8 Things Joseph Muscat Should Do Now Egrant Inquiry Is Done
The summary of the inquiry into Egrant has been published. Its main findings are clear: Magistrate Aaron Bugeja, supported by a panel of experts, has been unable to find any evidence that links Michelle Muscat to Egrant nor of any direct payment made from Azerbaijan to Egrant.
Prime Minister Joseph Muscat has been disassociated from being directly implicated into Panama Papers, Pilatus, and the way it appears that the Azeri ruling elite treated Malta as its piggy bank.
The report itself that was prepared by Magistrate Bugeja and passed on to the Attorney General’s office on Saturday morning is a landmark. Numbering 1,500 pages, it is longer than Tolstoy’s War and Peace, which is a ‘short’ 1,225 pages.
Does this mean it’s all over? Not quite. While the inquiry has answered two big questions that gripped Malta for the past 15 months, Joseph Muscat’s in-tray remains perhaps thicker than the epic written by Magistrate Bugeja.
The claims against Muscat were made in a context – one year after the publication of Panama Papers and after reports of dodgy dealings at Pilatus Bank started to emerge. This context remains. Muscat now has the keys to put this ugly and highly divisive episode in Malta’s history to rest. He needs to show leadership by doing these things:
1. Publish the full inquiry
If you want to see an example of legal thinking and analysis, then you should read the 49 pages that the Attorney General has released from Magistrate Bugeja’s report. The analysis is dispassionate and methodical and should be praised.
The report however is not only relevant for its literal or legal value: It also contains information that can help shed light on other actors in the whole plot and their activities. It is therefore in the public interest that the report is published in full.
2. Find out who falsified the trust deed and why
Pierre Portelli
The inquiry established that the copies of the trust deed passed on by PN’s head of media Pierre Portelli, who at the time was editor of The Independent, were falsified but was unable to establish who did so and why.
Forgery is a criminal offence and should therefore be investigated. Given the sensitivity of the case, the investigation should be carried out in the most transparent way possible.
While the Prime Minister is not directly responsible for the investigation (it is the job of the police), he should ensure that the police forces have sufficient budget and operational freedom to investigate.
Action: Equip the police to find the source and motive of the forged declarations of trust. Ensure prosecutions of the individuals responsible.
3. Take action against Keith Schembri
Magistrate Bugeja found that the Prime Minister’s chief of staff had a number of bank accounts at Pilatus Bank. The inquiry also finds that a payment was made from Willerby Trade, a company that is implicated into a passports kickbacks scandal, to Keith Schembri.
It has also been shown once again that Keith Schembri established a company in Panama in strange circumstances and at a time when he was meant to be divesting from his business interests since he had recently been appointed as Chief of Staff of the Prime Minister.
The financial dealings of Keith Schembri raise many questions. Even if we were to assume that there was nothing untoward in Schembri’s dealings, the actions of the Prime Minister’s chief of staff have been reckless as a minimum and put the Prime Minister at great reputational risk.
Action: The Prime Minister should suspend the chief of staff pending an inquiry into his dealings. In addition, the inquiry before the magistrate alleging kickbacks received by Keith Schembri for the sale of passports should start without delay – it is currently subject to appeal.
4. Take action against Konrad Mizzi
The Egrant inquiry also confirms that Konrad Mizzi opened a company in Panama and that several attempts were made to open a bank account for Mizzi’s company (alongside Schembri’s). It is still not clear why these companies were established. Even if they were established for ‘clean’ business, the question remains why a minister charged with an important project as the delivery of a new power station would choose to be distracted running a start-up. This would show lack of interest and a cavalier attitude towards conflict of interest.
Action: The Prime Minister should remove Konrad Mizzi from cabinet. He should also launch an inquiry into his actions to establish the facts surrounding the establishment of his company in Panama and why the company was established. Furthermore, Joseph Muscat should ask Konrad Mizzi to withdraw an appeal he has filed that is currently preventing the Maltese magistrates to establish the circumstances surrounding his Panama company.
5. Investigate Pilatus
Magistrate Aaron Bugeja obtained unprecedented access to the systems of Pilatus Bank. He could review the emails and the banking transactions of Pilatus.
The picture that emerges from the review is not a nice one. The foreign experts comment that the bank was involved in a significant amount of foreign money transfers. It would appear that companies linked to the ruling elite in Azerbaijan were among the clients that were very active in transferring money to unspecified accounts in Dubai.
Bank chief Ali Sadr himself is found to have transferred batches of USD100,000 to companies related to him. It is not clear why these funds were transferred.
Given that there are ongoing court proceedings in the US against Ali Sadr for sanctions-dodging and money laundering, the revelations may suggest that something wasn’t quite right with Pilatus. Why were all these funds being transferred? What sort of checks did the bank implement in order to ensure that it was not used as a tool for money laundering?
While the MFSA has already suspended the bank and has recommended its licence to be revoked, it is clear from the summary that a criminal investigation is necessary in order to determine whether any Maltese law against money laundering was flouted.
Action: Joseph Muscat and his government should equip the MFSA, the FIAU and the police with all the resources necessary to ensure that no stone is left unturned in respect of Pilatus,
6. Strengthen Malta’s financial system
The way Pilatus was set up and acted as banker for the ruling elite of Azerbaijan is worrying. A bank was set in the heart of Europe that channelled what appears to have been a significant chunk of its business to a jurisdiction (Dubai) that did not co-operate with the Maltese investigation.
The supervision of Pilatus also raises questions. The EBA has found shortcomings in the way that the FIAU reviewed Pilatus for money laundering. A European review into the MFSA is currently underway.
Action: If Malta is to succeed as a financial centre, then it should make it clear that it is not an easy place for people with the wrong intentions to do business. It is up to the Prime Minister and his team to strengthen the FIAU and the MFSA, equipping them with new powers to investigate and prosecute, good training, a proper budget and above all real independence and freedom of action. Finally, Malta should also fully implement the latest anti-money laundering legislation that is coming from Europe. So far, it hasn’t.
Sadly, Malta is choosing to bury its head in the sand and pick a fight with Europe instead of taking the path of reform. Finance Minister Edward Scicluna was reported as saying that the FIAU was preparing a ‘strong legal letter’ in response to the FIAU’s report.
7. Improve the standards of the accountancy profession and corporate services providers
Magistrate Bugeja confirmed that Nexia BT set up the Panama companies for Keith Schembri, Konrad Mizzi and a third company which appears to have lay dormant. He also found that the firm acted as corporate services provider for Pilatus bank and that its two main partners, Karl Cini and Brian Tonna, used to correspond with Ali Sadr frequently. It is not clear to what extent were Nexia BT aware of the activities of Pilatus, however it is safe to assume that they could have been the first people to get a whiff if anything with Pilatus was going wrong.
While the summary does not suggest any criminal activity on the part of Nexia BT, there are a number of circumstances that would warrant a review of the activities, primarily to establish whether and to what extent did Nexia BT know of Pilatus’ activities and if not, how should service providers improve their reviews to detect suspicious activity.
Action: The Prime Minister and his team should review the legal framework that regulates the accountancy profession and corporate services providers and ensure that service providers have a clear duty to monitor and report suspicious activity.
8. Find out who ordered the murder of Daphne Caruana Galizia
Daphne Caruana Galizia, the person who broke the story, was murdered on 17 October 2017, just under 7 months after she ran the story that triggered the inquiry by Magistrate Bugeja. Her alleged murderers were arrested in December 2017 but to date we do not know who ordered the murder and why.
On a personal level, Joseph Muscat will surely have his own views and feelings about Caruana Galizia and particularly her decision to run a story that appears to have been incorrect in crucial elements, but correct in others. However, the fact remains that Daphne Caruana Galizia remains the only Maltese journalist to have been murdered on Maltese soil and a rare example of violence against journalists in a European country. Her murder is having a chilling effect on the Maltese press.
At this moment, a lot of supporters of Joseph Muscat, even possibly including within the police force, are looking towards him for direction on how to approach the journalist’s memory and, as a result possibly in the case of the police, her murder case. The slightest off-hand remark might encourage some elements to discard the investigation altogether in all but name. This would be a great injustice that needs to be avoided at all costs.
Action: Given the direct personal link between Joseph Muscat and Daphne Caruana Galizia and the antagonism between them and considering the highly political nature of Caruana Galizia’s writings, it is important that the investigation is carried out and seen to be carried out without any bias, whether real or implied. The government headed by Joseph Muscat should therefore hand over the investigation to an international authority that can carry out the work using Maltese law. This was done in the case of the murder of the former President of Lebanon Rafic Hariri, who was murdered in 2005 and his investigation was led by a United Nations investigative commission.
Malta has a lot to learn from the aftermath of Panama Papers. The country has not even started to deal with the repercussions, partly because it was caught in the midst of a febrile political climate. Joseph Muscat now holds the key to lead the country to an age of transparency and accountability. If he fails, then Magistrate Bugeja’s report will probably become the greatest futile attempt to restore the rule of law in history. That cannot happen.
READ NEXT: WATCH: Prime Minister Breaks Into Tears As He Addresses His Children After Egrant Findings
