The timing could hardly have been any worse. As the country tries to get to grips with secret companies in Panama and trusts in New Zealand, the Nationalist Party comes up with a fund-raising scheme that, whatever the packaging it chooses to give it, still leaves it exposed to criticism.
It is a simple scheme, €10,000 loans from the public payable back after 10 years. Called Cedoli, the scheme offers a compound interest rate of four per cent, meaning lenders would receive €14,802 after 10 years. Ostensibly a good investment opportunity for anyone willing to support a political party and getting good returns too but Labour has been crying foul.
The main problem is that the scheme falls outside the scope of the recently-enacted party financing rules. Although loans can be considered as party donations, if the rates are not more favourable than prevailing commercial rates, then they are not classified as donations. The PN appears to have found a way around the law.
A second problem concerns anonymity. Cedoli 2016 creditors will not be disclosed, again flying in the face of the party financing law that seeks to introduce transparency to the system. The president of the PN executive committee, Ann Fenech, has argued that the scheme is not intended for large donors but there is no capping on the amount that can be loaned by one individual.
The criticism by Labour has been vicious. Justice Minister Owen Bonnici warned the scheme could put Malta on a corruption blacklist. There were accusations that it could be used for money laundering or tax evasion and Education Minister Evarist Bartolo went as far as to draw parallels with the Bernie Madoff multi-billion Ponzi scheme.
Mr Bartolo even said he saw no difference between holding a secret account in Panama and loaning secretly to the PN and called the Malta Financial Services Authority to look into the matter.
In total contrast, Dr Fenech describes the scheme as a modern and transparent way to finance the party.
Party financing in general has, over the years, been messy at best.
Labour accuses the PN of having, in the past, a list of secret donors, called the JS list, that was still in use until the last election. The implication was that these donors paid the party back for government contracts received.
Labour, on the other hand, has opened its doors to big donors, prompting its former deputy leader, now Speaker of the House, Anġlu Farrugia to lament, soon after his ousting, that the workers’ party was getting too close to businessmen and big contractors who called frequently at the fourth floor of the party headquarters.
After the stunning defeat at the last election, the two parties seem to have switched roles with Labour coming across as the significantly richer and slicker of the two. One of PN leader Simon Busuttil’s first tasks was to stabilise the party finances and that even included discharges of long-serving party employees and property sales. Meanwhile, comfortable in government, Labour dropped a court case against itself over the Australia Hall, pocketing a prime real estate site in the process.
The PN knows that no election campaign can ever be successful without good financing and borrowing itself out of its present debts, apparently running into millions, was a logical way out.
It is claiming that paying interest on the loans would free it from future obligations to creditors. An interesting concept but it remains to be tested even within the spirit of the party financing legislation.