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The real Panama earthquake

Malta might not be another Panama; but we still need to ask ourselves whether we should be an actor in the international orgy of tax evasion, money laundering and kleptocracy… or whether we want an economy that works for all people rather than the few, based on social justice and the highest labour and environmental standards. 

21 April 2016, 7:31am
Cartoon by Mark Scicluna
Cartoon by Mark Scicluna
Energy minister Konrad Mizzi is a political liability for Joseph Muscat, and even if the Prime Minister would have his electorate think his victory in the House on a confidence motion is a sign that his compact group back him, Muscat is on borrowed time.

Senior ministers have balked at both the politically moral and international inconvenient reality of having a minister open an offshore company, one that is believed was to serve as a vehicle for consultancy fees. We know that requests from the minister’s auditors for an international bank account required enormous sums of money to be opened, and this alone has placed Mizzi under severe suspicion.

But observers who witnessed the prime minister during Monday’s confidence motion would be wrong in assuming that Muscat is about to let time heal his predicament. There are signs that the prime minister realises that no action on Mizzi could become a fatal option for Labour; similar noises came from Edward Zammit Lewis, the successful tourism minister, who on TVM’s ‘Reporter’ sounded convinced that Muscat intended taking some form of concrete action on what has turned out to be a grave error of judgement, a serious breach of political ethics, and a warning sign for the entire Labour project.

As for Opposition leader Simon Busuttil, whose delivery on Monday seemed uncharacteristically weak – perhaps undermined by the constant jeering of the government side – it is indeed to his party’s credit that Panama Papers stayed on the agenda in the House.

But a word of caution on his appraisal of the independent press. All leading newspapers have demanded resignations from Konrad Mizzi and Keith Schembri – recognising what is unethical and impolitical is effortless when one truly believes in the values of proper political conduct. But to constantly misrepresent any factual report in the media, such as that of his deputy leader Mario de Marco, as being fed directly by his opponents in Castille, is puerile and not conducive to a healthy relationship with the press. Nobody is shooting the messenger on Panama Papers; that’s something the political class ought to practise right here in its own House.

***

The Panama Papers earthquake, ironically the same words once used by Muscat to herald changes of a very different type, has seen Malta experiencing only part of the extent of the revelations: in that the public media focus has so far centred only on the issue of Mizzi’s and Schembri’s resignations, while ignoring the broader picture of how tax havens are used to circumvent fiscal regulations across the board.

This in turn suggests that both the political class and the media may be misreading part of the popular mood in connection with this scandal. 

In essence, the anger stirred by Panamagate is not derived from the suspicion of corruption alone; there is also a growing sensation – stronger in Europe than here, perhaps, but felt all the same – that there is one rule for the rich and mighty, and another for everyone else. 

What has also been stirred is a deep-seated resentment at an entire system that has been allowed to fester out of control. On this, too, the public expects concrete action. For too long now, we have become inured to a situation where the country’s fiscal and even legal authorities apply blatantly different standards to ordinary citizens, then to a class of citizens that have always been treated using a different yardstick. 

Mizzi and Schembri may be the latest faces to attach to this phenomenon; but the truth is that it is a reality we have been facing a very long time. The Panama Papers only served to concretise this perception once and for all; to make it impossible for governments to carry on ignoring.

It becomes harder to ignore when you consider how much of Malta’s own fiscal and economic infrastructure is implicit in the scandal. 

Malta is already under increased pressure, as Germany, France and Italy are pressing the EU to tighten restrictions on tax havens, after calling for measures to impede “aggressive tax planning” and “profit shifting”. There have been renewed calls for tax harmonisation across the EU: a move that both Labour and the Nationalists oppose, despite their declared aims to fight tax evasion and money-laundering.

Malta might not be another Panama; but we still need to ask ourselves whether we should be an actor in the international orgy of tax evasion, money laundering and kleptocracy… or whether we want an economy that works for all people rather than the few, based on social justice and the highest labour and environmental standards. 

DealToday
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