MALTA: Small country, big problems

Malta took on the rotating presidency of the E.U. at the beginning of the year, but members of the European Parliament are concerned that the country is not capable of leading the bloc in its major anti-money-laundering drive. The Panama Papers, a massive document leak that revealed the offshore banking practices of the world’s elite in April 2016, has damaged Malta’s reputation even among its closest allies.

The flags of Malta and the E.U. fly outside the office of the prime minister © TheLiftCreativeServices / Shutterstock.com

Having swept to victory in the 2013 elections after fifteen years in opposition, the Partit Laburista (P.L.) has found itself embroiled in a number of corruption scandals that have impacted on its popularity and credibility at home.

Investigative journalists working on the Panama Papers in April 2016 found that the then-secretary for health and energy and unofficial contender for future leadership of the P.L., Konrad Mizzi, had opened offshore bank accounts in New Zealand and Panama immediately after the 2013 elections. The revelation provoked street protests in Malta and the half-resignation of Mizzi: while he lost his positions in the health and energy ministries, he has remained a ‘minister without portfolio’. He has also stayed notably close to the energy ministry.

The Panama Papers provoked such fury in the E.U. that the European Parliament set up a special committee to hold an inquiry into the affair. Mizzi was summoned for a hearing in February 2017 in which he came under fire from within his own European party grouping after he apparently gave conflicting evidence. The well-known Portuguese MEP and fellow member of the Socialists & Democrats party grouping, Ana Gomes, who is also the vice-chair of the committee, said Mizzi was an embarrassment to Malta and to Europe. She also pointed out that, while Mizzi was still healthcare minister, three Maltese hospitals were privatised and transferred to a company ‘with no prior experience in the sector, ultimately owned by a company in the British Virgin Islands’, a notorious tax haven.

Keith Schembri, Prime Minister Joseph Muscat’s chief of staff, was also named in the paper. He had apparently used the same Panama-based firm, Mossack Fonseca, to channel profits from his recycling business into trusts in New Zealand. When the European Parliament’s special committee on the Panama Papers summoned Schembri for an inquiry hearing, he failed to arrive, instead sending a messenger to hand a letter to the committee’s chairman just before the hearing was due to begin. In it, he named the Maltese writer and anti-corruption activist Daphne Caruana Galizia, suggesting that the committee instead investigate her for ‘alleged tax-based indiscretions’, without proof. This was greeted with ridicule and open criticism by the European Parliament.

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