Follow up on the European Parliament’s Mission to Malta

Photo @kirkandmimi


On November 15, 2017, the European Parliament adopted a Resolution on the Rule of Law in Malta, as a consequence of the murder of the independent journalist Dahpne Caruana Galizia, and as a follow up on the findings that had been obtained after a first Mission to Malta from the PANA Committee on February 20, 2017.


This resolution resulted in a new Mission to Malta, which took place in November 30-December 1, in which Takis Hadjigeorgiou (AKEL) participated in representation of GUE/NGL.


The conclusions of this Mission can be found in the Report produced by the LIBE-PANA Committee. Several issues raised concern, some on which the Maltese government is working to change –even when not necessarily in the ideal way-, such as the lack of independence of the Judicial system, and the defamation and libel cases; and others that remain with an open question mark.


Which are these problematic issues in our view?


In first place, the fact that the problems in Malta seem to be of a structural nature, as was noted by Aditus Human Rights representatives during the Mission, who observed that they had commented on the violations to the rule of law long before Daphne’s assassination, and before the current government, as the legislation allows the appointment of party affiliates in judicial positions, determining excessive politicization of courts.  They also noted that every single body in Malta is politicised, and that the Parliament has kept this system for the last 25 years.


Serious doubts remain on the process under which Pilatus Bank obtained its license; the fact that the bank has a high competitiveness in this sector when it actually holds a very low number of clients (130); the low level of Suspicious Transaction Reports (STRs) filed by the Bank to the FIAU (0 in 2016 and in 2017, 4 or 5, but several were related to one client) as declared by the Bank’s CEO during the Mission.


The ‘Individual Investors Programme’, through which Malta sells European citizenship and Schengen Residence permits, similar to that of other Member States such as Portugal, is also of concern, as it foments corruption; but also because, when linked to a system of fiscal incentives which treats local income of individuals or corporations differently than international income, it is then a system for tax evasion granted by the government.


Moreover, on January 30, Tax Justice Network published its Financial Secrecy Index 2018, locating Malta in the position 20 of the ranking, basically due to its high level of secrecy, as Malta does not require the registration of trusts; does not publicly disclose country-by country reports, nor corporate tax rulings; but also has a high level of secrecy in other aspects such as company ownership; promotes tax evasion and allows for harmful structures, among other things.


On another issue, even when some changes have been made to the legislation in Malta, it still does not prevent defamation and libel cases against journalists be made. Moreover, some journalists commented that they had been threated with law case in the United States by Pilatus Bank, in an attempt of the bank to arbitrate between different legislations.


Finally, but not least important, the European Arrest Warrant against Maria Efimova, the Russian ex-employee of Pilatus Bank, is something that raises serious preocupations among MEPs from different political groups.


Efimova absconded from Malta in the course of a criminal case brought against her by Pilatus Bank on misappropriation charges. In November 2017, a warrant for her arrest was issued to have her appear in court to testify. In January 2018, Cypriot authorities issued an arrest warrant on a complaint lodged against her four years earlier by the company IDF Fragrance Distribution, with whom she worked.


During a video-conference held with the LIBE-PANA MEPs, Ms Efimova provided Members with information about the business model of the Bank, where she had worked as a personal assistant of the CEO, Mr. Ali Sadr, but also was in charge of certain clients. She informed the Bank was mainly operating on the basis of deposits of 2 or 3 Azerbaijani clients, among other PEPs.


The safety of whistleblowers is not guaranteed in the EU. Moreover, even when the European Commission had committed to come up with a legislation on the protection of whistleblowers by the end of last years; news on this respect are still being awaited. And even when the European Parliament’s Panama Papers Inquiry Committee has several paragraphs on the protection of whistleblowers and journalists in its Recommendations voted on last December, political groups did not finally agree on any concrete solutions to the problems encountered by whistleblower, which have resulted in anonymity being the preferred and safer solution to filtering information of public interest today.


Several political groups in the European Parliament are considering continuing the follow up on the Malta’s fight against money laundering, tax evasion and tax avoidance under a possible new Special Committee. In case this happened, it could be interesting to analyse the impact of the Maltese incentives in other Member States, as has been pointed out by some tax justice NGOs.