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Muscat puts up staunch defence as MEPs take Malta to task over tax and Panama
MEPs in a poorly-attended debate on the rule of law of Malta take Muscat to task: ‘We will insist that you don’t get off scot-free’ says head of PANA committee
Last updated on 14 June 2017, 6:30pm
Tim Diacono / Yannick Pace
Tim Diacono / Yannick Pace
6 min read
Just a week after winning the election, Prime Minister Joseph Muscat will face the European Parliament on Panama Papers and the rule of law
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Prime Minister Joseph Muscat this afternoon accused MEPs of drawing on “fake news” to draw information on Malta and of getting basic facts about his country wrong, during a poorly-attended plenary debate on the fallout Panama Papers and the rule of law in Malta.
Only 35 of the European Parliament’s 750 or so MEPs had chosen to attend the debate. Out of those that were present, a number questioned Muscat why he refused to suspend his chief of staff Keith Schembri and tourism minister Konrad Mizzi and why the police failed to act on three damning FIAU reports. However, must MEPs used the occasion to poke holes in Malta’s imputated tax system.
Portuguese MEP Ana Gomes lambasted Malta as a tax haven, German MEP Markus Ferber arguing that Malta’s economy is based off “exploiting the tax systems of other countries”, and his colleague Fabio de Maso warning that Malta is protecting “blood-stained money…that has been laundered by the mafia”.
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The most damning in his criticism was Werner Langen, the chairperson of the European Parliament’s Panama Papers committee, who ripped into Keith Schembri for refusing to appear before the committee.
”This is total disdain to the European Parliament, and I’ve never seen anything like it,” he said. “You can laugh all you like, Prime Minister, but we will insist that you don’t get off scot-free. If you keep doing nothing, then we [the Pana committee] will keep on following you and keep on questioning you…including whether you had bought votes in Malta.”
In his closing remarks, Muscat noted that there had been three debates held: that on taxation, one on the Panama Papers and a third debate about an “outright lie” – referring to German MEP Michael Theurer’s reference to reports that his wife Michelle Muscat owns the offshore company Egrant.
On the Panama Papers, Muscat said that while some MEPs had questioned why no investigation had taken place, the truth was that there were four inquiries currently underway
“They will decide whether there is room for prosecution,” he said, adding that he had stated a number of times that if the inquiries were to find wrong doing there would be resignations
“This is a basic fact that I’m afraid many have gotten wrong,” he insisted. “Unfortuantely, many MEPs got their facts from the social media and didn’t dig a little deeper to ascertain the veracity of those facts. Indeed, some of the conclusions they referred to had already been denied by the institutions, including the FIAU.&rdquo
Turning to Malta’s tax system, Muscat said that it was a unique one in Europe, and one which “has been around since World War II”.
“Some of you may not like it, but it was scrutinized by the European Commission prior to Malta joining to the European union more than 11 years ago and it is OSCE-compliant,” said Muscat.
“It’s not true that Malta’s economy is dependent on financial services, and indeed our main exports are microchips. We’re not a mailbox economy and the Tax Justice Network ranks us highly when it comes to transparency. While I could accept such caricaturisations from tabloids, I would have expected a far more informed debate in this House.”
Moreover, Muscat said references to Malta Files overlooked the fact that the stories that resulted from the documents where all based on information that was public, adding that only difference was that in the Malta Files, the information was searchable people’s name rather than company names.
According to Muscat, while all MEPs present had read media reports, none looked at reports on Malta by European institutions such as Moneyval.
Muscat said that he respected the rule of law to the point that he asked the independent courts to investigate the Egrant claims made by a “single blog”, stressing that he would resign if the allegations proved true.
Finally, Muscat said that he was amazed at claims – including by Werner Langen - that he had refused to attend the PANA committee hearing, insisting that he had stated many times that he would do once he inquiries into the allegations had been completed.
“I will appear in front of the PANA committee when I have all the facts in hand; I am not a Volkswagen that says one thing and does the other,” he said, in a reference to the VW emissions scandal. “If you can’t get this basic fact right, then please check your press reviews or fire the people drafting them for you. I am amazed that such a basic fact has been ignored during what should have been a serious debate.”
PN MEPs: ‘We will continue criticising government corruption’
PN MEPs David Casa and Roberta Metsola also refused to allow their party’s recent landslide election loss to alter their strategy – with both pledging to continue criticisng government corruption at the European Parliament.
“Some people are trying to silence us by claiming that we are betraying Malta when we are actually defending our country,” Metsola said. “We would be betraying Malta if we were to defend the people who are under investigation.”
Casa said that Muscat has a choice – “whether to go down in history as Malta’s most corrupt Prime Minister or whether to sort this mess out”.
“Prime Minister, I urge you to stop approving corruption but to instead join us in our fight against criminals and corruption,” he said.
Labour MEP Alfred Sant said that the rule of law is as alive and well in Malta as in any other EU member states, noting that Muscat has pledged to respect the conclusions of ongoing magisterial inquiries.
“Some MEPs may dislike that Malta is excelling in financial services and are using this debate on those grounds,” he suggested.
Romanian MEP Cszaba Sogor challenged Sant on whether he agrees with Konrad Mizzi’s appointment as tourism minister, noting that Sant had last year called for his resignation as energy minister in the wake of the Panama Papers scandal.
The former Prime Minister provided a diplomatic answer, responding: “The Prime Minister must respect the verdict of the people…I note that he has done this in this case too.”
PL MEPs Miriam Dalli and Marlene Mizzi turned the tables on the Nationalist Party for having prompted this debate in the first place.
“The PN is tryng to compare Malta with Hungary, which forms part of its own EPP,” Dalli said. “It wants to play judge, jury and executioner…saying who should be put behind bars and putting pressure on institutions, including here in this Chamber. This is the true threat to democracy.”
Mizzi lambasted the debate as a “poor excuse to serve the PN’s partisan agenda”.
“These people had wanted the debate to be held before the election so as to gain some political advantage. They should be ashamed of using such bullying tactics…”
Tim Diacono is a former reporter for MaltaToday.
Yannick Pace was a MaltaToday reporter between 2016-2020
Muscat notes that The Economist had classified Malta as a full democracy, that the country has a fully independent and criticial National Audit Office and Ombudsman, a Public Services Commission, an independent judiciary, an Attorney General and MFSA head who were nominated by the previous government.
He says that Malta’s media laws have been realxed to become the most liberal in Europe, by removing criminal libel and by adding more layers to protect journalists’ sources.
He criticises MEPs for referring to the Egrant story, which he once again denounces as an “outright lie”.
“Whenever we ask people to point out the source of these reports, they always refer to the same blog with unsubstantiated information…I had asked the court to appoint a magistrate to investigate these allegations, and said that I will immediately resign if it finds a shred of truth. I put my head on the line because I knew it is completely untrue. The Opposition leader failed to agree to the challenge I made him. I am marvelled at the idea that some extremely knolwedgeable MEPs have repeated such fake news here just like that.”
He responds to Langen by saying he will come to the Pana committee once the inquiry has been concluded: “If you dont get this fact right, then please check your press reviews or fire the people drafting them for you. I am amazed that such a basic fact has been ignored during what should have been a serious debate.”
He once again criticises MEPs for relying on media reports, and ticks them off for ignoring Moneyval’s recent postiive report on Malta.
”It’s not about who tweets what, but about what the experts tell us…when GRECO criticised our lack of party financing regulation, we responded to it and are now compliant with their demands,” he says.
He said the Malta Files revealed no secrets, but that it merely consolidated elements by allowing people to search names instead of companies.
”The Tax Justice Network ranks Malta highly where it comes to secrecy and transparency…we did away with banking secrecy over a decade and a half ago, and we disagree that member states should not be left alone to decide their own tax levels. It’s not true our economy is dependent on financial services, and indeed our main exports are microchips. We’re not a mailbox economy, and while I can accept this caricature in tabolids I would exepct a more informed debate in this House…”
He defends Malta’s imputed tax system as one that had been scrutinized by the European Commission before its EU accession in 2002, and is OSCE- compliant.
”There are two ways we can go on the taxation element. The government and the Maltese presidency has gone to lengths to conclue dossiers that are quite thorny in this issue, such as BEPS and the money laundering directive. That is a fact that should be taken into consideration..”
Joseph Muscat gives his closing speech, to say he is not angry and that he understands the “poltical narrative” of the debate.
“I thank Weber for his contribution to our campaign back in Malta,” he says mockingly, notes that an EPP politician was implicated in the Panama Papers, shuts off MEP Werner Langen as he interrupts him.
”There are four investigations taking place by independent judges, who will decide whether there is room for prosecution…if there is such room for prosecutions, then resignations will be in order. I am amazed that this basic fact wasn’t taken into consideration.”
European Commissioner Pierre Moscovici is back and says he is aware of the links between the Panama Papers and Malta, but cannot comment on them because they are currently the subject of investigation.
He refers to claims that Malta is a tax haven: “A tax haven does not respect international standards…EU member states go way beyond international standards, and have all adopted our rules and declared their will to respect those rules.”
Slovenian MEP Romana Tomc noted that no one has been jailed as a result of the Panama Papers scandal.
“We are all against coruption, but it would be nice for us to put our money where our mouths are for a change…”
Portuguese S&P MEP Ana Gomes warns that Malta is used by politicians and business-people to create front companies to hide the source of their income, that it sells citozenship and promotes it in Air Malta’s flight magazines.
“Malta is a tax haven…one of many, and we’ve got to put an end to this.”
Dutch S&P MEP Paul Tnag, who formed part of the Pana delegation to Malta, said that the committee had difficulty uncovering facts on its mission to the island.
”We have evidence for tax competition…small companies pay 30% more tax than large corporations. There is nothing wrong with having a different tax system, but I implore the Prime Minister to join in investigations to closing taxation systems and to introduce the common consolidated tax base, to join the EP to fight for fair and efficient taxes in Europe.”
Labour MEP Marlene Mizzi lambasts the debate as a poor excuse to serve the PN’s partisan agenda.
“They should be ashamed of this…these people wanted the debate to be held before the election so as to gain some political advantage. These are shameful bullying tactics. Malta is a progressive and successful country…don’t try to bully us.”
PN MEP Roberta Metsola dismisses accusations that she is a traitor for speaking against corruption at EU level.
”We would be traitors if we did not speak about these issues…. I am proud to be Maltese, and I will cotninue defending my country both in Malta and here.
She calls for institutions to be strengthened and pledges her full defence to Malta’s financail services industry.
Spanish S&P MEP Ramon Jauregui Atondo defends Malta’s efforts to combatting money laundering.
Polish MEP Mariusz Rosati, who forms part of the Pana committee, questions why Keith Schembru had refused to appear in front of the committee and notes that Konrad Mizzi had “failed to convince us of his innocence”.
”We find it very worrying that you have not suspended Schembri and Mizzi until legal investigation is concluded. The failure to do so has seriously undermined the credibility of your country and of yourself personally, and has sent a bad signal to EU public opinion. Winning elections does not allow you to sweep such problems under the rug…”
French Front National MEP Gilles Lebreton refers to the Malta Files as a “scandal” that the European Commission has done nothing about.
“I call on Europeans, and particularly French people, to open their eyes to the true nature of this union.”
Finnish S&P MEP Nils Torvalds is up next...he says he sympathises with Malta’s need for competitive taxation to compensate for its lack of natural resources but says he is concerned at the Maltese Presidency’s “unwillingness” to draw the proposed EU money laundering directive to a conclusion.
Romanian MEP Monica Macovei called for a full independent investigation into the Panama Papers.
“If we want to clamp down on corruption, then we must look into the corners of every member state.
Labour MEP Miriam Dalli gives Muscat a bit of a breather, turning the tables on the Nationalist Party.
“The PN is trying to compare Malta with Hungary, which forms part of the EPP too,” he says. “The PN has been playing judge, jury and executioner…saying who should be put behind bars, and putting pressure on institutions, including in this Chamber. This is the true threat to democracy.”
German MEP and Pana committee chairman Werner Langen rips into Muscat, questioning why he re-appointed Konrad Mizzi, why he didn’t call an independent investigation into the accusations, and why his chief of staff Keith Schembri has repeatedly refused to appear in front of the committee.
”This is total disdain to the European parliament, and I’ve never seen anything like it…You can laugh if you like, but we will insist that you don’t get off scott free. If you keep doing nothing, we will keep on following you and keep on questioning you…including whether you had bought votes in Malta.”
Italian MEP Mario Borghezio notes revelations in the Malta Files that people linked to the Mafia own Maltese companies.
“Malta is being spoken about as a second Tripoli…
French Green MEP Eva Joly says that the election cannot replace an independent investigation, and uses the occasion to warn that Malta is now being considered as a tax haven.
“It is high time that the Maltese governemnt take account of the harm caused by these practices..
German MEP Michael Theurer says that Mizzi’s appearance in the Panama Papers has undermined EU legislation to tackle money laundering.
“It’s as though you’re giving criminals the keys to the house…even the wife of the Prime Minister is being mentioned in the Maltese media as being the owner of a Panama offshore company. It must be proven that the acucsations are false, the rule of law must be enforced..”
He questions Muscat why Malta recently opted out of the European Public Prosecutor’s Office, which has been supported by the European parliament for several years.
Labour MEP and former PM Alfred Sant says that rule of law is as alive and well in Malta as in anyway in the EU. He says that the magisterial inquiries are proceeding independently, and that Muscat has pledged to respect their conclusions.
“Some may dislike that Malta is excelling in financial services, and are using this debate on those gorunds,” he suggests.
Romanian MEP Cszaba Sogor asks Sant whether he agrees with Mizzi’s appointment as tourism minsiter given that he had called on him to resign a year ago.
Sant answers diplomatically: “The Prime Minsiter must respect the verdict of the people…I note that this has been done in this case too.”
PN MEP David Casa takes to the stage. He warns that a number of criminal investigations are underway, and that last week’s eleciton doesn’t forgive the sins of corruption.
“His second term didn’t start on a good note and re-appointed corrupt politicians. He has a choice – to either go down in history as the most corrupt Prime Minister or he can sort it out.”
”I love Malta and it’s because I love Malta that I will continue speaking against corruption, and will speak when our isnsitutions are weakened. You can see what Malta has become…Prime Minister, don’t keep approving corruption but instead join us in our fight against criminals and corruption.”
British UKIP MEP David Coburn warns that several MEPs are using this debate as part of their plans to create a single taxation system, and that the debate shows that the UK should adopt a hard Brexit.
Greens MEP Sven Giegold takes to the floor to warn that he is seriously concerned at the rule of law in Malta, noting that he has written to the European Commission to call for an investigation into potential breaches by Malta of EU money laundering directives.
”The FIAU has investigated cases of money laundering and the licensing of some banks, but these three reports have not led to prosecution procedures, and we call on the police commissioner to open the respective procedures,” he says.
He notes that MFSA head Joe Bannister is also chairperson of Finance Malta, giving him a strong conflict of interest.
“The key persons involved in the Panama Papers, including Keith Schembri, Brian Tonna and Karl Cini, should appear before the Pana committee. Malta needs to defend its reputation, the country must be based on the rule of law – which cannot be replaced by investigations.
German MEP Fabio de Masi lambasts Malta as a haven for the money laundering of the mafia.
“The money Malta protects is stained with blood. It’s no surprise that the Maltese have re-elected their government though because there is no real alternative, and the Conservatives [PN] also have skeletons in their closet.
He questions Muscat whether he will appear before the EP’s Pana Committee.
ALDE MEP Petr Jezek says that the Panama Papers has laid bare the non-functioning of several institutions.
“Imalta is fighting EU efforts to combat money launderting and boost transparency, which implies that it has something to hide.
German ECR MEP Bernd Lucke questions why the debate is being held after the Maltese elections.
”What would have been more democratic than putting questions to the Maltese Prime Minister before the election?” he asks.
Danish S&D MEP Jeppe Kofod, a co-rapporteur of the Pana Committee, defends Malta as a sound democratic country, but questions the EU’s willingness to tackle tax evasion.
EPP chairman Manfred Weber questions why he has re-appointed Konrad Mizzi as a minister when he was the only EU minister implicated in the Panama Papers scandal.
“You won the election but the questions are still on the table,” he said. “You mentioned a lot of what you did on paper, but I was hoping you could have showed us what the outcome of this legislation is. Legislation on paper is one thing but implementation is another.”
Weber, who addressed a PN mass meeting during Malta’s election campaign, says democracy means that people must have full trust in their institutions.
Dalli said that Malta’s EU Presidency has pushed forward several dossiers to clamp down on tax evasion, fraud and avoidance.
Malta’s Europe minister Helena Dalli to start off the debate…
Good afternoon. Maltese prime minister Joseph Muscat will today face off MEPs in a special session at Strasbourg in a debate that takes on Malta’s state of rule of law in the context of the Panama Papers.
Many MEPs will have to contend with Muscat’s second major landslide victory, whose unprecedented majority of 35,000 votes seems to put to shade concerns that the Panama Papers and a corruption allegation which he put to a magisterial inquiry, would cost him his government.
One German MEP, Sven Giegold of the Greens, seemed incredulous at the election result. “Normally, when there are extreme governments, things get corrected in an election,” he said. “Here what strikes me most is that the government was not only not sanctioned in the election, but has once again won a landslide victory.”
Giegold is one of the Green members in the Panama Papers committee that interviewed minister Konrad Mizzi and sought the attendance of chief of staff Keith Schembri, both having opened secret offshore companies in Panama.