BREAKING ACROSS EUROPE/MALTA FILES: the tidal wave has hit the “Panama of Europe”

Published: May 20, 2017 at 2:35am

The tidal wave has broken over Malta’s financial services industry: 150,000 documents from a financial services provider in Malta – emails, contracts, documents, invoices – were leaked some months ago to the German magazine Der Spiegel. Together with an Excel file listing 53,247 Malta companies and their shareholders, leaked to the news magazine portal The Black Sea last September, they have become The Malta Files.

Forty-nine journalists from 13 European media houses have been working – under the collective name European Investigative Collaborations or ECI Network – on the documents for the last four months. The first tranche of stories broke some hours ago across Europe.

This piece gives you some background.




77 Comments Comment

  1. tinnat says:

    And slowly but surely the rest of the iceberg becomes visible and we wll finally understand why Joseph Muscat went for a very early election.

  2. Roy Brown says:

    It’s a dog eat dog world out there. Develop a limp through a fixer cum used salesman as a prime minister and you’re toast. Negotiations to keep Malta competitive for the next 10 are going to be fun… a ruddy nation of potato freaking farmers!

  3. Melissa says:

    The Castille gang can’t sue them for libel.

  4. Rosie says:

    The BUST in Europe

  5. Lomax says:

    I’m reading this with mixed emotions. The whole world and his brother knew that Malta has a preferential tax system. We knew it. The European Commission knew it. And everybody knew it.

    The tax system has, at its basis, the 6/7 refund which has been in force since, at least, 2006/7. So why this has broken recently is quite difficult for me to understand.

    Secondly, it does not benefit anyone in Malta to have this shadow cast on the country. When we say that the corrupt gang at the Auberge de Castille are driving our financial services into the wall, THIS is what we’re referring to.

    This tax preferential system was done to make Malta attractive to foreign investors. These leaks must have come from somebody who doesn’t want Malta to be successful in this way. Malta has been the envy of other member states for years.

    The question is: who leaked them? The more pressing question: why? Which was the financial services provider from which the documents were leaked? Or was its server hacked? We need to look into this with deeper analysis than simply superficially.

  6. The answer to your question is this. The Panama Papers scandal, and the fact that the Prime Minister chose to protect and shelter Konrad Mizzi and Keith Schembri, leading to the obvious conclusion that he is in league with them, the virtual collapse of the rule of law in Malta where investigations and cover-ups are concerned, and the rampant sale of Maltese passports by Henley & Partners in collusion with Keith Schembri and Joseph Muscat (aka ‘the government’) has drawn to Malta the kind of scrutiny, hostility and attention that it did not draw before.

  7. For God’s sake, think. It’s not the tax system that’s drawn attention here – because as you say it’s been there for years. It’s the fact that Malta is now seen as a pirate island, with the tax system abused by pirates in and out of government.

  8. “I can’t understand all the people pointing their fingers only at the current administration”

    Really, you can’t understand?

    Give a wild guess as to why it is only since April 2016 that Malta has attracted this kind of hostility.

    • M.Mallia says:

      As far as I know in my limited knowledge, neither the tax regimes, nor the finance sector pushing the threshold of legality to its limit, started with the current administration.

      • The point here, M. Mallia, is that Malta was getting along swimmingly before the Prime Minister and his two henchmen decided to set up companies in Panama, shortly after being elected to power, with the help of two corrupt accountants, only to be uncovered – worldwide – by the Panama Papers.

  9. Not really, no. When you are part of a collaboration like that, you are sign an agreement and have to keep everything covered until the launch date.

    • Zammit says:

      Yes, but Joseph Muscat was made an exception by Malta Today and was informed – at last we have the answer as to why the Prime Minister wanted an early election.

  10. Context is all. Since Malta began selling EU passports (and without scrutiny or transparency), and since the Panama Papers scandal involving the people at the very top of the government, followed by the quite obvious fact that the rule of law has collapsed because there have been no prosecutions or investigations, Malta is now the subject of hostile scrutiny in these matters.

    That is why it happened now and not at any other time in the last decade.

  11. Gregor Roland says:

    Strangely enough, Simon Busuttil is insisting that there are no offshore companies in Malta and that this leak is wrong.

  12. Corruption under this government is the reason international attention has been drawn to it now, NIN, and also the reason why Malta is now regarded with extreme suspicion.

    Having a ‘beneficial’ tax system is one thing. Allowing it to be abused, in a context where even the people at the very top of the government are behaving extremely abusively in terms of money-laundering and tax evasion, is another thing altogether.

    I’ll put it in simple terms: owning a boat is legal. Using your boat to run drugs is a crime. If the people at the top of the government beginning buying boats and using them to run drugs, the whole system comes under suspicion.

  13. Made incomparably worse by the fact that the Prime Minister, his chief of staff and his pet minister are all in it up to their necks.

  14. They are not using it as an opportunity. The Panama corruption scandal and the sale of passports have made Malta a cause of concern for the rest of Europe.

    It is now widely seen as a centre of financial services abuse – thanks to all that – where the rule of law is not respected and money is laundered, including by the men at the very top of the government.

    • tinnat says:

      When the leader of a country is seen as corrupt, one concludes that the country is corrupt. We are ruined by our current government’s trail of corruption.

  15. The last time I looked, Luxembourg wasn’t selling passports to all-comers and its prime minister and his two key aides did not have companies in Panama which they bent over backwards to keep secret.

    That is what has led to Malta being seen as pirate island.

  16. Yes, well, at least they won’t be driving us further into it, will they.

  17. Highlander says:

    The main reason why the shit has hit the fan only now is simply because of the wholesale trade in Maltese passports, corruption scandals, police and government cover-ups and questionable contracts entered into by a cabinet minister with a secret company in Panama, closeness to shady dictators, and to add insult to injury, the regulatory and investigative authorities appear to have collapsed.

    Then we have Konrad Mizzi’s corrupt appointment of his wife to do jack-shit in China, a loss of €14 million on the oil/gas deal he entered into, and Keith Schembri – rotten to the core, with a tangled web of secret companies and illicit bank accounts, and somebody on whom the Prime Minister depends entirely and protects.

    These are the reasons why the rest of Europe is now so hostile towards Malta, not because of the 5% effective tax which never drew comment before. It is because other EU member states now fear that Malta is not excercising any kind of regulatory control of its own activities, not even on those of its own prime minister and cabinet ministers, let alone on expats who buy a passport and move the administration of their assets to this island.

  18. Francis X Darmanin says:

    It’s onshore, because when you wash something (as in do the laundry) you then have to “onxor”.

  19. Chance would be a fine thing. The problem in Malta is that people do vote with their heads and not with their hearts, but they’re not necessarily any great shakes at using them.

    • Le pauvre homme says:

      In the unlikely event that I ever become Prime Minister, I’m introducing a voting system based on IQ: IQ = 100, 1 vote, IQ = 110, 2 votes etc. There will always be evil, twisted but clever people, however, my system will emasculate their ability to manipulate the dunces.

  20. M.Mallia says:

    Exacerbated by blind greed and corruption, sure, but this is not just about the preferentail tax system. This is about who you choose as your business partners, which clients you accept for ‘tax planning’, vetting of clients and how much you are willing to ride the fine line between what is legal and what is not.

    The whole system was sick for a long time before this government came into power. The Panama Papers put some pressure on the financial sector and they had to change business practices which did not start in 2013.

    • I have always said – and say it even more now – that Maltese people of all kinds have far too much respect for money. It really disturbs me when I see that even those who were brought up with money, respect money for its own sake and never, but never, bother about its source. A rich man is a rich man is a rich man.

      It unnerves me completely – firstly because I am indifferent to money, and secondly because ‘where does it come from?’ is a question I ask automatically, thanks to the specific nature of my family of origin.

  21. I think the more pertinent question here would be: how does he know what’s in those files unless it’s because Saviour Balzan told Keith Schembri during some midnight conversation?

    Newspapers which collaborate on that kind of investigation are bound over not to reveal anything to anyone else, let alone to people in government.

    Can you imagine what would have happened had Malta Today been granted access to the Panama Papers, as The Malta Independent and The Sunday Times were? Imagine the risks.

  22. That makes it very much a political problem, far from being “beyond politics”.

  23. Malta is a country of cowards trained from birth to keep their heads below the parapet and see that as “wise”. I’ve long learned to accept it. It’s pointless getting upset about it.

    You just have to thank God Malta was a British colony in World War II, that’s all – otherwise the general attitude would have been “Dan it-trouble xi jriduh?” and we’d have opened the door to the Axis powers and begun trading with Mussolini while selling prostitutes to Nazi soldiers.

  24. Saskia says:

    Could this be the reason for the early elections?

  25. People my age – you seem younger – understand that being Maltese and voting Labour when you have been brought up in a Labour-voting family is the equivalent of drinking Jim Jones’s Kool-Aid in Guyana: they do it unthinkingly and obediently, whatever the consequences. And if there are consequences – as there were with the Kool-Aid in the jungle back then – they will see it as the price their paid for their religion.

  26. “Panama” wasn’t hacked. Mossack Fonseca’s servers were.

    No, Malta’s company incorporation system is not transparent at all and in effect little better than that of the British Virgin Islands.

    Company incorporation legislation in Malta does not require the ultimate beneficial owner to be known to the Maltese authorities – and if the Maltese authorities do not know it, then it cannot be disclosed to the authorities of other countries or even to the tax authorities in Malta itself.

    When nominees are used in Malta, the Maltese authorities are informed of who the real UBO is. But then the same legislation allows the incorporation of companies of which the ultimate beneficial owner is hidden behind shareholding held by a BVI or other offshore company.

    So you have Total Bollocks Ltd, incorporated in Malta and registered at the Malta Financial Services Authority, and when you go into the registry to find out who owns Total Bollocks Ltd, you realise that the shareholding is held by companies in the British Virgin Islands, or the Isle of Man, and that the shareholding of those companies is concealed by nominees. And you will never know who the UBO is.

    Case in point: Vitals Global Healthcare Ltd, incorporated in Malta with unknown UBOs concealed by a nominee shareholders in a company incorporated in the British Virgin Islands. The UBOs of that company, to which this government turned over Malta’s public hospitals, may well be the very government officials who pushed the contract through – but we will never know unless somebody hacks another server.

  27. may borg says:

    Serrah rasek. When the news is out Malta Today will surely put the focus on ‘people close to the Nationalist Party’. You ever had any doubt?

  28. Wrong. Nobody was hassling Malta before they came on the scene with their corruption, their Panama companies, and their undermining of institutions.

  29. Yes: national consensus to get rid of the people who caused the problem in the first place, by deliberately undermining and hijacking Malta’s institutions, by their corruption, with their companies in Panama, and by their shady contracts.

    The problem is not the tax system but the fact that Joseph, Keith and Konrad – who have hijacked Malta – have communicated a very strong message to the outside world that Malta is a jurisdiction which cannot even investigate or control its own politicians, let alone international money-launderers.

    Hence, Malta cannot be trusted. And that is correct.

  30. The story here, because clearly you need a little help, is that the rest of Europe is busy communicating the fact – and hard – that it no longer trusts Malta (and with good reason).

  31. On the front pages of tomorrow’s newspaper and that of the following Sunday, of course.

  32. moses says:

    You are correct. Since 1994 to be exact (according to my sources). Which yes, as Mrs Caruana Galizia rightly pointed out, puts everything into context.

  33. It really isn’t a good idea to send a bunch of strangers to the party HQ to ‘help’. For a start, by turning up they will simply create a problem for those who have to deal with them. And most obviously, the last thing you need in a campaign war room is a bunch of people you don’t know from Adam.

    So don’t do this.

    In any case, people don’t stuff envelopes anymore. That was 1981.

    If people want to campaign today, the place to do it is on the internet.

  34. Grey matter matters says:

    Charming. It is official. We are screwed. So those of you out there who still plan to vote labour because things were going well for you, because promises had been fulfilled – well, I hope this convinces you that they are long gone.

    The whole system will go down with this scandal. The only way out of this mess is to vote Nationalist and let them clean the slate so that maybe by some miracle, we might gain back the world’s trust once again.

  35. Hardly. The firm might not even know what happened. It’s far more likely that Saviour Balzan tipped off Keith Schembri, with whom he is so friendly that Schembri calls him at 1am.

  36. Steve C. Miller says:

    Yes, the financial system was birthed by Nationalist governments as were all industries worth anything. Institutions were set up to regulate and keep a watchful eye on these activities and these institutions had managed to achieve a good degree of repute.

    Then this gang of crooks came along and and threw everything to the wind, manipulating the system to serve their purposes and turning the clock back to 1986 when Malta was the pariah of Europe outside the Iron Curtain.

    How can anyone trust Malta’s institutions when they are so brazenly controlled by the gang? You can’t, at all.

  37. Primitive Maltese people, looking for Moses. Message to Maltese people in their 20s: GET OUT OF THE COUNTRY NOW. THERE IS NO CURE.

  38. Elections are not forced on prime ministers. Prime ministers choose when to go to election.

  39. We are over 18 and fully expected to manage our own affairs using our own functional institutions. If our institutions are not functional, then we do not belong in the European Union.

  40. This website is supposed to be a refuge for people who are fed up of seeing everything dumbed down everywhere. There is a time and place for everything.

  41. The Maltese elected the bunch of criminals, despite it being very evident – no matter what contrite switchers may say – that this is exactly what they are.

  42. maltinglix says:

    Now we will vote the Nationalists in to fix the mess. Once that’s done, we will feel restless at having so much peace and calm, and vote Labour back into government for a bit of excitement and hassle.

  43. Melissa says:

    Cry, my beloved country.

  44. Sowxal says:

    Int sabiha Malta taghna,
    Mhux ghax Malti nfahhrek jien,
    Issemmik id-dinja kollha,
    Maghruf hmiegek kullimkien.

    L-aqwa fl-Ewropa? Le, fid-dinja.

  45. tinnat says:

    Hitler was an excellent orator.

  46. Richard J. Caruana says:

    What’s the problem? Hasn’t Scicluna discarded it as fake news?

  47. may borg says:

    You have to apply and be vetted. Don’t just appear on their doorstep. And rightly so.

  48. tinnat says:

    YOU help this country. Go put and use a gentle manner to persuade your Labour-leaning friends and acquaintances and those who say they will abstain from voting.

  49. L.Gatt says:

    Absolutely.

  50. Xanthippe says:

    If this was the reason then why wasn’t the election set to be before the story launch date?

  51. Jozzie_Onetwoone says:

    According to Joseph and his crooked cronies, the best is yet to come.

  52. M Farrugia says:

    The free-for-all attitude and dysfunctional institutions such as the Police and Malta Financial Services Authority in the last four years have brought about all this.

    The fact also that Europe now knows that Malta is being led by a government being investigated for corruption makes the country look very weak and in shambles and attracts more attention. Malta never had these problems before.

  53. M Farrugia says:

    They will not be re-elected. Now this is seriously threatening the livelihoood of thousands of workers in the financial services sector as well as Maltese banks u il-Malti jekk tmisslu l-but joqmos.

  54. The fact that the collapse of controls in Malta has led to the collapse of trust in the country’s system.

  55. callixtus says:

    When the financial services industry is the backbone of your economy, it is imperative to maintain an immaculate reputation. And to attract as little negative attention as possible.

    You don’t go about selling access to other European Union member states to the shadiest people of the globe. And you don’t set up money-laundering structures in scattered offshore centres around the world.

    You don’t licence a bank to launder money for your shady deals, either.

    And when you and your underlings get caught, you resign, not try to hang on at all costs.

  56. Spa says:

    F’ 4 snin hxejtu l-Malta f’sormha. Sew qalet dik il-mara.

  57. You think? If they had found a shadow minister, it would have been published already. Besides which, you’re forgetting one important point: the companies in the Malta Files are all INCORPORATED IN MALTA, and therefore public in Malta too.

  58. Stephen Forster says:

    This will win them the election. Already opposition leader is agreeing with Muscat, which will transform and sideline all the real corruption scandals into a “them and us” scenario. This is perfect for the PL and I can now see we are totally fucked. Voters who cannot see the difference in this and Panama will assume its all jealousy and cannot separate the two. Malta Today played the role perfectly as the insider. Perfect deflection tactics.

  59. Joseph Mark Buttigieg says:

    Daphne, is this possibly what has prompted early elections. You mentioned February.

  60. David Meilak says:

    This must be the reason why we have a snap election. Muscat was given info ahead of time by Malta Today.

  61. Fabio Franceschi Brown says:

    I got tired scrolling all the way down with all these international media headlines about Malta. What a colossal, ridiculous and embarrassment of a government.

  62. David Meilak says:

    He was happy to bring the house down with him. If parliament was still active the Opposition would have filed a a motion on the PM’s backing and ‘maybe’ it would have been the moment where some of the government members would have seen the only emergency exit by getting rid of Muscat.

  63. I am not the Nationalist Party and I am largely indifferent to the motivation of those who voted for Muscat and their motivation in voting against him now.

    I am just amazed that they couldn’t see him for what he is, that’s all. There were people in their 20s in our household who sussed him out when friends of mine in their 50s couldn’t.

    I’ll never forget what one of my sons said when he watched Muscat and a couple of his henchmen speaking about the Nationalists and ‘corruption’ at some rally. “He’s not shocked or annoyed. He’s actually envious,” he said. “He really believes they’re filling their pockets and he’s angry because he thinks they’ve been doing it long enough and now it’s his turn. Listen to them – it’s the underlying message in everything they say: you’ve been stealing long enough; now it’s our turn to have a go.”

  64. Louis Grech isn’t a “moderate element”. He is a crucial member of their shady clique. He has known Konrad Mizzi since birth (Konrad’s father Lawrence was his sidekick at Air Malta), and Brian Tonna has fronted for him and been his accountant for the last 15 years at least.

    And he is not bowing out at all. He won’t stand for election, but intends to remain in the cabinet and Muscat has said so already.

  65. H.P. Baxxter says:

    Yes I am hearing it. Lots. There is massive criticism. The financial crisis set off a massive debate across the continent and the world, and commentators, intellectuals, academics and professionals have been engaged in arguing both sides, and trying to come up with alternatives to tax competition.

    It is easy to miss all this is here in Malta, where tax competition is a matter of national consensus.

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