I recently watched an interview with international journalist Neil Chenoweth, in connection with the Panama Papers scandal and how it impacts Malta. The interview was aired on Net Television’s programme Iswed fuq l-Abjad.
The first thought that came to mind was who is this Chenoweth? A quick research showed he is a senior writer with the Australian Financial Review (AFR). In 1991, a magazine article he wrote triggered a secret government inquiry into Rupert Murdoch’s family companies. Since then he has earned a reputation as one of Australia’s best forensic business journalists and is regarded as the world’s most substantive writer on the public and hidden worlds of the Murdoch business empire. He is also the author of three books and is a three-time winner of Australia’s highest journalistic award.
The AFR was one of the media organisations which teamed up with the International Consortium of Investigative Journalists (ICIJ) to unravel data coming out of the 11.5 million files from Panamanian law firm Mossack Fonseca. Chenoweth linked senior figures in the government of three countries – Australia, New Zealand and Malta – to tax haven companies.
Chenoweth’s articles in AFR on April 4, 10 and 18, 2016 were veritably the three most revealing about the Malta connection to the Panama Papers during the last year.
Through these detailed articles we have learnt above all, that “Malta’s leaders turned to Mossack Fonseca five days after election” and that “Mossack Fonseca tried with nine different Central America banks to open an account for Panama companies owned by senior figures in the Maltese government”.
Iswed fuq l-Abjad asked Chenoweth whether all this was ‘fake news’ as the government was contending. He replied that: “The banks didn’t think this was fake news. Neither did New Zealand. This is really about leadership. When I revealed on April 10 (2016) the email trail that led to Mr (Karl) Cini setting up New Zealand trusts for Mr (Keith) Schembri and Mr (Konrad) Mizzi, the next morning the New Zealand prime minister, John Key, announced an inquiry into foreign trusts. That led to New Zealand changing the law for foreign trusts.”
Let’s now see how this story of the New Zealand inquiry developed to the point where Chenoweth, in his email to Net Television, is referring to.
Key, New Zealand’s Prime Minister, on April 19, 2016, tasked John Shewan, a tax expert, with this enquiry, the purpose of which was to examine New Zealand’s foreign trust disclosure rules and to report on whether these rules, and the enforcement of them, were sufficient to ensure that New Zealand’s reputation is maintained when considered alongside the country’s commitment to various OECD and other international agreements. In short, whether the rules were fit for purpose.
Shewan was given until June 30, 2016, to finish his work. In fact, he presented his report of this inquiry into Foreign Trust Disclosure Rules to the Ministers of Finance and Revenue on June 20, 2016 – barely two months after he was assigned this complicated task.
Mizzi’s and Schembri’s actions were the subject of a thorough inquiry by a foreign government but not deemed serious enough by our own Prime Minister to merit an investigation
His 60-page report was complemented by a number of appendices, one of which (Appendix 2 – Australian Financial Review articles) consisted of Chenoweth’s articles in AFR, mostly dealing with the whole background of the Mizzi-Schembri saga and their eventual setting up of a trust in New Zealand through the work of Nexia BT.
This alone amply demonstrates that Mizzi’s and Schembri’s actions were, ironically, the subject of a thorough inquiry by a foreign government but not deemed serious enough by our own Prime Minister to merit an investigation.
The final inquiry report refers squarely to the serious allegations contained in the AFR where the Maltese politicians are referred to. The report, among other things, states that “if the examples in the Australian Financial Review articles are examined in the context of those observations, it can be seen that there is the potential for the hiding of funds and the evasion of tax, and a reasonable likelihood that this is occurring. If this is the case then prima facie there is the potential for justified reputational damage if no action is taken.”
The inquiry arrived to a number of conclusions and made various recommendations. I mention two main conclusions. The overall one was that the existing foreign trust disclosure rules were inadequate and not fit for purpose in the context of preserving New Zealand’s reputation as a country that cooperates with other jurisdictions to counter money-laundering and aggressive tax practices.
Another important conclusion was that New Zealand required a regulatory and enforcement framework that is sufficient to protect its own tax base, while also ensuring that international confidence is not undermined through entities in New Zealand being used to hide funds to facilitate the evasion of taxes on other countries.
On his part, the New Zealand Prime Minister adopted most of the recommendations laid out in the Shewan report and presented a Bill with relative changes to parliament in August last year. The new law requires foreign trusts to file with Inland Revenue Department extensive details of beneficiaries, settlers and assets when a foreign trust is set up and yearly updates on distribution.
The third reading of this Bill was approved in mid-February bringing the whole process – from the inquiry stage to the relative parliamentary item – to a positive conclusion in approximately 10 months.
This is why, in the second part of his email to Net Television, Chenoweth wrote: “So they [New Zealanders] are grateful to Malta for showing what was wrong with their system. And they fixed it.”
Chenoweth concluded his email saying: “New Zealand cared about its reputation. Even Mossack Fonseca’s tame banks cared about their reputations. In Malta, the government has done nothing. For me that says something about how the rest of the world will see Malta, and how little the government cares.”
This is a serious indictment on Labour’s way of handling this biggest-ever international scandal which has continued to escalate since Labour, or rather Joseph Muscat, took it upon him to remain passive in front of all the revelations.
New Zealand’s example, as demonstrated by Chenoweth in his email to Net Television, shames this Labour government which not only never showed any will to tackle this enormous web of potential wrongdoing, but it is now being seen as putting obstacles and spokes in the wheel of all those relevant authorities which have examined, or should have examined, the Panama Papers.
Malta has been implicated in this scandal from the very first day, and even before, the publication of the Panama Papers. The international media reported incessantly about the Malta connection and very prominent journalists, including the two German ones who were the catalysts of the Panama Papers, are continuing with their follow-ups, day after day, as Muscat and his government continue to act irresponsibly.
I conclude by quoting from a recent significant tweet by Frederick Obermaier, the German journalist of Suddeutsche Zeitung and one of the protagonists of Panama Papers: “Fake News@Panama Papers? Well, no. Only an investigation on things Mizzi, obviously, wants to keep secret” (February 26, 2017).
Kristy Debono is the Nationalist Party’s spokeswoman for financial services, IT and gaming.