A due diligence report that leaves us none the wiser

On paper, it was generally commendable for the Nationalist Party to introduce a ‘due diligence’ process, to ensure that prospective leadership contestants are properly scrutinised for any potential future political baggage.

But the way the process unfolded in practice turned out to be rather disappointing. And this was evident long before the final conclusions were published last Wednesday.

As early as last August, PN secretary-general Francis Zammit Dimech had already confirmed that the exercise would “not include any recommendation on whether [Adrian Delia and Bernard Grech] should be allowed to contest or not.”

Zammit Dimech even admitted that the pre-emptive decision not to disqualify anyone had been rooted in “realpolitik”: acknowledging the “grave political implications” of stopping either of the two candidates from contesting at all, thereby reducing the election to a one-horse race.

While those are concerns are perhaps understandable, they do not amount to a justification for rendering the entire due diligence process toothless and ineffective. 

To make matters worse, however, the exercise clearly didn’t succeed in its primary aim either… that of exposing the candidates to higher levels of scrutiny.

Not all of this is the responsibility of the panel itself. As expected, the due diligence report had its limitations in verifying most of the allegations resulting from news reports in the public domain.

The panel of experts were not empowered at law to seek information from public authorities, so from the outset, questions of impropriety could not be addressed with certainty.

All they could really do was express an opinion on the seriousness of the allegations at hand, ‘if they are proven to be true’. This was more evident in Delia’s regard: especially when addressing the claims that Delia is the subject of an FIAU investigation over allegations that he once handled a client’s Jersey bank account, in which rent money from a London brothel was laundered.

The due diligence panel observed that “if true”, this would render him “unfit for public office”… only to add that “on the other hand, if Dr Delia’s rebuttals are correct and the press reports are incorrect, then Dr Delia would have had his reputation unjustly tarnished.”

This sort on non-committal approach speaks volumes about the same ‘realpolitik’ situation, acknowledged earlier by Zammit Dimech. For had the panel explicitly exonerated Delia of all suspicion, it would also have been interpreted as a vindication of his innocence: raising questions about why the leadership election was even being held in the first place.

But by failing to reach a conclusion either way, the panel also ‘passed the buck’ to the Nationalist Party members who will be voting on October 3… leaving them to have to reach their own political judgement on which candidate to trust as leader; but without giving them anything to base that decision on.

What also disappoints about the report is its lack of thoroughness when dealing with the personal financial situation of the candidates.

This was one of the areas where the due diligence did indeed have the ability and competence to put stiff questions and analyse the documents and numbers put forward by the candidates.

However, on this aspect the report was scant. We are none the wiser, by reading the report, as to why Adrian Delia did not file his 2018 tax return, and only did so a year later.

We are none the wiser as to whether claims that Delia’s income is not enough to cover his personal loans and other expenses are true. Nor are we any the wiser as to whether a €7 million loan from HSBC taken by a company in which Delia is a shareholder, has remained unpaid.

But equally problematic is the lack of scrutiny of Bernard Grech’s tax woes. While admitting that Grech did not give the experts the full picture, the report almost justifies the lack of thoroughness because the revelations about Grech’s tax evasion were published when the panel started writing its conclusions.

Even here, we are left none the wiser as to why Grech failed to pay income tax on various occasions. Or why he failed to pay VAT in the first place; or when these tax dues were settled, and the provenance of the funds.

Ultimately, the indirect effect of this lack of thoroughness was also to devalue the entire issue of tax avoidance in the first place. By seeming to play down the tax problems of both candidates, the due diligence report also imparts the impression that such issues are not worth scrutiny or criticism at all.

And this a very unwise thing to do, for a political party that is trying position itself at the very forefront of a war against corruption and maladministration.