Eight months ago, Malta was rocked by the news that Konrad Mizzi, the then minister for energy and health, and Keith Schembri, the Prime Minister’s chief of staff, had opened secret companies in Panama very soon after taking up their roles in the new Labour government in 2013. They failed to declare they had opened this financial vehicle with the Maltese tax authorities as required under Maltese law.
The Prime Minister ordered audits to be carried out on Mizzi and Schembri by an unnamed international audit firm and instructed the Inland Revenue Commissioner to investigate them. Their outcome is still unknown.
It is instructive to compare what happened to Mizzi and Schembri with a broadly similar case in Britain. Eighteen years ago, in his first ministerial post as Secretary of State for Trade and Industry, Peter Mandelson, one of the chief architects of Blair’s New Labour government, was forced to resign after less than five months in office.
He was undone by the revelation that he had bought a fashionable home in London with the help of an interest-free loan from a millionaire ministerial colleague, Geoffrey Robinson. When Mandelson had submitted the building society mortgage form to buy the house he had failed to report the loan.
He had also failed to bring the loan to the attention of his Permanent Secretary, even though Geoffrey Robinson’s business links were at that time being investigated by Mandelson’s own ministry, the Department for Trade and Industry.
Mandelson admitted being “technically wrong” in not telling his building society about the loan, but insisted he had done nothing improper. Tony Blair, who had vowed when he became Prime Minister that his government would be “whiter than white”, had no alternative but to ask him to resign.
The Mandelson story bears an uncanny parallel with the saga involving Mizzi and Schembri that has gripped Malta over the last eight months. Like Blair, Joseph Muscat had promised that he would demand ministerial behaviour of the highest order if elected. Like Mandelson, it could be argued that the case against Mizzi rests – up to the time of writing – on a “technicality” in not declaring to the tax authorities he had opened a company in Panama.
But the two stories diverge when we examine how Blair and Muscat acted next. Blair demanded and received the resignation of his Secretary of State. Muscat set his face against any talk of resignation by his minister on the spurious grounds that nothing technically wrong had been proven. Instead, he reshuffled Mizzi to become Minister Without Portfolio, effectively carrying out the same ministerial duties as before.
As to Schembri, although he appears to have been equally culpable of misleading the Maltese taxman, he too remains in post on the specious basis that his is a ‘position of trust’ and he retains the Prime Minister’s personal confidence.
Unlike Blair’s handling of the Mandelson case, Muscat has eroded the reputation of his government, our Parliament and our country
Any objective observer would agree that, on the circumstantial evidence presented, Mizzi’s and Schembri’s ill-judged actions have raised deep suspicions of possible misconduct (even corruption). This is a far cry from actual proof of corruptness or criminality. There is, as yet, no smoking gun.
Nor was there a smoking gun when Mandelson resigned “on a technicality”. He resigned because in a parliamentary democracy the doctrine of ministerial responsibility prevails.
The principle of ministerial responsibility is a fundamental convention of our parliamentary democracy. While conventions have no force of law, they are practices that depend on their observance for their validity. A breach of such a convention does immeasurable damage to the integrity of our constitution and to the reputation of the government and Parliament.
Ministerial responsibility is self-evidently exclusively the responsibility of the Prime Minister. He leads the government. He selects his ministers. It follows when a breach of this convention is tolerated, that breach is the Prime Minister’s responsibility. He alone has the right to determine who should be in his government and who should continue to be a minister.
If a minister has deceived Parliament – such as opening a secret account in a shady jurisdiction like Panama – as Mizzi has, accountability for it must be his own responsibility. If a minister knowingly deceived the Prime Minister, that minister should resign.
A Prime Minister who did not oblige him to do so would be culpable in the extreme because, jointly and severally, he and Mizzi would be guilty of a gross breach of the convention of ministerial responsibility and conniving in the deceit. Together, they also damage the reputation of Parliament and the doctrine of ministerial responsibility is seriously eroded.
Whichever way one spins it, the gulf between what is legal and what is moral in Malta has become so wide that it has added fuel to the anger and lack of trust that the public increasingly feels about Panamagate and the Prime Minister’s handling of it. It has even led to unfounded conspiracy theories of his being the ‘Third Man’ in this sorry story.
The Prime Minister’s conduct of the Panamagate debacle has been ill-conceived. Malta’s international reputation has been tarnished. The reaction of the European Parliament and its rejection of not one, but two, nominees to the European Court of Auditors was evidence of the international disquiet which the Maltese government’s involvement in the Panama Papers scandal has aroused.
The ongoing investigation of Panama Papers on a European-wide basis by an inquiring committee of the European Parliament will keep the issue in the international public eye throughout the period of Malta’s presidency of the EU.
Unless the Prime Minister takes the necessary action to remove this albatross from around his neck, the Panamagate story will run and run. Just as Oilgate brought down the Nationalist government, it may well be that Panamagate will presage the end of this administration. By failing to cut out the cancer, Muscat’s personal authority is bleeding away. Malta’s government is being undermined and its reputation blackened.
As Malta prepares to take over the EU presidency in three months’ time, it is unconscionable that Muscat has not demanded the resignation of the tainted Mizzi and Schembri, pending the outcome of the enquiry into the affair.
Unlike Blair’s handling of the Mandelson case, Muscat has eroded the reputation of his government, our Parliament and our country. His challenge is how to extricate himself from a mess of his own making just when Malta is about to take over the presidency. For six months, Malta will be at the centre of all that happens in the EU, dealing with some of the most intractable challenges ever faced by it.
As president of the council, Muscat must be able to command respect. The erosion of ministerial responsibility has led to deep cynicism about Maltese governance, which is not confined to Malta.
Unless Muscat takes action to demand the resignation of Mizzi and Schembri, he will be gambling with Malta’s reputation and standing (which will almost certainly face damning criticism from the European Parliament on Panamagate during the presidency), and severely undermining his party’s chances of re-election.
An objective and dispassionate adviser would stress that there is only one way forward. Muscat should dump Mizzi and Schembri before the start of the presidency in January.