Author: George Mangion - Senior Partner, PKF Malta
Published on The Malta Independent on 16 January 2022

On 17 January, the Members of the European Parliament will decide who will take the spot of the President of the European Parliament for the rest of the 2019-24 term.

In November 2021, Roberta Metsola was chosen by the EPP group as their candidate to succeed David Sassoli (who passed away this week). Of the three contestants, she earned 112 votes (64.4%), de Lange received 44 votes and Karas received 18 votes. Last year Metsola announced her decision to run for the Parliament presidency saying she wanted to “help get people in our member states to believe in Europe”.

A former lawyer, aged 42, and a graduate of the College of Europe, she is a classic product of the Brussels bubble. She served as a legal attaché at the Maltese EU office from 2004 to 2012 and as a legal advisor to Catherine Ashton, the EU’s former top diplomat. If elected, she will be the face of a strong, modern and more visible Parliament that will make us Maltese proud. A good-natured person, fluent in Italian and French, she has a family of four children. We all wish her luck.

The question is, does Malta need a leg up to improve its international reputation among EU members? Certainly, it can do with some fill-up remembering how only last June, it tarnished its reputation as a financial domicile when the FATF gave us the dubious title of being the first and only greylisted country in the 27-member block.

Guess guys, the dirty boys in the block are not the Russian “funds infested” Rumania or Latvia with its shaky banks, neither Hungary nor Poland with strong-arm tactics over members of their judiciary but tiny (hitherto squeaky-clean) Malta. Everyone hopes that this cloud will quickly float away and let in the sunshine once again.

Why did the island stand out as one which needs closer attention by the workings of the financial watchdog FATF? Have we been made the whipping boy being the minnow among larger states, some of which are themselves not without blemish? Is the present government doing enough to tighten the screws on investigated or perceived acts of AML deficiencies? Are the recent hefty fines charged on a number of financial institutions by FIAU (the largest being that of Pilatus Bank) enough to redeem our tarnished soul?

Only time will tell. Some may remember the bad old days when leakages of sensitive files were de rigueur in FIAU’s local history. Just five years ago, sensational leakages of FIAU investigations were surreptitiously landed on the laps of media reporters. It is curious to recall, how its senior director Dr Galdes led the FIAU between 2008 and the fateful summer of 2016, when he abruptly resigned before concluding an intense analysis of Pilatus Bank.

Later, he testified, under oath, that his due diligence team were not satisfied with answers to the queries. At one time, Dr Galdes had decided to go straight to police commissioner Michael Cassar with delicate information including details of bank transactions, companies and memos because he feared the information would be leaked or held up.

Unceremoniously, Mr Cassar as head of the Police Force resigned the following day. Some months following Dr Galdes’ resignation, the FIAU sent Pilatus Bank (a private bank owned by an Iranian shareholder) a letter saying its shortcomings “no longer subsist” ostensibly on the strength of a joint report commissioned by management from Pilatus’ auditors and legal advisers. The death knell has rung for Pilatus Bank when it was officially shut down by the European Central Bank in November 2018.

While other EU countries have not escaped the incidence of financial scandals yet in Malta we pride ourselves that the regulatory net has always been efficacious to keep out the bad wolf. Recent events have proved us to be over-ambitious. We are still feeling the cold blast of negative publicity following the brutal murder of a journalist, who reported on Electrogas, apart from three Panama companies opened by Nexia BT (a disbanded audit firm).

The latter was destined for top members of Joseph Muscat’s Cabinet. The slate must be wiped clean. As a democracy, we respect freedom of speech and the rule of law. Unquestionably, the common good must prevail over partisan pique, which if used and abused can ruin the sense of fairness and the ethical core of this country. We are not spotless but for fairness sake a sense of proportion is warranted. Surely, all our sins pale into insignificance when compared to the Luxileaks report.

Here multinationals signed covert tax deals with the Luxembourg finance ministry saving millions in taxes. Another scary story involved tax evasion by US multinational Amazon. It has been ordered to repay €250m in illegal state aid to Luxembourg, as EU authorities continue their campaign against sweetheart deals that help big corporations evade taxes. Luxembourg’s “illegal tax advantages to Amazon” had allowed almost three-quarters of the company’s profits to go untaxed, allowing it to pay four times less tax than local rivals. Amazon rejected the findings of the tax investigation.

More excitement revolves around the Cum-Ex scandal which revealed how an organised group of bankers had appropriated over €55bn from public funds, notably France and Germany, over the past 15 years through the so-called Cum-Ex deals. This scheme contrived a surreal "dual ownership" which allowed both parties to then claim tax rebates even though both were not entitled to it. Having mentioned some of the more glaring peccadillos of competing financial centres, one cannot but reflect that since many years, practitioners in Malta have put their shoulder to the grinding wheel to inculcate a good reputation.

Indeed, we all agree that we have to fight corruption and abuse of power. Perhaps at the forthcoming EU presidential election, we augur success for Metsola – our dame of honour, to help guide the European Parliament in its noble mission to snatch victory from the deadly jaws of the pandemic.

Author: George Mangion - Senior Partner, PKF Malta
Published on The Malta Independent on 16 January 2022
Get in touch: info@pkfmalta.com