John Dalli, better known as Johnny Cash, is the political octopus whose tentacles have spanned almost three decades of alleged corruption.
Dalli’s love affair with scandal first hit the international news when he was ousted from the European Commissioner over suspected corruption.
However, for most locals, he’s hung over Maltese scandals like a shroud – with his name never too far away from grave allegations, whether it’s his links to Pilatus Bank, the sale of Mid-Med bank, or dodgy government deals.
A Maltese accountant-turned-politician, Dalli served in a long line of Nationalist government between 1987 to 2010 – while his tenure as European Commissioner between 2010 and 2012, and his role as an official consultant to Labour Party Prime Minister Joseph Muscat in 2013 are still fresh in memory.
Having been at the centre of scandal since 1987, here’s a look at the major allegations that have plagued Dalli, who has still managed to evade any charges.
A.M.S Ltd and a missing €920,000 grant
Dalli’s flirtations with government scandals started under his tenure as Parliamentary Secretary for Industry between 1987 and 1990.
At the time, Dalli issued a roughly €920,000 grant from the Treasury of Malta to A.M.S Ltd to open up a factory in Malta.
The factory was never opened, and the business owners left Malta with the money. No action was ever taken.
The Water Miracle
By the end of 1990, Dalli was appointed as the Minister for Economic Affairs and corruption allegations soon followed.
Dubbed ‘The Water Miracle’, the scandal erupted in 1991 after Dalli’s brother, suspected smuggler Sebastian ‘Bastjan’ Dalli was charged with evading import tax on 30 boxes of whisky, gin, vodka, and rum.
Bizarrely, Sebastian Dalli claimed that he had actually ordered a container of bottled water, and only discovered it contained spirits once it arrived in Malta.
At the time, John Dalli was responsible for the Customs Department, but no action was ever taken against the then-minister.
The case is still pending almost two decades later.
Since the Water Miracle, Sebastian Dalli has been arrested for drug smuggling while there remain allegations that he is connected to the Neapolitan Camorra.
Mater Dei’s scandalous start
Dalli’s political career was unaffected by the scandals and he was appointed as the Minister of Finance after the 1992 election and remained in the post until 1996.
He was instrumental in the then government’s plans to construct the Mater Dei Hospital, then known as the San Raffaele Hospital.
Dalli was instrumental in bringing the Skanska/Devlands/Blokrete consortium for the construction. He even set up a special tender evaluation committee, which over-ruled the tender adjudication board’s decision, though it had no power to do so at law.
The issue was taken up with the courts, but Dalli was able to proceed with the plans.
Sebastian Dalli was the recipient of a large public tender to supply concrete for the hospital, even though the consortium had its own batching plants on the island. He had little to no experience in the field and had only bought a concrete plant in 1995. He supplied concrete for the project in 1996.
Dalli released a statement that year saying that he had bought the concrete batching plant because he knew for a fact that he would be supplying the concrete for the hospital construction.
By 2015, structural problems within the hospital were confirmed, and repair costs have been an estimated €150 million. There has never been a concrete investigation into alleged corrupt practices in the deal.
The current Maltese government spent years promising that it would Skanska but ended up withdrawing its claims last year.
The minister’s brother was eventually awarded several road contracts over the period. John Dalli eventually acquired his brother’s batching plant in a murky judicial sale.
Meanwhile, journalist Manuel Delia has since claimed that during this period, Dalli had tried to poach a government colleague and had promised him would give him some extra cash on the side every month which wouldn’t be declared.
The Daewoo Scandal
Dalli’s PN government was voted out of power in 1996. He became the Shadow Finance Minister and quickly began operating in the private sector.
By 1997, Dalli was a consultant to some of Malta’s largest companies, including the Universal Commerce Agency Ltd., which imported motor vehicles from Daewoo, Holden, Dacia, and Rocsta.
Loans in excess of €37 million from BOV were issued while Dalli occupied the role. It has been alleged that Dalli even received a kickback of €1.2 million for his role in the deal.
Reports of irregularities at the company soon emerged, and it eventually closed down over alleged misappropriation of funds. However, no investigation was ever conducted.
In early November 1999, Dalli filed a criminal complaint against Joseph Ellul-Grech, a former accountant at Universal Commerce Agency Ltd., claiming that the latter circulated forged bank statements and 20,000 anonymous letters among members of the press.
The anonymous letters alleged that Dalli had failed to declare assets he held in an overseas bank account. Ellul Grech denied the allegations.
Ellul-Grech was eventually acquitted for all crimes, later filing a constitutional case claiming degrading and inhuman treatment at the hands of police.
Mid-Med Bank Privatisation
John Dalli became Malta’s Finance Minister once again in 1998 after the PN regained control of the government following Alfred Sant’s brief tenure as Prime Minister.
Scandal soon followed, and in 1999, Dalli was instrumental in privatising Mid-Med Bank, the largest national bank at the time. He did this without the knowledge or approval of Cabinet and then-Prime Minister Eddie Fenech Adami, who was undergoing surgery at the time.
On 14th April 1999, Dalli worked on the sale Mid-Med Bank to HSBC for roughly €184 million, which was well below its actual value. The only J.M.W. Turner painting in Malta was sold as part of the deal.
The deal created a furore in Malta with the Labour Party, which was in opposition at the time, and other key bodies demanding an investigation into the deal. However, requests were ignored, and allegations of kickbacks remain.
Dalli’s first resignation for alleged corrupt dealings
John Dalli’s ambitions in the party were clear, but he lost in a leadership election to Lawrence Gonzi. Under Gonzi’s Cabinet, Dalli was appointed Minister of Foreign Affairs and Investment Promotion in March 2004.
A day before he took his oath to take over the office, a shell company, Mariner Holding Limited, was registered in Qormi. Dalli’s daughter, Claire Gauci Borda, was the company’s secretary, while the role of director was occupied by Dalli’s close associate, Adrian Baldacchino.
By June 2004, then-Opposition Leader Alfred Sant claimed that Dalli had successfully placed pressure on IRISL, an Iranian national shipping line, to replace its agent in Malta with Gauci Borda Shipping. The Iranian company denied claims of pressure burr Gauci Borda Shipping became its agent, later changing its name to IRISL Malta.
Dalli would resign from Cabinet just weeks later on 3rd July 2004, after investigations uncovered that contracts were awarded to an airline ticketing company called Tourist Resources Ltd, a shareholder in Gauci Borda Shipping.
An Auditor General’s investigation was never made public, with Dalli later claiming that members within his own party had framed him. IRISL commercial director Mehdi Shamszadeh was later instrumental in setting up the infamous Pilatus Bank, where Dalli holds an account.
A return to Cabinet
Despite the controversy, Dalli was re-elected in 2008 and was made Minister for Social Policy. However, he would resign just two years later, maintaining that he was facing attacks from members within the PN.
His tenure was not without scandal. Sebastian Dalli, the then minister’s brother, had been awarded a contract to build flats in Floriana by Dalli’s predecessor. The works were poor, and the building was deemed unfit for human habitation. Still, Dalli failed to start proceedings against his brother, even though he was duty-bound to do so.
During this period, Adrian Baldacchino was placed on the US Treasury blacklist for his involvement in several companies, namely IRISL Malta. This has since raised concerns that Dalli, through Baldacchino, may have been using shell companies to circumvent sanctions against Iran.
The Lowenbrau Deal
While serving as the Economic Affairs Minister in 1990, Dalli transferred a stretch of land in Qormi to Lowenbrau on a perpetual emphyteusis and a non-revisable ground rent of Lm10,000 a year.
By 2009, Marsovin was able to redeem the ground rent and become the legal owner of the land against a €466,000 fee. It had agreed to sell the land for €8 million to Vassallo Builders Group just two days before Marsovin redeemed the ground rent.
Dalli had served as both Chairman and Managing Director of Marsovin between 2004 and 2008. He was a backbencher MP at the time after he was forced to resign as Foreign Minister over travel bookings made through companies linked to his daughters.
The deal would later shoot to prominence under Joseph Muscat’s administration with Minister Owen Bonnici trading barbs with MP Jason Azzopardi, who was Parliamentary Secretary for Lands at the time of the 2009 deal.
Delegate, snus, and the tumbling of a house of cards
The beginning of the end of years of inaction against Dalli began in February 2010 when he was appointed as the EU Commissioner for Health and Consumer Policy.
Dalli’s house of cards came crumbling down on 15th October 2012, after the EU’s anti-fraud office (OLAF) passed on its first accusations that Silvio Zammit, Dalli’s longtime associate, had asked for €60 million from the European Smokeless Tobacco Council and Swedish Match, the main producer of Swedish snus, in return for Dalli’s help in changing European tobacco regulation. Swedish Match was the one to report the claim to OLAF.
The tobacco lobby also allegedly solicited the help of Gayle Kimberley, an official at the Council of Ministers on leave.
Dalli was forced to resign a few days later. The EU, in its capacity, could not conduct criminal charges and passed the information to Malta.
Despite denying all knowledge of the bribe, Dalli did meet with tobacco lobbyists at Peppi’s Restaurant, which is owned by Zammit, in February 2012. OLAF’s investigation was opened soon after that meeting.
It should be noted that OLAF’s handling of the investigation, which was mainly based on circumstantial evidence, which included illegal wiretaps, received stinging criticism from MEPs.
“There is no conclusive evidence of … Dalli as instigator or mastermind. Nevertheless, there are a number of unambiguous and circumstantial pieces of evidence … that he was indeed aware of the requests,” said OLAF director-general Giovanni Kessler.
Zammit was charged with bribery and trading in influence in December 2012. Something which he still remains in court over till this day.
John Rizzo, who was Police Commissioner at the time, has confirmed that he planned to arrest, interrogate, and prosecute John Dalli over the affair. However, Dalli had not returned to Malta.
Rizzo has revealed that he even informed the then newly elected Home Affairs Minister Manuel Mallia of the plans a few weeks after the Labour government was elected in March 2013. Current Police Commissioner Angelo Gafa had even written up a charge sheet.
“In the meeting, I made it clear that we had enough evidence to prosecute John Dalli,” Rizzo told the public inquiry into the assassination of journalist Daphne Caruana Galizia.
A week later, Rizzo was removed and replaced with Peter Paul Zammit. Dalli returned to Malta the next day. Rizzo’s replacement Peter Paul Zammit, whose wife is a relative of Dalli, ruled there wasn’t enough evidence to continue with the case.
Dalli maintains he was framed to this day.
Marie Eloise Corbin and the Bahamas scheme
Between 2011 and 2012, Dalli was appointed as a consultant to Marie Eloise Corbin Klein, with photographs showing that he even flew to the Bahamas to meet Corbin Klein and the investors who eventually fell victim to her scheme.
OLAF even flagged the visit itself. However, Dalli insists that the trip was due to voluntary work to organise a “philanthropic initiative”.
The Ponzi scheme, first reported by assassinated journalist Daphne Caruana Galizia back in 2015, was allegedly run by Corbin Klein, who operated under several aliases.
The FBI later investigated her for having allegedly scammed Americans out of some $600,000 by posing as a Christian missionary and convincing them to invest their savings into an African mining project.
Instead, the money was funnelled into two Maltese companies – Tyre Ltd and Corporate Group – owned by Louise Dalli and Claire Gauci Borda, Dalli’s two daughters, registered at John Dalli’s home address in Portomaso.
The Dalli sisters were formally charged in 2018 together with Corbin Klein, Charles Ray Jackson, Elizabeth Jean Jackson and Robert Mitchell McIvor. The latter four have all since passed away.
All six were charged with money laundering, misappropriation of funds, fraud, making a false declaration to a public authority and the falsification and use of falsified documents. Gauci Borda alone is charged with failing to properly carry out her professional duties as an accountant and auditor.
John Dalli, however, has managed to escape charges. The case will continue in September.
Joseph Muscat’s health sector consultant
After avoiding arrest over his role in the Swedish Tobacco Scandal, Dalli, who was often the subject of intense criticism from the Labour Party, was welcomed into the warm embrace of then-Prime Minister Joseph Muscat.
Despite resigning in disgrace, Muscat appointed Dalli as his health sector consultant. He occupied the role till the end of 2014 or 2015. However, over the period, Malta entered one of the controversial deals under Muscat’s administration, the Vitals Global Healthcare takeover of three state hospitals, the St Luke’s Hospital, Gozo General Hospital and Karin Grech.
The deal has been shrouded by scandal and corruption, with the company crashed out of the concession after crumbling to growing financial pressure less than 21 months into a 30-year concession. It left a debt of €36 million but its CEO, Ram Tumuluri, still made off with a €5 million bonus.
After their quick-fire exit in 2017, documents show that Vitals may have even reached the agreement for the concession in November 2014, a full five months before the public call for the project was even issued.
Dalli has distanced himself from the deal, saying in 2018 that he would have never advised the government to take part in the agreement.
Whatever the case, Dalli continues to be a constant feature in the news, particularly after the death of Marie Louise Corbin Klein and a counter-challenge to assertions by activist group Repubblika that he is a corrupt individual.
It remains to be seen whether any action will ever be taken against Dalli. However, the current Police Commissioner Angelo Gafa had once declared to a parliamentary committee in 2015, while serving as an inspector, that he still believed there was a case to pursue against Dalli.
With international bodies breathing down Malta’s neck, maybe things might change soon.
John Dalli has issued a right of reply following the publication of this article: you can read it here.
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