Stakes are high: crunch time on Egrant

The stakes are very high for all those involved including Prime Minister Joseph Muscat, Opposition leader Simon Busuttil and blogger Daphne Caruana Galizia.

The stakes are very high for all those involved including Prime Minister Joseph Muscat, Opposition leader Simon Busuttil and blogger Daphne Caruana Galizia.

If the allegations are fabrication based on a narrative linking a series of dots based on plausible conjectures – all aimed at giving credence to the claim that Michelle Muscat is the beneficial owner of Egrant – we are faced with an attempt to distort public opinion on the eve of a general election when the opposition is lagging in the polls. 

The claims have been fully endorsed by the Opposition, which raises the stakes for Simon Busuttil. The PN is not simply calling for an investigation to establish the truth but has already concluded that Muscat is Egrant’s owner. Although the reproduced text of the alleged declaration of trust has been posted by Caruana Galizia, if this is exposed as a fabrication it would be costly for the PN.

Moreover if the issue drags on without the presentation of any documented evidence substantiating the claims, Muscat can easily turn the tables accusing Busuttil of being dishonest by using unsubstantiated claims in his bid to win power.

But if the allegations are true, the PM – who has repeatedly denied owning Egrant – would have been caught lying. His only way to remain in power is to continue lying and crying frame-up. Unless he resigns. Either way the consequences on democracy will be devastating. It would mean that the 2013 landslide election would have delivered a government of crooks and that the PM had repeatedly lied to the nation. Even more damning is the implication that a company owned by the Prime Minister of a EU country was receiving payments from Azerbaijan, a country known for its caviar diplomacy.

In a case where claims may look too big and devastating to be true for some, and too big and devastating for others to be false, much hinges on the credibility of the Prime Minister, which has already suffered a big blow last year when news emerged of Konrad Mizzi’s secret company.

Ironically the greatest problem for Muscat and what lends credence to Caruana Galizia’s claim is his own track record when facing the Panama Papers revelations in the past year. Why on earth did Muscat decide to retain Mizzi in his cabinet and Keith Schembri as chief of staff after their names surfaced in the Panama Papers?

One possible answer is that Muscat could not expect them to resign because he himself had a finger in the pie. Which is why the claim that Michelle Muscat is the owner of Egrant provides a plausible answer to this question. 

The PM himself now admits that he initially failed to address speculation on ownership of Egrant, which company was formed on the same day as Tillgate and Hearnville in July 2013, but requested for formation in an email from Nexia’s Karl Cini just a few days after Labour won power in March 2013.

Mizzi’s initial attempt to derail the media by revealing his trust in New Zealand before it emerged that he had a Panama company also contributed to a climate of distrust which made the government less credible. 

Bearing on Muscat’s credibility is the institutional failure by police and the FIAU to fully investigate Konrad Mizzi for opening a company whose set-up “looks like money laundering”, according to PANA committee chairman Werner Langen. Moreover Nexia BT was never investigated despite the trail of failed attempts to open bank accounts in Dubai.  

Another factor in this case is the alleged involvement of Leyla Aliyeva, the daughter of Azeri dictator Ilham Aliyev, named as the ‘corruption person of the year’ in 2014 by the OCCRP. Azerbaijan’s ruling dynasty, known for its ‘caviar diplomacy’ through payments made through shell companies to curry favour with foreign politicians as was recently exposed by payments to Italian politician Luca Volontè, the former chair of the centre-right group in the Council of Europe’s parliamentary assembly.  

Any definitive proof of financial dealings involving Maltese PEPs with Azeri officials would cast a shadow on Malta’s energy policy, piloted by Konrad Mizzi.

Again it is possible that the Aliyev regime’s international notoriety is being used to give credence to the latest claims. But the fact that Nexia BT was also used by Azeri oligarchs raises questions. 

So was the failure to investigate Mizzi, Schembri and Nexia a consequence of Muscat’s involvement in Egrant? Or is Caruana Galizia feeding on the perception brought about by Muscat himself through his reluctance to act decisively by removing Mizzi and Schembri?

In this sense the publication of documentary evidence and proof is needed to resolve an issue, which has a direct bearing on the next election and the state of democracy. 

But would proving Muscat’s involvement bring the case to an end, or will the debate shift to whether such documents have been forged as the PM hinted when claiming that the documents will have to be authenticated. The onus is now on the country’s institutions, particularly the police, to investigate whether Muscat’s wife owns a secret company. Instead of acting on its own steam, the police only intervened after the PM asked them to do so through his lawyers. Proper governance demands immediate not delayed action, especially after the allegations surfaced on Caruana Galizia’s blog. 

The magisterial inquiry is a step in the right direction but it comes a little too late. By calling on the PM to resign while facing investigations, Busuttil has once again upped the stakes. It would mean that any PM would have to resign whenever faced with a serious but yet unproven allegations.

If conducted properly this inquiry can swiftly establish whether a trail exists for suspicious transactions linking the Azeri ruling family to the Pilatus bank and companies linked to PEPs. Indeed Muscat’s most solid defence is that any suspicious banking transactions through Pilatus bank can be traced, although this may not suffice to establish the identity of PEPs mentioned in hard copies of fiduciary agreements.

It is arguable that Muscat is only infuriated now by the alleged lie that his wife owns Egrant, which is why he should immediately sack Schembri and Mizzi. Last year he was placid about the sheer act of opening secret companies. Now the claim is devastating. Closure on Panama can only happen by removing the people in his Cabinet who opened an offshore company.

In this high stakes game, it may well serve the Opposition to keep Panama alive in the general election campaign and not burn all its ammunition now. Muscat will want to clear his name before the election. What is sure is that for the first time Muscat seems to have lost the initiative to Busuttil in determining the best timing for the general election. Entering the campaign with the sword of Damocles hanging on his head, could be his biggest risk.

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