Suppose you can’t help suspect that, behind all this European fuss about our rule of law and financial services, there lie some hypocritical international interests. You’re sure they are using certain issues of genuine moral concern as a pretext to push their own national agendas at our expense. How would you go about flushing them out with solid arguments?
One way would be to demonstrate that Malta’s leaders have stood up, time and again, for rigorous standards.
Admittedly, it would be a challenge to do that with Adrian Delia, whose nebulous financial affairs hover above his head like a fat, dark rain cloud. But then he’s only the Opposition leader.
Joseph Muscat is different. In March 2005, as a young MEP, not even a year into his term, he drafted an ‘Opinion’. On behalf of the Committee on Economic and Monetary Affairs, he tabled a series of suggested amendments to tighten up and strengthen what was then a draft law to prevent the use of the financial system for the purpose of money laundering (and terrorist financing).
‘Your draftsman’, he informed his readers, mainly the Committee of Justice and Home Affairs, is in favour of constant vigilance and enhanced, regularly up-dated approaches.
Yes, he added, it could discomfort clients of financial services. But it was worth it.
Why? Because tight controls in any one country were of ‘high importance’ to ensure the stability of the entire financial system of Europe. They were important to protect Europe’s citizens – from the proceeds of crime entering the economy, distorting it and endangering both economic and democratic stability.
Now, there’s nothing out of the ordinary here. Muscat, the young MEP, was subscribing to the European consensus and suggesting ways of seeing it’s implemented not just on the law books but in practice.
His position on the Economic and Monetary Affairs committee shows that he was speaking in the name of the interests of healthy financial services. And he was addressing the committee mainly responsible for rule of law.
So there. We can turn to the MEPs who, on Tuesday, debated the state of Malta’s rule of law and its commitment against money laundering. “See! Our Prime Minister is the man who from the onset of his parliamentary career, targeted money laundering.”
And we can turn to Werner Langen, the chairman of the PANA committee and who is today one of Muscat’s most stringent critics, and say: “You of all people should remember that. In 2005, you were a substitute on the group that saw that Opinion approved.”
Except there’s a problem. Langen can turn the report against us. Today, Muscat undercuts the very standards he insisted on in 2005.
In that report, Muscat insisted that the definition of a Politically Exposed Person should not remain vague. So he included a long list that specified, among others, senior government officials and “close associates” of any PEPs, “whose substantial or business transactions may represent an enhanced money laundering risk”.
The PANA committee has been, unanimously, particularly insistent that Keith Schembri appear before it. Schembri has insisted that the rules and norms don’t apply to him. Yet, by the definition endorsed by Muscat himself (and which is standard for anyone who wants to be taken seriously), Schembri is a PEP twice over.
What a situation. You try to defend Malta’s interests and the Prime Minister himself lets you down
He is a senior government official as well as a close associate of the Prime Minister. While Schembri insists that whatever appeared in the Panama Papers concerns only his own private estate-planning affairs, that doesn’t cut any ice with the standards of the young Muscat. It is enough that they are substantial business transactions and that they represent a money laundering risk. Risk is enough to warrant European interest.
Schembri has also questioned the mandate of PANA. But the Muscat report had itself recognised a broad European interest in the risk of money laundering anywhere within Europe – to protect the financial system as well as European citizens.
Muscat had insisted that one of the fundamental principles should be a high level of transparency and broad consultation (which would include the European Parliament).
From the point of view of defending Malta’s reputation,it keeps going downhill, I’m afraid. Muscat had also insisted on adequate resources and staffing for national financial intelligence agencies – the FIAU, in the Maltese case.
Why? To allow them “to provide the institutions and persons covered by this directive with timely and specific feedback on the effectiveness of and follow-up to reports of money laundering transactions”.
In other words, if the financial intelligence agency had a reasonable suspicion of money laundering, it should be in a position to ensure a swift follow-up – so that the rest of the system can be kept secure.
In the light of that, what we have now is difficult to explain away. A number of FIAU reports have urged police investigation of suspected money laundering involving Schembri. Investigate? The police didn’t even give a file number to at least one report (with the obvious danger it could just disappear from the archives).
What a situation.
You try to defend Malta’s interests and the Prime Minister himself lets you down. He tolerates behaviour, from his own chief of staff, that his own report finds unacceptable.
It’s not a good basis on which to defend Malta against charges that its rule of law is precarious.
There’s more. We have Italian anti-Mafia authorities affirming that the Calabrian Mafia has channelled €2 billion in drug money to Malta. Other European authorities and financial investigators concur that Azerbaijan – an undoubted Mafia state – regards Malta as one of its ‘provinces’, at least for money laundering.
With that kind of consensus, it’s splitting hairs to argue whether we are a Mafia state or just a backyard or simply a useful pipeline. With that kind of money, and that kind of customer, no democracy is safe from dangerous penetration.
Or summary execution of those who resist.
This week, in the face of the wide criticism of Malta, the best that Labour’s MEPs could do was summon some lukewarm support for a resolution that called upon the Malta government to be transparent and cooperate on all matters of concern, including Panamagate.
That resolution is meaningless if, at a minimum, Schembri does not appear before PANA. If Muscat doesn’t oblige him to do so, it shows he just isn’t serious.
Not serious about upholding standards he once championed. Not serious about defending the national interest.
ranierfsadni@europe.com