Former minister John Dalli took me to task for my article ‘30 years on’ (September 20). He questions my credentials even though he knows me well and made very good use of my services during the PN leadership campaign, which pitted him against Lawrence Gonzi.
Dalli wrote that as far as he knew I do “not have any in-depth knowledge of the financial services industry”. I followed the history of the financial services sector from its onset. I quote what official publications, foreign and local media had to say about this sector. I especially quote what then prime minister Eddie Fenech Adami and the parliamentary secretary for offshore activities and maritime affairs Joe Fenech were quoted as saying about this subject. Dalli never challenged their veracity.
As for history: Dalli wrote that Fenech wrested the offshore sector from George Bonello du Puis, then finance minister. However, given that Fenech was at the time parliamentary secretary for the offshore sector, he couldn’t have wrested it from Bonello du Puis. At the time Bonello du Puis was minister, I used to meet him regularly and discussed financial matters so I could write about them. He never complained about Fenech but he confided that he was disappointed that Dalli wrested the Ministry of Finance from him following the 1992 general election.
Dalli writes about “one piece of legislation that practically set up a register for offshore companies and stated that any registered company will not fall under any Maltese law in Malta, that is reporting taxation, etc”.
The Central Bank of Malta in its 1988 annual report says:
“The drive to promote Malta as an international centre for offshore business gathered momentum in 1988. In January, Chase Manhattan Bank N.A. of New York were appointed as the government’s consultants in this field, complementing the work of the Offshore Investment Development Advisory Committee which was set up in July 1987.
“Following the issue of the White Paper in September, legislation was passed by the House of Representatives in November to regulate offshore business. This included the Malta International Business Activities Act (which provides for the setting up of an authority responsible for the development and supervision of offshore banks, insurance companies and trading companies); the Offshore Trust Act, which regulates and recognises offshore trusts; and the Merchant Shipping (Amendment) Act, which besides other provisions, revises the arrangements for the registration of ships under the Maltese flag.”
Not exactly “one piece of legislation”. Any further comments will be superfluous.
The concept of an offshore jurisdiction evolved into an onshore jurisdiction. It evolved just as our industrial sector and the tourism sector evolved. But for every sector, as for anything else, there was a beginning
In my article I quoted from a special supplement on Malta in the Wall Street Journal of April 11, 1989. In an interview, the prime minister was asked about Malta’s competitive advantages as a potential offshore centre for Europe. Fenech Adami said: “Again a new law has just been approved by Parliament. The Malta International Business Activities Act was just put into operation, and I appointed the board of governors of the authority. Again a package of incentives is being offered. Malta will not be a tax haven, but income tax will be payable at a very reduced rate.
“While other countries started up offshore business before providing legislation for it, we have changed that process. We had a close look at what competitive countries were offering and started with the legislation. I think this is a very positive thing because now anyone coming to Malta has a very clear picture of how the whole set-up is going to work. The response seems to be very positive.”
In the same supplement Fenech spoke at length on offshore development, which is described as “a top priority” for Malta. The parliamentary secretary noted that “with the luxury of studying the evolution of other offshore centres, Malta has chosen Luxembourg as its principal role model. Accordingly, it looks to be in a good position to combine a successful offshore services industry with full EC membership.”
Dalli wrote that “Chase Manhattan billed us about €10 million for that effort”. This is news to me, as I think it is for many other people. The euro was not yet in existence in 1987.
In a budget speech in Parliament on December 7, 1987, Fenech Adami said his government asked for offers from those who wanted to advise on the offshore sector. A call from renowned international companies was issued asking if they were willing to help the government in the offshore centre project. There was a positive reply and the government was on course to decide about this choice. Fenech wrote that Chase Manhattan Bank was retained by the government to prepare for the development of the offshore sector.
“In the first research phase of the three-stage contract, Chase has conducted a thorough comparative study of existing offshore centres to use as a basis for recommendations on legislation.”
I went through various parliamentary speeches by Fenech Adami who always commented positively about development in the offshore sector.
The article related to what happened 30 years ago. A Nationalist government led by Fenech Adami gave birth to the financial services 30 years ago when it enacted legislation aimed at turning Malta into an offshore centre. The concept of an offshore jurisdiction evolved into an onshore jurisdiction. It evolved just as our industrial sector and the tourism sector evolved. But for every sector, as for anything else, there was a beginning.
I wish Dalli the best. In his years as minister in various Nationalist Party administrations he contributed to the development of our economy to what it is today. The financial services sector, which started as an offshore jurisdiction, contributes 12 per cent of our GDP and thousands of good jobs. Nobody is happy that in the Zyen Global Financial Services Index Malta went down eight places, from 77 to 85 out of 92 jurisdictions.
I do not think that anybody can deny the positive effects of the financial sector in Malta and I am convinced that no one in either the current or in past administrations wants to harm this sector.
Joe Zahra is former editor of In-Nazzjon.