Le Monde today/Panama Papers: Malta government in the eye of the storm

Published: April 14, 2016 at 12:26am

I uploaded this big piece in Le Monde earlier but here it is in translation.


The Maltese government is in turmoil after the Panama Papers revelations about clients of the tax firm Mossack Fonseca. The right-wing Opposition has been calling for several days for the resignation of Labour Prime Minister Joseph Muscat, two of his closest collaborators are included in the documents leaked to Süddeutsche Zeitung and analysed by dozens of media, including Le Monde.

They are his chief of staff, Keith Schembri, and the Minister of Health and Energy, Konrad Mizzi. According to the Australian Financial Review, in June 2015, using the services of Mossack Fonseca, the two men set up companies in Panama and trusts in New Zealand to hold them, then tried to open bank accounts Dubai. The New Zealand trusts are not subject to tax, and their beneficiaries may remain anonymous. But several banks contacted by Mossack Fonseca on their behalf became suspicious and refused to open accounts for these two politically exposed persons.

Mr Mizzi claims that he did not want or use this complex structure for tax evasion. “The trust has no bank account. It was set up to manage family assets and inheritance,” he told the Australian Financial Review. “New Zealand is a stable parliamentary democracy and among the best governed in the world.”

Mr Schembri said that he had opted for a New Zealand trust only for “wealth management purposes” and he promised to ask for a tax audit. But in a new article published Wednesday, April 13, the Australian Financial Review contradicts these arguments: the newspaper has published the contents of an email from the Panama Papers which speaks of operations in “recycling” and “remote gaming”.


These explanations are clearly not enough to convince the Opposition, which accuses the Prime Minister of protecting these two who are close to him, instead of punishing them. On Sunday, April 10, a demonstration outside the Office of the Prime Minister, organised by the centre-right Nationalist Party, was attended by several thousand people. “You humiliate Malta. You have lost the moral authority to govern,” the Opposition leader, Simon Busuttil, said before (people holding) placards proclaiming “Out!”. The Nationalist Party has tabled a motion of censure, which will be debated in the Maltese Parliament on Monday, April 18. It has virtually no chance of being adopted, because the Labour Party has had a comfortable majority since 2013.

Mr Muscat has done nothing more than call for an audit on the companies his two colleagues. He has pledged to take a decision based on its results. But within the Labour Party, several senior officials, including the Minister of Education and a former prime minister, have publicly called for Mr Mizzi’s resignation. “In his own interest, personal and political, in the interest of his family, of the Labour Party, the government and the country, it would be the honourable thing to do for Konrad Mizzi to resign as soon as possible,” Alfred Sant, who led the country between 1996 and 1998, posted on Facebook.


The shockwaves are more limited in Malta than in Iceland, where the prime minister resigned on Tuesday, April 5, after hiding the existence of his offshore company based in the British Virgin Islands. “The events are organised by the Opposition and remain highly politicised. The protesters were mostly supporters of the Nationalist Party. They want to take the opportunity to take their revenge on the Labour Party,” says Dominic Fenech, a history professor at the University of Malta. The island also has itself long been accused of being a tax haven, due to a very attractive tax system.

The New Zealand government announced on Monday, April 11 that it has appointed an expert to review its legislation on secret trusts. It is a sudden change in position: after the publication of the Panama Papers, Prime Minister John Key had first strongly disputed that New Zealand is a tax haven. But New Zealand has 11,645 secret trusts held by foreigners.

Le Monde 1