GUEST POST/The Prime Minister’s determination to protect his men is damaging Malta’s financial services reputation

This guest post has been written by Pandora, a corporate service provider whose livelihood depends on the reputation of Malta’s financial services sector.

I just feel like crying. I am a corporate service provider who considers herself one of the small fish in the pond. We take our work very seriously, vet our clients diligently, comply with the laws, submit audited accounts for all our clients, on time. We attend training sessions and report suspicious activity to the Financial Intelligence Analysis Unit. Our non-Maltese clients all pay their taxes and are fully compliant with Maltese laws. Our responsibility is to ensure the Malta operation is fully compliant with Maltese law – Malta is an EU-compliant onshore jurisdiction. We are serious operators who have a good reputation and enjoy high esteem from our clients.

I have just returned from my bank and, among other things, asked why they were suddenly so vigilant (read suspicious) about all bank movements. Their response: “It has nothing to do with us. We know your company and we know your clients. We assessed the risk when we took them on and we are satisfied that their business is legitimate and transparent. But sadly the pressure is coming from outside Malta. Our reputation overseas has gone from ‘very high’ to ‘poor’ overnight. All our transactions are being scrutinised and treated as being suspicious. Even as a bank we cannot operate effectively like this. What is the point of being an international operator when you cannot operate?” The man at the bank flipped his hand and lowered it: “We went from up here to down here – in just a few weeks”.

That is the extent of the damage caused by Prime Minister Muscat’s determination to protect his men, with their complicated web of secret companies in several offshore jurisdictions, which were discovered only by chance, the effort of others and their bad luck. Our livelihood and that of so many thousands who work in Malta’s financial services sector is now endangered because Malta’s reputation has slipped downwards fast.

All the hard work put in over the past two decades to build a reputable jurisdiction is now being sucked down the drain. The worst of it is not because of bad practices in the industry generally, or poor due diligence on the national client base all around, or even because of a general failure of checks and balances. It is the result of the Prime Minister’s behaviour and that of his henchman, and the serious malpractice of a high-profile accountant with a desk in the Prime Minister’s Office, who is the fixer for the illicit offshore web. It’s all over the news, and Malta no longer operates in a tight island bubble.

The Prime Minister’s behaviour was interpreted by all and sundry, except the loyal party faithful, as condoning and defending corrupt practices. But now popular opinion – at least among those whose opinion is most influential in this sector – is that he is not simply condoning them, but is involved with them. There is no other explanation for it.

More disturbingly still, the Minister of Finance has lost his voice and has pledged support to his Prime Minister and not to the financial services sector he once championed and he is there to protect. The Malta Financial Services Authority is more interested in the contracts it is handing out than in defending Malta’s reputation. And the Labour Party, in its frenzy to defend the indefensible, has gone all out to tarnish the entire sector with the same corrupt brush, targeting intermediaries to conveniently obscure the frightening fact that the unscrupulous operators who are getting away with murder are those who set up companies in Panama after taking office in the government, and who had other offshore companies already, hidden from the authorities, between which secret movements of hundreds of thousands of euros were made.

I sit here at my desk, not contemplating the work I need to do for my clients, not figuring out my next growth initiative, not smiling at a client and explaining the safety of the Maltese jurisdiction and what a wise choice they have made. No. Instead I am sitting here wondering what I should do to branch out into something completely different to safeguard the future of my young family. I am trying to figure out how to cocoon the business I have so successfully grown over the past ten years and find a way to create a business that is immune from this corrupt government.

I read the news portals in the morning and the talk is about frenzied land speculation at giveaway prices, a desperate attempt made by a cabinet minister and the Prime Minister’s chief of staff to open offshore bank accounts while hiding the information from the banks in Malta (this is blatant, in an email), the falsification of documents handed to the National Audit Office, motions brought before parliament of no confidence in the government, a corrupt cabinet minister and the Prime Minister’s chief of staff, and arrogant lies like “the Panama Papers have blown up in the face of the Opposition”. Where is the national good?

The truth is that what has blown up is this government’s reputation and, with it, that of Malta’s financial services industry, which was so carefully nurtured over the past two decades. This government is killing the goose that lays the golden eggs. But they don’t give a stuff because their Panama, British Virgin Islands, Cyprus and Gibraltar offshore pockets are full of dosh – and that was their only intention all along. They are criminals.