The Panama Papers scandal has cast doubt on Malta's ability to push through EU anti-graft laws while it holds the presidency, the international political website politico.eu has reported.
Calling it a "money-laundering scandal that reached the highest levels of government in the EU’s smallest country" it said the case has attracted the attention of Brussels.
"When a Maltese cabinet minister and the prime minister’s chief of staff were mentioned in the Panama Papers leaks, it looked like a messy domestic affair. No longer. The alleged burying of a report into the saga has set alarm bells ringing among EU lawmakers worried about Malta’s ability to steer through new EU anti-money laundering legislation when it holds the rotating presidency of the EU’s Council of Ministers in the first half of next year," the popular news site said.
A spokesman for Prime Minister Joseph Muscat was quoted as saying that the matter was being taken “very seriously.”
"But not everyone is convinced," the site adds.
“This is all very embarrassing,” German Green MEP Sven Giegold said. “We will raise this whole mess in the [European Parliament’s special] Panama Papers committee. Malta has to get serious. It has to tidy up in order for the whole European financial infrastructure to gain credibility.”
The Parliament’s special committee is likely to summon minister Konrad Mizzi and Keith Schembri, the prime minister's chief of staff, when it meets after the summer break.
I am going to propose that Malta will be high on our agenda… even more so with these developments
Politico said that what is even more troubling for Brussels is the resignation last week of Manfred Galdes, director of the Financial Intelligence Analysis Unit, who was tasked with investigating the saga. It also questions the departure of Police Commissioner Michael Cassar who was also probing the case.
Ana Gomes, a Portuguese MEP and vice chair of the Parliament’s Panama Papers committee, said Malta was in the crosshairs.
“Malta is definitely a case for particular attention, not just because of allegations against the prime minister’s chief of staff and the minister, and this latest development with the Financial Intelligence Analysis Unit chief resigning, apparently because his recommendations were not followed, but also because Malta is already on our radar.”
“Malta is one of the jurisdictions in the EU that has a very lax system of incorporation where it is very easy for anyone who wants to fool the anti money-laundering authorities, they can set up a company like a Russian doll and can make ultimate beneficial owners hidden,” said the MEP, who is from the Socialist group, the same political family as Muscat, Mizzi and Schembri.
“I am going to propose that Malta will be high on our agenda … even more so with these developments.”
The site also discusses how the Panama Papers have harmed Malta's reputation.
Nationalist MP Kristy Debono said the scandal was causing serious damage to the reputation of the Maltese financial services sector.
“The problem is that the prime minister has not taken responsibility. He needs to take certain actions so that [Malta’s] reputation will remain intact,” she said.