I have a small collection of books about alleged corruption scandals which took place in the 1990s. There’s the wonderfully named Bizzilla u Barunijiet about intricately worked out circumstances which ended up favouring a few lucky “barons”.

Then there’s Omertà about the bus ticketing issue way back, and other assorted scandals. L-Isptar Mater Dei – l-Omm ta’ Kull Skandlu is a meticulously detailed account of the various plots and subplots in the saga of the building of the national hospital over an incredibly long period of time and at an exorbitant cost.

On rereading these and other accounts of allegations of corruption, one thing stands out – that although the facts revealed all pointed towards wrongdoing, there was rarely any definite judgement of corruption. This is not as absurd as it sounds. It is notoriously difficult to nab someone in the act of physically receiving or giving bribes, and it is equally unlikely that a record of dealings between fellow conspirators is revealed. There are very few smoking guns which are actually identified.

The perception will remain that there is something very untoward in a Cabinet minister even considering being linked with such a jurisdiction

However, the public can read about the circumstances in which the claim is made, and draw its own conclusions. Despite the fact that there have been so few (if any) official findings of corruption – and in some cases there has been an official exoneration by boards of inquiry – the perception lingers that there was something not quite right about the cases mentioned above.

This is precisely the plight that Konrad Mizzi is facing over his Panamanian company. Although the audit commissioned will (as widely predicted) not find millions stashed away somewhere, the perception will remain that there is something very untoward in a Cabinet minister even considering being linked with such a jurisdiction. There will be an official exoneration but the perception out there is still very damaging.

• It has come to light that an underground bank has been operating for some years. People would pass on substantial amounts of cash to a company representative who was unlicensed to operate as a financial or a lending institution. In turn, their cash would be loaned to other local businesses and interest charged. Finally, the original investors would have their capital returned with a considerable return on their investment. It seemed as if all involved had a good thing going on. Everybody was spared the bureaucracy and reporting rules that would be required in a normal bank set-up, the interest earned was higher than that specified by law and everybody was making a quick buck away from the taxman’s prying eyes (no need to go to Panama – we have a local set-up).

However, it so happened that the man coordinating this operation passed away, before all the loans could be returned to the original investors, leaving them in the lurch. The creditors are now clamouring to have their money back from the man’s heirs. Well, good luck with that and the long and tortuous court process that will involve. I sympathise with the creditors just as I would sympathise with anyone who has been diddled of their earnings, but I can’t help feeling that the situation is self-inflicted.

If you are operating outside the confines of the law, you cannot expect to avail yourself of the law’s protection when things go belly up. Banks are highly regulated for a reason – to ensure that clients enjoy a minimum amount of protection in the event of things going wrong. That’s why they are required to have certain amounts of reserves and a guaranteed depositor compensation scheme. If you are ready to forego the protection that comes with an official legal set-up in exchange for greater returns, you have to take the risks that come with it.

There’s another aspect of this underground loan system which sheds light on the Maltese psyche. The fact that it’s quite widespread indicates that the average citizen feels no great moral qualms in engaging in the black economy with the lack of scrutiny of the tax and legal authorities that this entails, but then they expect their elected representatives not to do likewise.

Of course, the fact that someone is evading tax in Paola in no way excuses ministers setting up shop in dodgy jurisdictions such as Panama, but no-one can claim the moral high ground if he’s operating irregularly back home.

cl.bon@nextgen.net.mt