The Dalli Chronicles: Politics on a rollercoaster

John Dalli has a political legacy to defend: whether to be remembered as the EU commissioner forced to resign because of shady dealings involving lobbyists; or as the political reformer who changed things both in Malta and in Europe.

Dalli's place in history as a reformer is guaranteed as the architect of Malta's modern taxation system through the introduction of VAT, fiscal cash registers and capital gains tax; as well as the man who revamped the banking system by selling Malta's major state owned bank to HSBC.

Over the years he stood out as a 'doer' who put a face and a name to the Nationalist government's most unpopular reforms and decisions. 

In Europe his first claim to fame was the controversial lifting if a 13-year ban on genetically modified Amflora potatoes; and more recently for steering a directive which would have severely limited cigarette packaging, a veritable blow to big tobacco.

But accusations of shady dealings also pervade his political career even if he was never found guilty of any corruption allegation.

Through the 1990s and early noughties he was constantly the target of Labour's scandal mongering machine: only to fall from political grace in his own party after the divisive 2004 PN leadership contest where he found himself the target of a fabricated report. But then he made a dramatic comeback: first as Health Minister in the second Gonzi administration and than as the Prime Minister's own choice as European Commissioner.

The key to the contradiction between his statesmanlike qualities and his propensity to expose himself to scandal could be explained by his otherwise atypical rise to political heights.

Rise of an atypical politician

Not bred in any of the patrician political dynasties of lawyer politicians, Dalli projected the confidence of someone who had climbed the social ladder; starting from humble origins of a family which run a coffee shop in Marsa, serving a long-since departed clientele of mainly British servicemen. His other brother Father George Dalli described their upbringing in Dickensian terms: "We were a poor family. Poverty back then simply meant asking your mother for another piece of bread which she didn't have."

Dalli enrolled as an apprentice at the Royal Malta Dockyard, which sponsored his accountancy degree. At 24, he became a financial controller at Blue Bell Malta, which handled some 25% of Malta's exports. At 30, he set up its head office in Brussels.

He returned back to Malta in 1981 to form part of the PN's electoral machine. While his humble upbringing may well have increased his determination to achieve, it could also have made him more streetwise in his business connections.

His entrepreneurial streak, which co-existed with his political career, made him fair game for accusations of blurring the distinction between his private business and politics. His business links in Gaddafi's Libya while he served as chairman of the Libyan-Maltese Joint Commission were a case in point. 

Cutting his teeth in the 80s

John Dalli formed part of a generation of PN politicians who cut their teeth in iron in the turbulent 1980s.

Elected to parliament in 1987, Dalli was a member of the cabinet in all four administrations led by Eddie Fenech Adami. After a short spell as parliamentary secretary for industry and minister for economic affairs he was Malta's finance minister for 14 whole years.  He stands out for revolutionising the fiscal system by introducing VAT and alienating the self employed category - a rational decision, which may well have cost the PN the 1996 election.  

His second landmark decision was the sale of Mid Med Bank (and all its properties) for the meagre sum of €184 million after the PN was re-elected to power in 1998 - a decision which was firmly opposed by the Labour Party which derided Dalli for selling a large chunk of Malta's financial assets "secretively" and "single-handedly".

The second scandal milked by Alfred Sant's Labour to hit Dalli was the bankruptcy of the Daewoo franchise in Malta, following the sanctioning of heavy loans to the company from Bank of Valletta. Dalli worked for a very short period under a Labour administration as a financial consultant with Daewoo but then left to work with the Corinthia Group of Companies.

Dalli rebutted insisting that no loans had been taken from Bank of Valletta when he was consultant and the loans from the BOV were given to Daewoo when Alfred Sant was premier.

Ironically Labour's accusations resurfaced in an SMS message warning PN councillors against voting Dalli in the 2004 leadership contest where once again Dalli defied the established political scheme standing against the candidate anointed by Eddie Fenech Adami. 

The years in the wilderness

Five months after his defeat at the leadership election, Dalli submitted a letter of resignation from the Gonzi cabinet (where he briefly served as Foreign Minister) that still makes for a bitter read: "In the 17 years I have served under all Nationalist governments...I have been under constant attack and the target of the Labour Party. But this is the first time I am facing attacks from different quarters." Dalli did not disguise his suspicions that those 'quarters' lay within his own party.

The ammunition had been provided by two allegations of nepotism. The first involved airline tickets allegedly channelled to his daughter's firm. The second, relating to a tender for hospital equipment, supposedly involving kickbacks to his brother Sebastian.

He spent three years in the political wilderness, relegated to a backbencher after a resignation that was at best, contrived - at worst, forced. He said the prime minister had told him he could not have "a minister under investigation" - referring to unfounded (later found to be fabricated) allegations that Dalli had taken a kickback on a multi-million-hospital tender.

Dalli resigned at a time when the allegations had not even reached the Commissioner of Police's desk. And then he spent the next years carving out his niche of 'disgruntlement' from a newspaper column.

Bouncing back again

But in the end, Gonzi decided to rehabilitate him: he propped up the former minister in a press conference at Castille to declare that Dalli had been wronged by devious detractors, and offered him the role of 'special advisor'. That was in 2007, just before the general elections of March 2008. Dalli nearly made it on two electoral districts: scoring a surprising 1,711 first count votes in the tenth district (which he had never contested before) and 3,371 votes from his sixth district (Qormi) stronghold. He was then made Social Policy Minister. 

Ironically one of the canvassers who had helped Dalli in his electoral comeback was none other than businessman Silvio Zammit - the same person who brokered two meetings with the tobacco lobby, which prompted the OLAF investigation.

But two years into Gonzi's second administration, as unhappiness started brewing on his backbench, suddenly it seemed Dalli's stature as an aspirant leader, forged by the turbulent 1980s and embittered by his fall from his grace, had turned him into a reference point for the MPs protesting their exclusion from Gonzi's inner circle.

"I act as a father confessor to most of them... They come to me and I try to explain to them what the situation is at the present... These are good people who need to be fostered and not hit on the head," Dalli said back in October, outlining his new paternal role as a senior minister trusted by a select group of MPs.

Kicked upstairs

It was in these circumstances that Dalli was offered a prestigious post he could not refuse: a kick upstairs into the European Commission. He also started with an inclusive mark, appointing former Green Party leader Harry Vassallo in his cabinet.

But his term as commissioner immediately started with an outcry among environmentalists, shocked by Dalli's decision to lift a 13-year ban on genetically modified potatoes - a decision which he insisted was based on the scientific evidence at hand.

In the meantime Dalli had his first clash with the commission when he openly questioned EU commission President Barroso's call on Gaddafi to step down.

Dalli broke ranks with his boss in March 2011, when he told a Maltese business audience that he "didn't think [he] had the right, or anyone else, to make a statement on whether Gaddafi should step down."

In the last year Dalli won the support of anti smoking NGOs - and the ire of big tobacco - by pushing for a stricter directive which would require all cigarette packs in the EU to have plain packaging with no branding, and to be hidden from public view.

Trouble back home

Despite being appointed commissioner, Dalli did not refrain from stirring the already troubled political waters in his own homeland. Upon being appointed commissioner he made it clear that he would not refrain from commenting on the local political scene. He lived up to his word making a number of critical appearances in the Labour media. 

During one of these appearances he revealed that during his tenure as Commissioner, he had brokered a meeting between government and Energy Company SARGAS - for which he used to work as a consultant in the past - and criticised the government for ignoring a proposal which he claimed would have helped government reduce utility bills.

Dalli was also called to give evidence in front of the Nationalist Party executive after being called as a witness by rebel MP Jeffrey Pullicino Orlando in his failed attempt to expel Jeffrey Pullicino Orlando from the party. Dalli had alleged that his email account server security had been breached. John Dalli later filed a police report with the names of people in the Nationalist Party he believes hacked his e-mail account.

In another appearance on One TV, John Dalli accused the Nationalist Party of allowing itself to be run by an intolerant "policy of apartheid where one either obeys, or one has no place there."

But despite his harsh criticism of the party's leadership, Dalli did not exclude contesting the forthcoming election with the Nationalist Party insisting that he "would wait and see how things develop". This suggests that Dalli was still entertaining thoughts of a local comeback. In fact, the immediate result of the OLAF investigation is that these hopes of a comeback in the next election have been dashed.

In the Attorney General's hands

Dalli's future now hinges on whether the Maltese Attorney General will prosecutehim on the basis of the European Anti Fraud Office (OLAF) conclusion of "unambiguous" but  "circumstantial" evidence that he was aware that a Maltese entrepreneur was involved in a bribery attempt. 

Dalli has already indicated that he intends to clear his name using all means at his disposal, hinting at a conspiracy involving the invisible hand of the tobacco industry - a claim which finds an echo among anti smoking NGOs disappointed that Dalli's resignation has derailed the anti-tobacco directive.

But the problem for Dalli now is that he is facing evidence included in a report prepared by the EU's anti fraud watchdog: a highly reputable organisation led by Giovanni Kessler, a former member of the anti mafia directorate in Caltanisetta.

Ultimately Dalli's future depends on refuting OLAF's conclusion that he was aware of Silvio Zammit involvement in the alleged bribery attempt.  Much depends on the nature of the "circumstantial" evidence included in the file already sent by OLAF to the Maltese Attorney General.  

Whether Dalli would have the chance to clear his name or not depends on the local AG's decision on whether to prosecute Dalli, Silvio Zammit or both.

If the AG decides not to proceed against him, a cloud of suspicion will be left hanging on Dalli, thus making any political comeback unlikely. 

The best bet for Dalli would be a swift conclusion of the case but this could be compounded by the long lists of international witnesses, which could bog down the case for months... well after the results of the next general elections are announced.