'Caritas activities in Luxembourg will be maintained'

Following his initial announcement that the Luxembourg government would "no longer pay a single euro" to Caritas, Prime Minister Luc Frieden clarified his position on Wednesday during a press conference at Hôtel Saint-Augustin.

Frieden revealed plans to establish "a new Caritas" in the coming weeks. His statement in July that the government would cease funding Caritas had left many questions unanswered. In the weeks following this initial press briefing, the Prime Minister acknowledged that many people in need rely on the NGO's services, which have been compromised by a recent embezzlement case.

On Wednesday, Frieden emphasised that his previous remarks reflected his frustration with the situation but assured that the government is committed to ensuring Caritas' activities continue. He underscored that the focus will be on maintaining essential services for Luxembourg's most vulnerable populations.

Frieden clarified that the government intends to mainly preserve Caritas' activities within Luxembourg, including crèches, drop-in centres ("maisons relais"), and support for the homeless and refugees. These services will be managed by a newly established structure, which Frieden referred to as a "new Caritas." The Prime Minister reiterated that the government "no longer has confidence in the management of Caritas." Frieden confirmed that this management has been replaced by a crisis committee.

All existing agreements between the Luxembourg State and Caritas, except those related to Caritas Youth and Family, have been revoked. New agreements will be negotiated with the "new Caritas," which will operate under new governance and government oversight. Frieden anticipates that the new organisation will begin operating in October.

Regarding the €60 million embezzled from Caritas, Prime Minister Frieden reassured taxpayers that "the Luxembourg State has not lost any money in the Caritas affair." Frieden explained that €30 million of the funds were sourced from reserves accumulated by the NGO, while the remaining €30 million came from credit lines established with various banks.

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However, the Prime Minister admitted that Caritas had used anticipated government payments to secure the final €30 million. Frieden expressed his anger and bewilderment at the scale of the embezzlement, acknowledging that the situation was as shocking to him as it was to the public. "We will do everything in our power to recover this money," he stressed.

Frieden also used the opportunity to address other NGOs, urging them to review their systems and report any anomalies promptly rather than waiting until issues become critical. Additionally, he called on the Financial Sector Supervisory Commission (CSSF) to identify and address any weaknesses in the existing system that allows NGOs to receive payments.

Prime Minister announces "open debate" on pensions this autumn

The Prime Minister also announced an "open debate" on pensions to take place this autumn. A public consultation will be held from now until the end of the year, involving businesses, trade unions, various associations, and the Idea Foundation. The goal is to explore ways to rebalance the pension system.

Additionally, Frieden introduced a platform where citizens can submit their ideas, and round-table discussions featuring Minister of Social Security Martine Deprez will be organised to facilitate open dialogue. A report summarising the findings and recommendations will be prepared at the beginning of 2025 to guide future decisions, Frieden noted.

"This is not an issue that needs to be resolved quickly," Frieden emphasised. He acknowledged that the pension debate may have a greater impact on younger people compared to those who are already retired or approaching retirement. In this context, he welcomed the input of the Economic and Social Council, "which already gives us some ideas." Frieden mentioned that he reviewed the council’s paper while on holiday and encouraged all taxpayers to read it.