Pirates of the Mediterranean.

 

The #Maltafiles scandal has just broken. The journalistic network EIC (European Investigative Collaborations) combed through 150,000 documents leaked from Malta and concluded that Malta is a ‘pirate base’ for tax avoidance. Coming right after Panama Leaks had projected Malta into the wrong side of the limelight thanks to its having the only EU Minister with companies in Panama (and not doing anything about it), this new scandal threatens to deal a heavy blow to a crucial sector of the Maltese economy. As things stand we are definitely not in the best position to set up any form of defence.

Reputation is the key concept here. Blow after blow is being dealt to Malta’s reputation as an honest dealer on the international and European level. One lesson that many nations learnt from Panama Leaks was that in order to be able to survive in the cut-troath world of tax competitiveness it is crucial to know how to be on the right side of the fine line between tax avoidance and the abetting of illegality.

The International Dimension

Take New Zealand for example, the discovery of the use of their system of trusts by Maltese government figures led to the changing of laws in the country relating to trusts. Notwithstanding the immediate and timely reaction to shore up the damage, the ripples of the scandal are still having an effect on the NZ trust system to this day: the inquiry into the dealings by the Azerbaijan President’s daughter involve movement of moneys through New Zealand trusts.

In Panama, the founders of Mossack Fonseca – the law firm in the eye of the storm – were arrested and accused of having formed a criminal organisation that assisted persons in hiding funds of doubtful origin (read money laundering). They have only just been released on bail. Laws get changed, law firm partners get tried criminally and action is taken. All to protect a country’s reputation. That is because in the world of tax and investment competition reputation is crucial.

What happened in Malta? For over a year now the Prime Minister has stood by two of his closest operators: Keith Schembri and Konrad Mizzi notwithstanding the fact that they were two PEPs caught up in the Panama Papers scandal. The feeble excuse? Some sort of declaration on a hastily written paper makes it all seem – to the Prime Minister – A.O.K. Worse still, insofar as Mizzi is concerned we have the fake defrocking from his position as Energy Minister as some form of retribution for his ‘genuine error’. The hypocrisy behind this move was never more blatant than during Malta’s turn at the presidency of the EU with Mizzi turning up and chairing meetings of the EU Council of Energy Ministers.

No effort at all was made to preserve Malta’s reputation in this respect on the international scene. Joseph Muscat was quite prepared to defy everyone and everything and proceed with his headfast ways keeping both Schembri and Mizzi close to his chest while ignoring international calls that cried foul. At no instant did his particular magic formula for Malta’s economy – Muscatonomics – contemplate the huge damage being wrought by his actions and those of his entourage. The recent developments with regards to the operations of Pilatus Bank are only an aggravation of this situation. It can only get worse.

The European Dimension

The Best in Europe is what Joseph Muscat had promised. Has he delivered? There are different ways of looking at this. First there is the government spin that our economy has never been better. We have low unemployment and budget surplus flowing through our ears and noses. The ‘trickle down’ benefits for the citizen remain the famous ‘consumption bill cuts’ that earned Muscat his first ride in power. A different song is that sung by others who – as best put metaphorically by a colleague of mine – describe the situation as follows: The previous nationalist government had replaced an old car with a spanking new one and the labour government found it all set to go. What labour is doing is revving up the engine and wearing it down as fast as possible like there is no tomorrow.

Beyond the inevitable spin though there is a reputation to be upheld in the European Union too. Being the best in Europe also entails being the best in Europe by European standards and those standards are to be found in the rules of the club. It’s not about a blind adherence to the rules either, it is about understanding that the European Union is a sum of its parts and that every part of the Union can only benefit when they work together and for the same interest.

This idea is best enshrined in article 4(3) of the Treaty of the European Union:

“Pursuant to the principle of sincere cooperation, the Union and the Member States shall, in full mutual respect, assist each other in carrying out tasks which flow from the Treaties.

The Member States shall take any appropriate measure, general or particular, to ensure fulfilment of the obligations arising out of the Treaties or resulting from the acts of the institutions of the Union.

The Member States shall facilitate the achievement of the Union’s tasks and refrain from any measure which could jeopardise the attainment of the Union’s objectives”.

The principle of sincere cooperation underlies the operation of the EU as a group of states with common goals and common regulations. When boiled down to the essence it translates into “member states (and institutions) should not engage in activity that undermines the goals and effectiveness of the Union and its objectives”.

Which brings me to passports and the sale thereof. It may be ok for the government of Malta to lend lip service to the European Union as a project and as a concept. The damascene conversion of Malta’s PM from hater of all things EU to sudden prophet on the future of Europe might have become a taboo topic and yet it remains to be tested given how every action on the European stage by this government is tied to inherent contradictions and the sale of passports is the prime example.

When Malta’s Labour government decided to turn the sale of Maltese citizenship into a lucrative business it also did so with the full knowledge that the main attraction of such citizenship was that it included EU citizenship in a sort of 2 for 1 deal. The bulk of local criticism of the scheme was related to the type of purchasers who would be attracted but few chose to stress the European dimension of the problem. The low and inconsistent standards applied to the scheme and the readiness to accept anybody willing to pay were not only harming Malta but they were harming the European Union.

Did our PM care? Irrespectively of whether he was aware of the alleged massive operation of greasing of wheels when it came to the implementing of the scheme, Muscat showed an incredible nonchalance in dismissing this huge “up yours” to the European Union as one big bout of jealousy. What does that make Malta seem like in the eyes of its partners in Europe? What does it do to the reputation of the nation? Yes you guessed. We are the pirates of the Mediterranean, ready to sell our soul for a quick kill – and that kind of reputation sticks.

So when the focus suddenly shifts to a Financial Services industry and to how Malta has used a (cheap) competitive edge to attract investments here the onus of proof that Malta acts with malicious intent of the “I’m alright and f you jack” kind is much lower. Couple that with the fact that our regulatory system in this sphere has not exactly been improving over the years but rather has degenerated and you suddenly discover that one of the crucial sectors in our economy is under open fire from all sides.

This is not Luxembourg right after Luxleaks. This is not Ireland after getting rapped on the hand by the Commission for the way it deals with huge multinationals. This is passport selling Malta with a Panama Leaks associated heart of government that is now exposed with a set of files showing that its financial services system is being abused by persons of not too high a standard.

That is the difference really. On any other day, under any other government, an attack on the competitive edge of a particular sector can be weathered given the right diplomacy and the right legal action in the right quarters. Take our gaming industry – constantly subjected to a barrage of attacks by fellow EU members who want a piece of the cake. So long as we can show that our regulatory standards are high and that we operate within the limits of sincere cooperation then it as all part of a days work as members of the EU. There are forums were this battle can be taken.

This is not any other day or any other government. This is a scandal ridden government that has now got a long list of grievances which all boil down to the breakdown of governance. The strongest defence for maintaining a competitive regime is that it is done and maintained within a strong regulatory framework that allows for no nonsense. When France, Germany, Italy and more come knocking at your door asking questions as to how your financial services industry is full of huge holes allowing for money laundering operations the best platform for defence is not the deck of a pirate ship that is sinking fast.

After the Coalition: Vote Forza Nazzjonali

A week. It’s a damn long time in politics. I watched with a heavy heart as coalition talks between Alternattiva Demokratika and the Nationalist Party disintegrated. I had already set out my ideas on what should ideally have happened. The moment in time that we are living requires extraordinary moves by extraordinary people. The nation is desperately in need of a political wave of change that transcends any individual party’s interest.

So yes. When the news came out that AD and PN had not found a common ground I was angry. I’ve seen the chronological account given by Alternattiva’s members. I’ve also tried to understand the main reasons given by nationalist party. The impression I get is that on both sides there are quite large factions who are unable to step up to the occasion and understand the immediacy and urgency of the problems that this nation are facing.

AD

Let’s look at AD first. Here they were with a huge chance of getting one of the two behemoths of Maltese politics to commit to a common programme. They knew that, like them, the PN was first and foremost interested in getting the corrupt clan out of Castille. They knew that they had a common ground on this matter of cleaning up politics. This was their trojan horse – their chance to work on a wider agenda of reform. Did they sit at the negotiating table with an open mind or with more red lines than was feasible to come to a compromise?

With hindsight and having seen the “Qawsalla” proposal I detect a bit more intransigence than was necessary at that stage. Too much mistrust was built over the years and maybe, just maybe, AD was seeing the PN in what appeared to be a weak position and therefore they tried to go for the overkill. To the third party observing the battle it seemed like payback time. The PN name had to go. It did help that there was a logic in the reasoning and that the idea was doable on paper but putting this as a deal breaker was tantamount to putting a petard under the proceedings from the start. That might be what some AD die-hards full of rancour at the PN might want but this is neither here nor there – it does not help in the battle against the incumbent and it does not contribute to any possible discussions on change in the future.

PN

Now for the Nationalist Party. There has been much talk about whether the PN was caught unawares by the early election call. Most of the talk is rubbish because it dismisses the recent developments from within the party when it comes to proposals on transport, on the environment, on small business and the economy and on other things. The veneer of electoral preparation was almost there. The PN had been gearing for election anyway – the shock announcement might have just sped up some of its machinery into action.

I do however believe that the PN was unprepared for the election in another way. The PN is unprepared because it had not had enough time to metamorphose into a real party of values. You only have to listen to the discourse in the rallies, in the meetings in the kazini. It’s all about “il-Partit nazzjonalista this and that”. Only an hour ago I was listening to Claudio Grech speaking from Santa Venera and the discourse is all the chiaro-scuro, us and them, “remember what the nationalists havemdone for us”.

All this betrays a lack of understanding of the real predicament of the nation. It betrays a lack of assumption of responsibilities that should be combined with a willingness to change.

When the coaltion with the PD was announced Simon Busuttil was flanked by six or seven persons whom he described as representing the highest echelons of his party. The parties in lilliput need a leader, two vice leaders, one chairman of executive this, one chairman of administrative that and one probably to make the coffee. The party. The risk is always there that people are not understanding the message of this election – the crucial nature of the change that is needed – because they cling to old ideas of alternation. It is the kind that is ingrained with “good vs bad”, “us vs them”.

It’s dangerous. Very dangerous. It is so especially because this time round we cannot do without voting for the nationalist party to get corruption out of our system. The onus therefore lies on the nationalist party to be convinced about the changes that need to be brought in from day one. The coalition with Marlene Farrugia’s PD gives us a ray of hope that someone in the new formation will be hoding them accountable. Pity AD are not there too.

Which brings me to the matter of how the nationalist party dealt with the coalition talks with AD. You could sense the supercilious arrogance oozing through the statements of some exponents of the party. Comments on size and votes in the past betrayed the fact that lessons still had to be learnt about the how and why our politics works. As I argued in an earlier post not much was being asked of the PN to show a commitment to a wider coalition that transcends the single party. This test was failed and failed miserably judging by the reactions to AD by the same exponents mentioned earlier.

What now?

We are here though. At a crossroads. The battle has only just begun and the day of reckoning has been fixed. We see a nationalist party trying to battle the monster of deceipt that holds the nation in ransom. It’s going to get tougher as the earth is promised by the incumbent in order to save his skin. Forza Nazzjonali has become the last chance to get the change going against all odds.

Its members must begin to realise that they do not only represent their respective parties but also the hopes of a much wider swathe of population that goes beyond the flag waving hardcore. That swathe of population has had enough of the old republic. They expect real change and reform. We all do.

If we care for our country, if we care for real change and reform we can only but put our weight behind Forza Nazzjonali. We do so with the solemn promise that should we be successful in or endeavour to get this movement into government then that will only be the beginning. For every day on from the 4th of June we will hold the new government to its word: constitutional and electoral reform. We will not be silenced by mere talk of discussions that threaten to drag on for five years.

No dilly dallying, no excuses. No returning to the needs of the party. In order to change the whole system even the parties themselves must change. It is a tall order. It is probably also our last chance before the nation descends into the level of a tin pot dictatorship.

Hopefully, for the last time, many will have the courage and goodwill to hold their nose and vote nationalist.

“Turiamoci il naso e votiamo PN” (con tant scuse a Salvemini e Montanelli).

Akkuzaforizmi – Sejf

SkonD one news ma hemm l-ebda “sejf” fil-kcina ta’ Pilatus. Is-sejf il-muzew tal-arkaeologija qieghed le? Imbaghad meta ssemmi sejf u Pilatu mohhok itir ghal Cesri u l-Ides of March. X’tahwid simboliku. X’konfuzjoni kataklizmiku. X’mizerja ta’ poplu imdorri jahdem bil-fidi u mhux bil-logika. #ghidofmarch

Why fund?

I have a genuine question to put to all political party activists in Malta. In the light of recent developments directly linked to political party funding I believe that there is a fundamental question that must be cleared even before we start to ask other ancillary questions such as how, when, who and what. It’s about funding really – we are currently, and have been for some time, engaged in extreme scrutiny of the movement of monies in power circles. From the unmeritocratic engagement of personnel by government (which is in itself a way of moving monies and funding) to the awarding of public contracts, public permits and the like (also movement of monies and value for consideration) to the direct “investment” of monies into political parties, the whole business of funding is intricately related to questions of power and influence.

Ideally and hypothetically speaking of course the role of political parties is to represent given sets of values that are then elected to power in the form of representatives who in turn will “govern” the nation (or scrutinise the government) in the name of the people and using the measure of such values. Arguably, the whole matter of funding should be intricately linked to the issue of keeping such entities as are political parties afloat for the very purpose of achieving their goals of representation. Arguably.

Broadly speaking funding should fall into two large categories. Firstly there is the ensuring of the day to day existence of the political party so that it can achieve its aims. Secondly, it is universally acknowledged and accepted that a Campaign Fund during election periods is needed in order for said parties to forward their cause and “sell” their ideas to the people. Beyond that though, there is no reason why parties should evolve into behemoths running costs in the millions and needing constant injection of funds. That our two major parties in Malta have evolved into such behemoths is proving to be a running disaster. The more the monster needs funds to feed its existence the more the fine line between interests, power and funding is broken. The defence that “donations are there to ensure representation” comes crumbling down when you see how the parties have also evolved to depend on periods in “power” in order to enable “investors” to cash in their cheque.
By investors I do not only mean the order of businessmen who seem to think that they can buy their way into power (mostly, incidentally, contractors) but also providers of services who will expect the party to repay them if not in cash then in kind. The classic example is how a large part of any party’s apparatus is shifted onto the public purse once that party gets elected into power. Whether it is as persons of trust or as employees of para-statal entities such as the public broadcasting this has been a natural consequence of the party power and money broking methodology.

The question I want to ask (I am not holding my breath of course) is the following:

Why do our parties need funding? What is the justification for funding on a daily basis (outside campaign mode of course)? What is the real cost for a party to do what a party is meant to do i.e. formulate policy and develop it?

More than words – Ken Clarke on Brexit

Occasionally a landmark speech turns up in the House of Commons. Ken Clarke’s speech during the Brexit debate on the 31st of January is one of those. A lesson in democracy, representation and history it is a breath of fresh air in a world of fake news and alternative facts. Sadly it seems like politicians like Clarke are a dying breed.