Maltese taxpayers have been billed a hefty €120,000 to pay for a secret golden handshake to disgraced former Prime Minister Joseph Muscat following his premature exit from politics in January 2020, The Shift can exclusively reveal.

After an investigation lasting over a year, which included several Freedom of Information (FOI) requests, The Shift has now established that Muscat, forced to resign after multiple corruption scandals involving his closest colleagues, walked away with a handsome one-time payment, dubbed ‘terminal benefits’, amounting to €120,128.40 – the equivalent of two years of his salary as prime minister.

On top of that, Muscat also continued to bank his parliamentary honoraria until October 2020, when he resigned his seat in parliament.

The OPM, and particularly the Cabinet Office led by former GWU deputy secretary-general Mario Cutajar, has stubbornly refused to divulge any details of the benefits awarded to the disgraced former prime minister and turned down multiple queries from the media as well as various FOI requests. Cutajar justified his refusals with the claim that this type of benefit is dictated by a Cabinet memo drawn up in 2004.

A ‘Terminal and Transitional Benefit’ scheme was introduced by the Nationalist administration in 2004 and approved by the Cabinet at the time. Although details were never published, it covers payments of benefits to former prime ministers, ministers, parliamentary secretaries and leaders of the opposition upon their resignation.

How these benefits are calculated and paid through the exchequer remains unknown. The Shift is informed that it entitles former holders of political office to a one-time payment amounting to a minimum of six months’ salary.

The prime minister’s annual salary in 2020 stood at around €60,000. This implies that for some reason, Muscat was awarded four times the minimum payment. The OPM has refused to explain how this amount was established.

The OPM said that “as per prevailing parameters, Joseph Muscat received a terminal benefit of €120,128, 40 following his resignation as prime minister”.

The OPM said this type of disbursement from public coffers is taxable but refused to give details of how Muscat’s golden handshake was calculated and whether the conditions were changed during his administration – to his own benefit.

The reply received said only that “the said benefit covered from October 2008, when he was appointed as Leader of the Opposition, until the last day as prime minister on 12 January 2020.”

The pay-off to Muscat was not only based on his time as prime minister but was taken all the way back to when he was appointed opposition leader.

Benefits paid from public coffers a ‘state secret’

Details about the generous payment given to Muscat upon his resignation were also withheld in parliament.

Several MPs, and most frequently Opposition MP David Thake, have repeatedly asked for details through a series of parliamentary questions.

Prime Minister Robert Abela has consistently refused to share the requested information, insisting that the amount paid to Muscat was based on a Cabinet policy drawn up by the same politicians and can’t be made public.

The Shift only managed to obtain the information following a call for an investigation after several FOI requests were refused over the past year. In the end, the Information and Data Protection Commissioner (IDPC) decided that the payments given to the former prime minister were in the public interest and ordered the Office of the Prime Minister to provide the requested details.

Muscat’s bank account surged after leaving Castille

During his seven years as prime minister, Muscat’s bank balance remained unchanged at €75,000 for four years running.

In 2018, Muscat was asked to explain why this amount had neither increased nor decreased. He had said that he always spent all his annual income on living expenses and therefore didn’t manage “to save a cent”.

But his finances took a positive turn soon after he left politics.

According to the last declaration he submitted to parliament for the year 2020, Muscat’s bank account registered a significant increase, with deposits suddenly reaching €256,000 in less than a year. He banked €191,000 the year after stepping away from the role.

Muscat said, in reply to questions, that this was due to the payment of his terminal benefit, which he refused to quantify, and income from his new practice as an ‘economy consultant’ and inheritance following the passing of a family member.

Muscat did not say whether his new clients were connected to any decisions he made when holding Malta’s most powerful political office.

Muscat’s record on allowances from public taxes

While still in opposition prior to 2013, Muscat waged a bitter war with the Nationalist administration over a secretive €500 per week increase in Cabinet members’ salaries. Yet once elected to power, Muscat established his own system for topping up MPs’ take-home pay – including his own.

As well as receiving his prime ministerial salary and allowances, Muscat boosted his income substantially by using his own car, then an Alfa 159, instead of an official car, which meant he could pocket an additional €7,000 a year.

He also changed laws so that all his MPs who didn’t get an executive position were given a sweetener of some kind, such as paid chairmanship of public entities or well-compensated government consultancies with state-run enterprises.

Asked to list the terminal benefits paid to all former members of the executive since the introduction of the secret scheme in 2004, the OPM turned down the request.