Why a Maltese judge threw out Simon Busuttil’s complaint for a Panama Papers investigation

A Maltese judge has decided that a complaint made by the former Opposition leader Simon Busuttil alleging money laundering in the Panama Papers scandal, failed to satisfy the legal requirements for such a suspicion to merit a magisterial inquest.

To make a quick recap of what happened, Busuttil never filed a police report after the Panama Papers broke in 2016, insisting that it should be the police to investigate any wrongdoing of their own initiative.

After losing the election in 2017, Busuttil filed a report with a duty magistrate on the strength of the Criminal Code’s Article 546, which allows for a magisterial inquest to take place following the receipt of “any report, information or complaint” on an offence liable to the punishment of imprisonment exceeding three years.

On 26 July, Magistrate Ian Farrugia decreed there was enough prima facie evidence to merit an in genere inquest. Prime Minister Joseph Muscat, Konrad Mizzi, Keith Schembri, Adrian Hillman, Karl Cini, Malcolm Scerri and Brian Tonna appealed the decision on 27 July.

So why did Mr Justice Giovanni Grixti overturn the first court’s decision?

1. Filing a complaint to a magistrate actually requires a higher degree of detail than the ordinary police report

The ‘suspects’ protested that Busuttil had “not observed the elements of Art. 546 (4a) of the Criminal Code… which asks that whoever files the report must identify the crime they are alleging; describe the subject material of the crime in detail; mention the manner and tool employed to bring about the crime; mention clearly the person suspected of committing the crime.”

2. The Appeals judge said the first court applied the wrong article of law

Mr Justice Grixti said Magistrate Farrugia referred to Art. 536 – a report filed to the police – instead of Art. 546; the former allows the informer to “as far as possible, furnish all such particulars as may be requisite to ascertain the offence…”. However, Art. 546 (1) states that “each and every particular, shall be described, and the instrument, as well as the manner in which such instrument may have produced the effect, shall be indicated.” Grixti said the erroneous application of Art. 536 had a direct effect on the magistrate’s decision.

EXPLAINER | From Panamagate to Panama Papers

3. The suspects were denied a right to reply to Busuttil’s observations on the appeal

The suspects were not notified of Busuttil’s replies to their appeal. “… When the complainant files ulterior explanations and new documents… there is an obligation for the suspect to be notified with this new information.”

Grixti remarked that he did not need to be drawn into a debate about the fundamental rights of suspects at pre-trial stage, referring to Busuttil’s insistence that the magistrate was not obliged to inform the suspects of his replica to their appeal. “This court will not close its eyes to a potential breach of rights even if, according to the Hon. Busuttil, there is no article in the Criminal Code obliging the magistrate to notify his replica to the suspect.”

Mr Justice Giovanni Grixti, second from right

4. Busuttil did not make a clear allegation of money laundering

Grixti says it is “immediately evident” that Busuttil did not allege in a clear way how the facts of the Panama Papers he recounted amounted to a crime of money laundering, but that he “without pointing his fingers at anyone, lightly indicates that this crime is punishable by a prison sentence of more than three years…”.

Grixti says this was no mere technicality (“the days of excessive formality are over…” he remarks wryly), and that Busuttil had to pinpoint how each of the suspects are involved in the crime.

“It seems the complainant does not want to assume this responsibility so much that in his summing up he says that it was German MEP [Werner] Langen who publicly declared that these facts indicate ‘a textbook case of money laundering’. But what qualifies as a prerequisite to the magistrate is that those facts amount to a qualified crime and not to what someone else thinks of those facts.”

PANA chair Werner Langen had warned Joseph Muscat that he will not 'get off scot-free'

[Actually, it was German MEP Sven Giegold who said it was a textbook case of money laundering, not Werner Langen, the chair of the EP’s PANA committee, who said “it is not clear at the moment, but it looks like money laundering… we must be careful before drawing any final conclusions over what it actually means’.”]

Grixti also said triggering the judicial machinery for an inquest required not only satisfying all the elements requested by the law “but also that the investigation can truly happen… Busuttil suggested in his replies to the appeal that the inquiring magistrate is given access to the Mossack Fonseca offices in Malta but also in Panama and New Zealand, or to release [former FIAU director] Manfred Galdes from professional secrecy when nowhere was it alleged that Galdes resigned because he was aware of irregularities that can prove what is being alleged here. All that is said is that Galdes resigned on 2 August, 2016.”

5. Grixti poured cold water over Busuttil’s use of episodes played over and over again during the Panama Papers saga

“If the Prime Minister visits Azerbaijan without being accompanied by the press, how is this a crime related to money laundering? If Michael Cassar and Manfred Galdes resigned… if Nexia BT disposed of an amount of paper which was collected by Kasco [Schembri’s paper merchants]… if these occasions, even by the sake of argument or a stretch of the imagination, suggest an individual crime, how is this conducive to the crime of money laundering? It is quite unjust that the complainant suggests an elaborate web of crimes from his subjective viewpoint, so that the magistrate – with the system’s current limitations – is encumbered with extrapolating whichever crime may exist from all this.”

Grixti concluded that in his “roll call of various episodes in which he suspects ulterior motives in each occasion” Busuttil did not explain who each formed the subject matter of a crime that merited a magisterial inquiry, “making it speculation in the absence of other clues.”

The Maltese delegation (at right) meeting Azeri officials in December 2014

6. ‘An offshore company alone does not merit a magisterial inquest’

Grixti said that documents obtained “unlawfully” from the Panama Papers leak had no probative value: he actually points out that Busuttil describes it as a “hack”, therefore making it “useless for a magistrate to secure documents, or photocopies of documents that cannot be used as evidence.”

He also said that while it was public knowledge that Mizzi and Schembri had New Zealand trusts, it was incumbent upon Busuttil to “describe, even if he does not advance any proof in this regard, how this money laundering was attempted or committed if this is the crime he alleges… he did not describe any situation, for example layering, that is commonly used in money laundering; or how the absence of the press in Azerbaijan could have been instrumental to a money laundering plan…”

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