Süddeutsche Zeitung: Unrest in the archipelago

Published: May 8, 2017 at 10:29am

The link to the article is here.

Caption: Scandal of Panamanian proportions – in Valletta, citizens protest against the Maltese government led by Prime Minister Joseph Muscat. (Photo: Darrin Zammit Lupi / Reuters)

Unrest in the archipelago: Pressure on Malta’s government is growing, new elections are set. Premier Muscat and his wife could be involved in offshore deals and bribes.

By Oliver Meiler, Rome

Malta likes to view itself as the “heart of the Mediterranean”. The catchy slogan is used in advertising and promotion. Malta is situated in the Strait of Sicily, a crossroad between Africa and Europe, an archipelago of three small rocky islands, ochre in the middle of the big blue, and inhabited by half a million people.

The two worlds, south and north, are reflected in the country’s cuisine, language, architecture, and mentality. There are a lot of things coming together. In their mind, the Maltese are Europeans, orientated to the north, and still affected by the legacy of the British who colonised the country until 1964. Malta has been part of the European Union for 13 years, the smallest member state, on the southern edge of the Union.

At times, however, it seems as if it is a different, somewhat bizarre world. One of those times is now, when Malta holds the presidency of the European Council for the first time: the Maltese are instead experiencing a political thriller, as they have never before in their country’s scandal-torn political history.

Given the litany of recent episodes, the suspicion arises that prominent figures in the Maltese government have been taking kickbacks in grand style. The pressure has grown to such an extent that the prime minister, Joseph Muscat, from the Social Democratic Labour Party – who has been in power since 2013 – has seen no other way out than to call for new elections one year before schedule. The election will he held on June 3.

Polls are still showing a narrow lead of 4% for Muscat. Because in effect, Malta is doing splendidly. The economy is growing, the unemployment rate is as low as it gets, the state has a budget surplus for the first time in 36 years. But all that is fraying. If it turns out that the latest accusations are true, Muscat is gone. They concern his wife.

The accusation is that a million euros from Azerbaijan flowed to a bank account held by a Panama-incorporated company owned by his wife. The story began in February last year. At the time, a journalist and blogger with the movie-like melodic name Daphne Caruana Galizia announced that a big scandal was unfolding. At its centre were Muscat’s most trusted aides: Konrad Mizzi, then Minister of Energy and Health, and Keith Schembri, his chief of staff.

The journalist anticipated what emerged a month later from the Panama Papers: that when barely in office, Mizzi and Schembri had set up companies in Panama and trusts in New Zealand. Their consultant was Brian Tonna of the financial services provider Nexia BT, who also led the Malta office of Mossack Fonseca of Panama.

The two men denied any wrong-doing – but they had not reported their faraway financial setups to the Maltese authorities. Both retained their positions, though Mizzi had to give up his two portfolios and the deputy leadership of the Labour Party. He kept control of Malta’s energy sectors. Prime Minister Muscat stood protectively in front of his confidantes, even when the Maltese went out in their masses and demanded the resignation of all three of them.

The Prime Minister was not yet accused personally. He thought he could face down the scandal. But two weeks ago, the blogger reported claims that the often-mentioned third Panamana company Egrant Inc, which was set up with the two owned by Schembri and Mizzi, belongs to Michelle Muscat, the prime minister’s wife. The information comes from documents that were kept in a safe in the kitchen of the Maltese Pilatus Bank.

The documents, Caruana Galizia reported, had been leaked to her by a former employee of the bank, a Russian woman who had scanned them, and who turned whistleblower with the judiciary. To ensure that they cannot be destroyed, she has now saved it in her data cloud, Caruana Galizia revealed. The documents stated the name, date of birth and birthplace of Muscat’s wife.

The accusations are highly charged. An account at Pilatus Bank, held by Egrant Inc, the journalist writes, last year received one million euros. Leyla Aliyeva, the daughter of the Azerbaijani ruler Ilham Aliyev, is the main client of Pilatus Bank. People remembered that Muscat and his closest aides, including Schembri and Mizzi, had travelled to Baku to negotiate an energy deal. One of these journeys was only semi-official: the Maltese press, which would otherwise be involved, were not even informed.

The evening that the revelations about Egrant Inc. were made, a crew from Net TV filmed the owner of Pilatus Bank, an Iranian man, and the bank’s risk manager, a Maltese woman, leaving the building through a side door. They carried an attaché case and two suitcases, the contents of which were much discussed. Was it cash? Customer data? Both? The bank’s owner claimed he had just returned from a trip to Washington DC, and the suitcases were full of clothes.

Now Keith Schembri is in the headlines again. The prime minister’s chief of staff is said to have been bribed by three Russians who applied for the purchase of Maltese citizenship. The sum of money involved is almost 167,000 euros. A criminal investigation looms. The alleged proof of the payments was handed to an inquiring magistrate by the Opposition leader, Simon Busuttil, who is Muscat’s most important rival.

The political climate is poisoned, devastated by speculation and plot theories. Muscat’s decision to call for early elections is like a bet against time. Thousands of opponents have again protested in front of the Auberge de Castille, the baroque government palace in Valletta. Printed on their posters were the messages “Barra Issa”, which is Maltese for “Get out now”, and “Kriminali”, which needs no translation. Maltese is, incidentally, a melodious language, a beautiful mix of Arabic, Hebrew, Italian and English influences. Almost a world language – just from a small, peculiar world.