A democracy can easily degenerate into an autocracy if the proper checks and balances are not kept in place at all times. All truly democratic countries have legal processes in place that ensure there is proper segregation of duties between different institutions, including the judiciary, the legislator, regulatory bodies and the administrative arm of government.
When Manfred Galdes, the director of the Financial Intelligence Analysis Unit, which is primarily responsible to combat money laundering, fraud and the financing of terrorism, resigned at a time when important investigations are ongoing with regard to the Panama Papers’ revelations on a government minister and the closest Prime Minister’s aide, questions started to be asked.
Was the head of the FIAU simply making a career move? Or was he compelled to leave because of other reasons, like, say, undue pressure that prevented him from carrying out his work independently, as required by law? The information that emerged so far is still hazy and in no way helps to give the visibility that most people are seeking to be reassured that there is nothing sinister in the resignation of such an important regulator.
Understandably, the man himself refused to comment because of ‘ethical’ reasons. However, the board of FIAU, which includes the Attorney General and representatives of the police, have an obligation to know why this director decided to leave at such a delicate time when sensitive investigations on the financial activities of senior political figures are underway.
Most organisations, though not necessarily in this country, carry out an exit interview when one of their senior staff resigns to take up another post. If such an organisation is a regulatory body, it crucial there is confirmation that the resignation of a senior official is not the result of political pressure. This is what good governance is about.
The Minister of Finance needs to confirm whether the FIAU board members are satisfied that the head of the organisation has left for reasons that do not cast shadows on the independence of the unit he managed.
Some politicians are known to have a short-term perspective on how a country has to be run. This perspective usually coincides with their term of office. Regulators ensure the long-term interests of a particular important sector of the country is safeguarded at all times.
These different perspectives can cause serious tensions between politicians and regulators. The public has an interest to be reassured that such tensions do not lead to political pressures on employees who need to act independently of the political priorities of the government of the day. Malta’s economy is passing through a good phase. But it would be short-sighted to ignore weaknesses that could lie under the surface of certain economic activities.
An equally essential consideration is that no amount of economic growth can justify bad governance practices, especially by politicians in power. Among the weaknesses that this country’s economy has to deal with is the belief/perception that money laundering both by politically exposed persons and corporate businesses is tolerated.
Trust in a country’s economic stability is a very fragile asset. Full transparency and an effective code of good governance is indispensable to ensure that both local and foreign institutions reinforce their trust in Malta’s future.
It is worrying when the government fails to give clear answers to those who need to be reassured that regulators like the FIAU are guaranteed the independence of thought and action in their work as defined by law.