[ANALYSIS] Understanding Malta’s corruption nosedive

In the year of Panamagate Malta dropped 10 places in the Transparency International corruption perceptions index, overtaken by a number of Caribbean nations, some of which were not included in last year’s report. Beyond the inevitable political spin, what does Malta’s nosedive in the global graft index really show?

Konrad Mizzi - the decision to keep him in the cabinet cast a shadow on the government’s ethical standards
Konrad Mizzi - the decision to keep him in the cabinet cast a shadow on the government’s ethical standards

Compare the reaction of the Prime Minister to last year’s report and the Labour media attempt to spin this year’s report and you get the gist of how the corruption index is spun in the local context.

When last year in the wake of the Café Premier and Gaffarena scandals, Transparency International’s Corruption Index surprisingly showed Malta climbing to 37th place from 43rd and scoring one point more than the previous year, Prime Minister Joseph Muscat was quick to point out that “this is proof that the government is factually fighting corruption.”

Using the same yardstick set by Muscat last year, the fact that Malta has now dropped 10 places and lost one point should be used as proof that the government is not “factually” fighting corruption.  

This time round it was the Labour media which failed to use the yardstick set by Muscat last year. 

In a case reminiscent of what in the US is being dubbed as “alternative facts” – One News described the report as one showing “a greater perception of corruption” in a year, which saw “great scandals”, but awkwardly not the ones impacting the government but the opposition. After referring to scandals involving Tonio Fenech, Jason Azzopardi and Beppe Fenech Adami, it blames the opposition’s protests against corruption in the wake of the Panama papers for Malta’s poor ranking.

But while Labour is failing to live up to its leader’s yardstick, the Nationalist Party’s conclusion that the drastic change from Malta’s ranking from 2015 to 2016 confirms that the current government “is the most corrupt government in Malta’s history,” comes across as an exaggeration. Not surprisingly the party had issued no such statement when last year the same index showed Malta improving its ranking.

For while it is true that Malta has slipped from 37 to 47th placing, its lowest level ever in the graft index, this drop can also be attributed to the fact that Malta was overtaken by six countries which normally fare better than Malta but which had not been assessed last year. For just as last year’s improvement in rankings can be partly explained by a decrease in the number of countries included in the index (from 175 to 167), Malta’s nosedive in this year’s index coincided with an increase to 176 in the number of countries assessed.

But irrespective of the methodology used to compile the index, Muscat’s decision to retain Konrad Mizzi as Minister – albeit one without a portfolio – did cast a shadow on the government’s ethical standards and may be reflected in the sharp drop in the score given to Malta by three out of the four organisations which assessed Malta’s score last year.  

Fodder for the opposition

Ever since Alfred Sant started using the transparency index as a yardstick to measure PN graft in the mid-noughties, the corruption index has provided opposition parties with ammunition, whenever these showed a drop in rankings. 

In 2009 the Muscat-led Labour opposition did not shy away from linking a drop in Malta’s ranking in the index to the ongoing controversy on the Delimara power station, arguing that Prime Minister Lawrence Gonzi was “simply not coming down hard enough on corruption”, adding that his “blinkered approach” gave the impression that corruption was permissible. On that occasion the annual report by Transparency International had shown that Malta had slipped nine places.

According to the PL, the government’s postponement of a parliamentary debate on the tender for an extension of the Delimara power station, which was mired in controversy, “further reinforced the perception of growing corruption”.

But a year later, unexpectedly, Malta improved its ranking in Transparency International’s ranking, going up to 37th position from 45 the previous year.

On his part former PM Lawrence Gonzi was consistent in his insistence – even when Malta improved its ranking in 2010 – that he did not give much importance to this index because it was “only based on perception”. But on that occasion he did feel the need to remind the opposition of the existence of the report which it conveniently ignored.

Speaking in parliament Labour frontbencher (and now EU auditor) Leo Brincat recognized that Transparency International based its statistics on perception but, “contrary to what the Prime Minister (Lawrence Gonzi had said, perception was important,” adding that “corruption had seeped through all institutions”.  

Keith Schembri, Prime Minister’s Chief of Staff
Keith Schembri, Prime Minister’s Chief of Staff

Why Malta lost 10 places but only one point

The score given to each country in the CPI aggregates data from 13 different assessments assembled by independent institutions, including country experts and business leaders.

Malta’s score was based on indicators from five reputable organisations. Countries rated by fewer than three agencies are not included in the index. This explains why each year a different number of countries are assessed.

In reality one major reason why Malta has lost ground in this year’s global index has nothing to do with Panamagate. That’s because 2016 saw six new entrants in the index, which were not assessed last year: Barbados, Bahamas, Santa Lucia, Brunei, Saint Vincent and Grenadines, and Grenada which all have scored better than Malta.   

Bahamas, Domenica, Barbados and Saint Vincent and Grenadines were not included in the index last year, but had been included in the previous year’s index. All four nations had performed better than Malta in 2015. This partly explains why Malta ‘improved’ its position in 2016 when it faced less competition.

As regards its placing in the European Union ranking, Malta slipped one place from 20 to 21 this year, after being overtaken by Latvia which last year scored one point less than Malta and now scores two points more. Presently Slovakia, Croatia, Hungary, Romania, Italy, Greece and Bulgaria are the only EU countries which are perceived to be more corrupt than Malta.

Apart from Latvia, three countries who used to score less than Malta in past years but which have now overtaken it are: Costa Rica, Cape Verde and Georgia – all three have made remarkable advances while Malta has lost a precious point.  

In an index survey where 41 countries register a score of between 45 and 65, a drop of a point or two can make an enormous difference in rankings. Malta already starts from a low position in the rankings, thus any further reductions in its score are bound to be in the single digits.

WEF gives Malta four points fewer

Malta would have fared worse had it not been for the improved rating given by the Bertelsmann Foundation – a non-profit think tank based in Washington with “a trans-Atlantic perspective on global challenges”.

For the score given to Malta by the World Economic Forum EOS sharply declined from 58 last year to 54 now. Malta also lost two points in the rating given by HSI Global Insight and three points in the rating given by PRS International. 

Yet Malta gained a remarkable 11 points in the Sustainable Governance Indicators of Bertelsmann Foundation, that compensated for the other losses. 

This time round, for the first time ever Malta was also assessed by the Economist Intelligence Unit, which gave Malta a relatively low score of 54, the same score given to a large group of countries ranging from Cuba (which ranks in 61st place in the overall index) to Slovenia (which ranks in 35th place in the overall index). 

Malta’s EIU score is also much lower than Cyprus’s 72, despite the fact that the latter is just one notch above Malta in the overall index.

Overall the ranking indicates a decrease in Malta’s score in three of the five indexes used in compiling Malta’s score. It is this sharper decline in these three indexes that Panamagate could have been a factor. For if its score were limited to these three indexes, Malta’s average score would have decreased by three points and not by one.

But this does not mean that the CPI Index tallies with increased concern on corruption reflected in MaltaToday’s opinion polls, which have seen concern on corruption increase sharply in the past year.

A survey conducted in May showed that concern on corruption has reached an all-time high of 18%, and is only second to traffic in the list of national concerns. None of the five indexes used for Malta appeared to have used popular polling. 

The World Economic Forum’s executive opinion survey (EOS) is an annual survey of business executives; the Bertelsmann Foundation’s sustainable governance indicators (SGI) examine governance and policymaking in all OECD and EU member states in order to evaluate each country’s need for, and ability to carry out, reform; the Political Risk Services (PRS) of New York assess risk profiles; and the Global Insight country risk ratings are compiled by 100 in-house country specialists, who also draw on the expert opinions of in-country freelancers.