GUEST POST/The Tailor of Panama & Other Stories (laundry included)

By ‘Bertrand Russell’

It is no small wonder that John Le Carre’ chose Panama to stage one of his books. When interviewed about his choice, he said he visited that country six times and “was drawn by the obvious corruption of Panama and the wonderful collection of characters you meet there.”

So back to our man in Panama, Konrad Mizzi.

To start with, the red herrings.

The first red herring is Joe Muscat’s schoolyard replies about Austin Gatt and other allegations. Austin Gatt himself has decided to stay above the fray and if he feels I am interfering in his private affairs, then I apologise, but the story is important in the current context and after all I am simply recapitulating what is already in the public domain.

His father was a successful lawyer. When he passed away in the 1970s, he left a sum of money in Switzerland to his son, but left the usufruct to his wife, i.e. Austin Gatt’s mother. This means that for the very many years that Mrs Gatt senior was alive after her husband died, Austin Gatt would not have had material access to the funds. They would have to be (and were) declared on his mother’s tax return when appropriate, and could not have been declared on Austin Gatt’s.

Then his mother passed away in 2005, creating two obligations for Austin Gatt, the first being to declare them on his income tax return, which he did, and the second to declare them on his Ministerial Declaration of Assets, which he failed to do for two or three years.

It did not take a journalistic investigation or a Wikileaks scandal to get him to do so, he simply noticed his oversight and rectified it. It was only brought into the public eye 6 years later in the electoral campaign of 2013, for obvious reasons. At all time it was and is clear that the source of the funds was legitimate and that no attempt was made to evade tax.

If Joe Muscat would like to draw attention to former PN ministers who hid money and evaded tax, he should be pointing fingers at Michael Falzon and Ninu Zammit, both of whom have since admitted it and paid the relevant fines, and the PN took all the necessary disciplinary action.

The point is that Joe Muscat does not wish to antagonise those who helped him get into power in 2013, and has helpfully forgotten the streams of allegations against Ninu Zammit, as well as the relationship between Michael Falzon and Sandro Chetcuti. One hopes that this is simply a debt of gratitude and not a debt of obligation.

Of course, a citizen from either side of the political divide might be tempted to ask why Giovanna Debono is still in parliament. The PN response would be that that is her affair as she is no longer under the Nationalist whip. However her own response, assuming (but not yet a given) her husband is found guilty, could easily be, why me? What about Anton Refalo?

That might be considered a response in the Joe Muscat Kindergarten School of Debating, of course. The minister has been broadly accused of exactly the same thing as Mrs Debono’s husband by many sources, repeated in the press and as far as I know not challenged by libel cases. In addition, there are serious question marks about the discrepancy between his declared property portfolio and his declared income and how the latter could possibly have supported the creation of the former.

The second red herring is that Konrad Mizzi needs a trust to manage his assets. For the purpose of this conversation, we do not even need to go into the merits of how he acquired those assets, although that is also an interesting question. Konrad Mizzi has declared to parliament (and a lie in that declaration of assets to his parliamentary peers would be a resignation matter) that he has nothing more than 4,000 shares in Malta International Airport plc, a small flat in Sliema, €310,000 in bank deposits brought to less than nought on the balance sheet by €320,000 in bank loans, and a London house or flat which he has since sold.

These assets do not in any way warrant the setting up of a trust in any jurisdiction, let alone a secret trust in New Zealand holding a secret company in Panama. Most people in Malta own their own homes and do not feel any need to have their home held in trust, still less by a company in the secretive and blacklisted jurisdiction of Panama.

From a purely financial perspective, opting for a trust rather than straightforward wealth management as provided by any bank in Malta is a bad financial decision. I suppose Konrad Mizzi is free to take poor financial decisions with his own possessions, but one cannot help but wonder if those poor decisions would not spill over into his professional life, further reinforcing this aura of incompetence apparent to all except those blinded by sycophancy.

The third red herring is that Konrad Mizzi has said he will declare all his assets. Well that’s the whole point. Unlike those who use financial instruments in above board jurisdictions, he can’t be checked.

Now we come to the biggest issue, which is the illegitimacy of the whole thing. Ascribing poor financial judgement to Konrad Mizzi does not magically eliminate the conclusions to which all and sundry have come.

Panama is a blacklisted jurisdiction, notoriously corrupt, and specifically blacklisted by the European Union. Konrad Mizzi is a minister of an EU member state. Panama has a reputation for being used as a money-laundering haven for drug cartels, corrupt dictators and terrorist organisations.

Mossack & Fonseca, the Panamanian law firm used to set up his shell company, which has offices around the world and, after the Labour Party was elected to government, opened up an office in Malta, has a similar reputation. Mossack Fonseca (Malta) Ltd is 50% owned by Brian Tonna, Konrad Mizzi’s consultant.

The purpose of a shell company in a secretive blacklisted jurisdiction can be one of only two – that is, to hide the source of one’s funds or property, or to hide the revenue from those funds or property, legitimately acquired or not. Both are criminal activities.

The fact that there is no direct evidence that these instruments have so far been used for criminal activity does not mean that such criminal activity has not been carried out, but simply that there is no evidence of it, bearing in mind that these companies are designed for that precise purpose. Serious government ministers in serious countries do not carry out activities which lead to this sort of speculation.

Ultimately, it’s very simple. If you were to ask a political consultant or a tax inspector in any other serious developed country/EU member state whether Konrad Mizzi should resign, be fired or be prosecuted, you would be greeted with a patronising smile. When pressed for an explanation they would tell you:

“A minister in MY country would have resigned if this came out.”

“If a minister in MY country failed to resign he would have been fired.”

“How can I prosecute if I can’t get information? That’s exactly why you do something like this, and that’s exactly why we’ve blacklisted Panama – because we can’t get information – and that’s exactly why a minister of the government should not do this.”

The bottom line is that either Konrad Mizzi is corrupt or he has made a monumentally stupid mistake. He will never be able to shake accusations of corruption. Even if he could somehow show that his company in Panama does not have nor ever had any assets, the fact remains that once he has been forced to admit – after the fact was reported on this website – that he has one company in Panama, how do we know he doesn’t have others, perhaps even in other blacklisted jurisdictions?

Any accusation of corruption or corrupt intentions would be construed as fair comment. Simply saying he will declare everything it holds is not good enough. It can’t be verified, and it also begs the obvious question as to what he is putting in it that he hasn’t declared to parliament.

Innocent or not, he is a liability to the nation, especially when negotiating on our behalf. He should go, or be made to go. Due to the nature of the financial instrument he has chosen, whether he should be prosecuted or not depends on other possible leaks rather than investigations through official channels. This Labour government may yet regret removing the time-barring on crimes of this nature.