Malta’s present collective leadership has been likened to Dickens’ Artful Dodger and to Shakespeare’s Macbeth who could not suppress his guilty conscience.
Like Sisyphus, our government has been pushing the rock of guilt, of overpadded or undervalued sales of national assets like the power stations, gas contracts, hospitals, the ITS building and Planning Authority permits, of Panama and Dubai accounts, of the takeover of the police and army, the FIAU and other institutions, up the hill since 2013. The rock will one day crush our Sisyphus.
Today what comes to mind is Fiddler on the Roof, the musical based on the book by Joseph Stein set in 1907 Russia.
The musical, inspired by the story’s best known song If I were a Rich Man, inspires this essay.
The criticism of our rule of law, separation of powers, taxation and passport sales systems by the European Commission, the European Parliament, the Council of Europe, the Venice Commission, the OECD and all Maltese NGOs, as well as from international organisations representing press freedom and the protection of writers and authors, is becoming louder.
Malta is slowly having the noose tightened round its neck. The 17 Black revelations and the warning issued at an International Investors Conference in London, by David Marchant, an offshore tax haven specialist, to steer clear of Malta are just the latest signs.
And another bank allegedly linked to money laundering as well as the Italian and Spanish police-led investigations on tax and the illegal importation of fish and oil strongly connected to Malta suggest that our policing and supervisory authorities are closing a blind eye.
Following the murder of Daphne Caruana Galizia last year, the constant harassment of her memory, of her admirers and of those fighting to bring a semblance of normality back to Malta was the chosen strategy which is failing. Not only are local voices clamouring for Malta’s return to democracy getting louder with thousands joining the march one year after Daphne’s murder, but overseas, newspapers, TV channels, politicians, political parties and heads of government rumble and grumble about Malta.
Many Maltese are unhappy about the non-existent separation of powers and the infiltration of the police, army, FIAU, courts and all other departments of government. We are unhappy about the rape of our natural environment, our built heritage, our national culture and identity. Abroad they may be unhappy about these matters too, but their greatest anger is directed towards money laundering, the contraband of arms, oil, people, fishery and agricultural products, the sale of EU passports to possible criminals and terrorists, despots and undemocratic government officials and the siphoning of their taxable wealth.
You name it – we do it! So, where does If I Were a Rich Man fit in?
Today I put myself in the shoes of rich men and women. Lured by our accountants and lawyers, our real estate developers and tourism operators, our sales and marketing abroad by Henley and Partners and our Prime Minister’s sales efforts, they decided to relocate to Malta.
The adverts of our legal and financial services firms reek of back room deals, secret anonymous offshore companies, intricate holdings and facilitating passports.
Malta is slowly having the noose tightened round its neck
So, if I were one of these rich men and women I would today begin to reconsider my decision to relocate here. These had decided to open their gaming, roadside café, massage parlour retirement on laughable taxation levels (15 per cent of nothing instead of 30-50 per cent of millions in their home countries), to localise in Malta their holding companies held by others to hide the real owners, to siphon profits from abroad and to subject them to local taxation at near to zero per cent rates by means of a clear intention of the local tax authorities to serve as a taxation sink hole. At nominally 35 per cent with a refund of all but five per cent of that tax through ‘imputation of tax’, monies earned elsewhere get to be taxed nowhere thanks to Malta.
All international organisations are up in arms.
To the rich men and women who should be spending at least 183 days a year in Malta to avoid falling back into the tax net of their home countries, probably still their ‘real’ residence, from which they inherited or earned their wealth but from which they decided to elope with their wealth sneering at the solidarity expected from them by their less lucky or crafty fellow citizens, I say, be careful.
No one checks whether they spend the proper time here or transfer sufficient funds to live here. As they are only taxed on funds they transfer to Malta it is important that these funds taxed here amount to half their annual income to cover half their time spent living here each year.
Locals ensure that water and electricity run regularly to produce bills that supposedly prove residence and presence. Who do they think they are fooling? As the international noose tightens their home countries will demand proper proof of residence.
Gaming or gambling companies by-pass the social rules governing the gambling addiction of clients back home, and to enjoy the taxation loopholes allowing employees to pay nominal tax here through split salaries and limits of taxable incomes kindly offered by our generous ministers.
Yacht or airplane owners register their assets here since Malta only taxes these assets nominally pretending to believe that they are leased for use outside EU waters. Lease agreements can be produced by fraudsters too, you know. Who do they think they are fooling?
Both bona fide or mala fide residents and new passport citizens or investors in Malta should listen carefully to the rumblings of thunder and far away lightening appearing on the horizon. The OECD, Council of Europe, European Commission and European Parliament, NGOs, international newspapers and editors cannot all be wrong. These distant thunder claps sound a warning. If I were a rich man, honest or criminal, I would begin to wonder whether I should continue to invest here, to hide my loot here, to open a money laundering activity or a smuggling ring here. I should maybe seek another willing place to move my wealth to before it is too late. International investigators and regulators are closing in.
It is a well-known fact that the Mediterranean storms are insidious, rapidly forming and dissipating, and arise with little warning. We who live here have always listened to their warnings in the past and that is why our landscape and houses have survived. Nowadays even the Maltese are not listening to the signs, pretending not to hear the thunder, calling lightening claps the screaming of kittens. Locals are fed up living in an unfair two-tier society where foreigners pay far less tax than locals but benefit from all our services.
Enough is enough.
If I were a rich man I would listen to these rumblings. Clever people in the great crash of 1929 moved their cash before the fall. Clever people emigrated and moved their assets to the US and Switzerland from Germany before it was too late.
The Azeris, Russians, Chinese, Saudis and the Italian mafia moved to Malta in the last 15 years because they saw changes in their own countries which they did not like. They were the rich men thinking and acting like rich men.
It is useless to just brush this criticism away. Unless we, the Maltese, take a deep look at how our system needs changing and bring it back in line with standard practice among democratic countries, in line with international organisations we belong to, then we have only ourselves to blame if the rich men and women of this world will vote with their brains and their greed. They will pack up their bags and leave whatever we say.
They came for our dodgy systems and crooked advice. They came because we provided them with a tax haven. They came because we promised them lax supervision or no supervision at all. They came because many of us participated in their schemes and aided and abetted their tax evasion, money laundering and fraudulent land deals and asset sale contracts. We have only ourselves to blame and we are the only ones who can resolve the situation. Doing nothing is not an answer.
I wonder when the exodus from Malta will begin?
John Vassallo is a former senior counsel and director for EU Affairs at General Electric, a former vice president, EU Affairs, and associate general counsel, Microsoft, and a former Ambassador of Malta to the EU.
This is a Times of Malta print opinion piece