Transparency needed now more than ever

Malta needs to upgrade its transparency standards across the board

27 April 2017, 7:37am
Cartoon by Mikiel Galea
Cartoon by Mikiel Galea
The events that have paralysed this country’s institutions this week have so far raised many questions. Some of those questions are linked to allegations that have not to date been substantiated with documentary evidence. Though reinforced by many compelling suspicious circumstances, the suggestion that large sums of money were transferred to funds owned by the Prime Minister and his entourage must be supported by more concrete evidence. Evidence that would stand in a court of law (where the matter would certainly have to be decided, once due judicial process begins.)

It is problematic to discuss this aspect of the case for two reasons: one, the inquiry should run its course – with all interested parties interrogated, and the evidence independently verified – before any clear assessment can be made. Two: the situation is too fluid at this stage. The entire country is anxiously awaiting a fresh twist or turn at any moment. Prudence dictates that one must be cautious is commenting at this stage. 

But there are other aspects which should be discussed. The entire corruption allegations revolve around the dubious relationship that appears to exist between Malta and Azerbaijan: a country with a poor transparent record, to say the least. For years, Azerbaijan has been accused of offering cash and luxury gifts in exchange for favourable votes at the Council of Europe which was last week urged to set up a far-reaching anti-corruption investigation, amid fresh allegations of vote rigging by the former Soviet republic. 

This record has a direct bearing on the present situation. Azerbaijan was suspended from the Extractive Industries Transparency Initiative (EITI). Outside of the EITI, Azerbaijan can evade accountability obligations on governance and transparency... allowing for secret transactions of the kind being alleged.

It was for this reason that Malta’s decision to tie our energy supply to the Azeri State oil company SOCAR for 18 years should have been handled with the utmost of transparency. Yet the contract was sealed without full disclosure of all the relevant documents. This adds to a web of suspicion; even if it is a coincidence, the government would surely have benefited from maximum transparency in the name prudence.

On the other side of the demand-supply chain, it is now more urgent than ever to regularly audit Malta’s energy infrastructure.

Looking beyond the agreement, it is questionable that Malta should be bound by an obligation to buy all energy supply from one source. Government defends this strategy on the grounds that it made the closure of Marsa and Delimara possible... but the same target could have been achieved by mix of interconnector and renewables... not by 18 years from the Electrogas plant and the rest from the Shangai Electric plant which also buys gas from Electrogas. And while gas is cleaner than HFO, the ‘fabbrika tal-kancer’ narrative would have fit in a plan for larger percentage of renewables. However this is not possible as we are now dependent on the interconnector and the new power plant.

Part of the problem is also a lack of continuity. Malta has unfortunately lacked long-term energy planning under different governments. This is a pity as other countries, not far from us geographically and economically, have managed to achieve a lot.

Portugal had reached a zero-emissions target for the first time, using a combination of wind and solar energy. Our geographical limitations may make that target unobtainable locally, but a lot more could be done to diversify the mix.

This may sound like an environmental consideration – and it is – but it is also a financial-economic-political one. Relying on an energy monopoly is unhealthy at the best of times: at times when a notoriously shady country controls all aspects of the energy sector, it becomes downright unwise.

Malta needs to upgrade its transparency standards in other areas across the board.  This scandal has also exposed serious lacunae in our financial regulatory structure. These must be investigated without delay. Naturally the present allegations remain the priority focus of any investigation for now. But when the dust has settled we must also start to actively discuss ways of strengthening the country’s institutions once and for all.