were the same issues that had been flagged back in 2018.

So the question is: were those shortcomings — the ones left unaddressed for six years — part of what allowed the Caritas fraud to happen? Did they enable the transfers that slipped through unnoticed?

Who is going to answer that question?

In the end, the apportioning of responsibility shouldn’t be reduced to calls for resignations. What the country needs far more is for someone — anyone — to put their hand up and say: this is exactly what went wrong, and this is what we’re going to do by this date to fix it.

Then, set up a transparent monitoring mechanism. Report progress regularly. And show people that accountability means something in Luxembourg.