Since Joseph Muscat came to power in 2013, with his battle cry of meritocracy, transparency and zero tolerance of corruption, Malta has sunk to unfathomable depths of institutionalised corruption.
In 2019, Muscat joined the ranks of Russian president Vladimir Putin and Azerbaijani ruler Ilham Aliyev as the ‘Man of the Year’ award by the Organized Crime and Corruption Reporting Project (OCCRP), a non-profit media organisation.
Past winners include Rodrigo Duterte, president of The Philippines, and Milo Djukanovic, Prime Minister and president of Montenegro, a place Konrad Mizzi visited regularly for a wind farm project we now know was another corrupt deal.
“Under Muscat’s leadership, criminality and corruption have flourished — and in many cases gone unpunished — in the small Mediterranean archipelago of Malta, creating an environment that led to the 2017 murder of investigative journalist Daphne Caruana Galizia, investigators and government critics say,” OCCRP said on Muscat’s ‘award’.
“Muscat has shown total disdain for the media, free speech, and has allowed corrupt figures to order killings with impunity,” the organisation said.
A member of the Dutch Parliament, Pieter Omtzigt was appointed as Special Rapporteur by the Parliamentary Assembly of the Council of Europe (PACE), a human rights body whose Assembly consists of elected representatives from 47 States. He was tasked with looking into the investigation on Caruana Galizia’s assassination and the rule of law in Malta.
Omtzigt’s report was a catalogue of failings, and he said he was concerned the authorities may have turned down evidence that could lead to those who commissioned the killing of the investigative journalist.
He also said that there was a considerable delay in implementing recommendations from the Venice Commission, the Council of Europe’s Group of States against Corruption (GRECO) and MONEYVAL, despite Muscat’s commitments to implement the Commission’s recommendations when he was prime minister.
“I am looking at you Owen Bonnici. You had been justice minister for two years and I had not seen the results which Robert Abela now announced… I am happy some of the recommendations are being picked up now, but there has been a considerable delay,” Omtzigt said in a recent meeting with Prime Minister Robert Abela, the Deputy Prime Minister and Minister Owen Bonnici.
He told The Shift in an interview following the meeting that the government had to change tack. “It is quite astonishing to see that the Electrogas deal, which makes electricity in Malta very expensive for citizens and the privatisation of the hospitals have not had any consequences so far,” Omtzigt told The Shift.
In Transparency International’s annual Corruption Perception Index report, Malta’s ranking slid six points since 2015 to a score of 54 among 180 countries. The index ranks 180 countries by their perceived levels of public sector corruption according to experts. It uses a scale of zero to 100, where zero is highly corrupt and 100 is very clean.
“Such plummeting does not happen in democratic countries in general, and even less in EU countries in particular,” Transparency International regional expert Nacho Espinosa said in an interview with The Shift.
The report cites Malta’s cash for passport scheme, the Panama Papers exposé and the collapse of Pilatus Bank among a number of scandals that appear to have contributed to a drop in the ranking.
Pilatus Bank started its operations in Malta in January 2014. Its owner, Ali Sadr Hasheminejad, a close friend of Muscat, Keith Schembri and Yorgen Fenech who were guests at his lavish wedding in Italy, has been found guilty of bank fraud, conspiracy to commit bank fraud, defrauding the United States and busting sanctions against Iran. He is awaiting sentencing.
The bank had been at the centre of political controversy ever since a series of leaked financial intelligence reports flagged evidence of money-laundering and serious compliance shortcomings back in 2016. It had also been alleged that the bank was used as a conduit for Azerbaijani millions making their way into Europe.
Financial crime consultant Kenneth Rijock article ‘Is Malta the New Grand Cayman?’ underlines the lack of action by the authorities in Malta on the Pilatus Bank scandal. Rijock compares Malta to the Cayman Islands where complaints about white-collar crime filed in Grand Cayman have a habit of being permanently filed away.
Rijock a former banking lawyer, stresses that the EU must act on this: “Otherwise Malta will find itself entertaining more sanctions evaders, money launderers, and terrorist financiers, who will use Malta’s Schengen Zone status to enter Europe’s financial markets at will.”
Malta also registered a decline in The Economist Index where the country was rated as a “flawed democracy”.
GRECO last year noted that while Malta, on paper, had a remarkable number institutions involved in checks and balances, their effectiveness was put into question by a wave of controversies concerning the integrity of senior government officials in relation to tenders issued, energy supplies, sale of land, the awarding of contracts and public positions given to Party members or supporters.
GRECO highlights that, to date, there has been no visible disciplinary or criminal justice response to a number of these allegations, even when some of them have been confirmed by subsequent audits, for instance, of the National Audit Office. The NAO report on the ITS site given to Silvio Debono’s DB Group is another case added to the pile.
GRECO laid out 23 recommendations in its report on Malta. Executive Secretary Gianluca Esposito told The Shift they must be implemented within the deadline. When referring to the powers held by the Prime Minister, he stressed that a redistribution of responsibilities was necessary to avoid a risk of paralysis.
Standards & Poor have also lowered the outlook on Malta because “the country’s reputational risks related to weaknesses in regulatory financial and anti-money-laundering supervision represent an increasing risk to its macro-financial stability. This is, in our view, particularly relevant given the importance of the Maltese financial sector to its economy.”
Muscat finally resigned last January. Yet the impact of his legacy will continue to be felt in the country for many years to come.