Despite the prime minister’s insistence that the decision by the Financial Action Task Force (FATF) on Wednesday to greylist Malta will “not impact the economy”, industry leaders have reacted negatively to the news, including the Malta Employers Association (MEA) that described it as a terrible “autogoal” for the Maltese economy.
“The news that Malta has been greylisted by the FATF has dealt a devastating blow for the Maltese economy which will stretch its resilience to its limit. Unlike the COVID pandemic, this crisis is entirely self-inflicted and the result of lax and corrupt practices by a minority of dishonest politicians and businesses, compounded with ineffective governance systems,” the MEA said in a statement.
The association also referred to the country’s justice system that is “strong with the weak” whereas glaring transgressions and crimes, including a murder of a journalist, remain unresolved or languish in the labyrinth of our judicial system”.
The country has been shaken by too many scandals involving senior politicians and politically exposed persons as well as the major institutions, the MEA pointed out.
Malta, the only EU Member State to be greylisted and whose economy depends on financial services, now joins countries like Syria, Yemen, and Myanmar on the FATF grey list.
Saying the greylisting is a “humiliation” for Malta, the MEA said it was time to realise that governance is not just about ticking boxes, but about values. The country must work to rebuild the trust of the international community, and not waste time in political bickering “in vain attempts to deny or downplay the severity of the greylisting”.
The first step of the uphill process to rebuild our national brand has to accept this outcome for what it is, the MEA said. It seems to be a message the prime minister has not heard. During a press conference held following news of the decision, both Robert Abela and Finance Minister Clyde Caruana downplayed the issue, even insisting financial targets would not be revised, despite international reports that show the impact of greylisting on countries.
A report by the International Monetary Fund (IMF) analysing the effects of FATF greylisting on countries around the world indicates that greylisted countries experienced an average decline in capital flowing into the country of 7.6% of the same country’s quarterly GDP.
The MEA also pointed out that “the repercussions of the grey listing will be carried by honest businesses and their employees. The cost of added compliance procedures is already stifling many businesses. MEA has, for years, been campaigning for reform at a political level to have a clean administration, run by competent and trustworthy people”.
The Opposition reacts
Opposition Leader Bernard Grech described the decision as “a punishment for the entire nation”. During a programme on the Party’s TV station, he said this was “no time for business as usual” and the problem must be addressed as a matter of urgency. Malta was greylisted because the FATF does not trust the government, he said.
He proposed a task force that would include financial crime experts, social partners and representatives from the two major political parties. His suggestion was immediately dismissed by Prime Minister Robert Abela.
PN MEP and Quaestor David Casa told The Shift: “This is a disaster. It a very sad day for hard working Maltese people who should not have to suffer these consequences because of the greed of a few. The truth is that when you look at the scandals over the last years you realise that there has been complete impunity. No action on the Panama Papers, no action on 17 Black, Electrogas is still in operation, and nothing happened after the Montenegro wind farm project was exposed as yet another ploy to rob the Maltese out of millions and then launder it.”
In line with the MEA’s statement, he said strict measures have been put in place to give the impression that Malta is taking anti-money laundering rules seriously, but these are impacting honest businesses or individuals who want to open a bank account, while impunity remains for high level corruption and money laundering.
“I don’t think that this has impressed anyone. Impunity for high level corruption and money laundering must come to an end. It can’t be compensated for by interrogating honest citizens every time they try withdrawing their own money. We need to act now. We can’t afford not to get this right. It is too important. The livelihoods of our citizens depend on it,” Casa said.