Tuesday

25th Sep 2018

Malta: EU island of 'impunity and fear'

  • Muscat (l) with commission chief Jean-Claude Juncker in Malta (Photo: European Commission)

Corruption allegations are not being properly investigated in Malta, MEPs have said, highlighting a case on EU passport sales and a top official.

Malta's Financial Intelligence Analysis Unit (FIAU), a government agency, wrote two reports in 2016 on Keith Schembri, the chief of staff of Maltese prime minister Joseph Muscat.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 18 year's of archives. 30 days free trial.

... or join as a group

  • European Parliament paid tribute to murdered campaigning Maltese journalist (Photo: European Parliament)

The FIAU said it had "a reasonable suspicion of money laundering" by Schembri of kickbacks from sales of Maltese EU passports.

It said three Russian passport applicants had paid €166,000 via offshore firms into Schembri's account in Pilatus Bank, a shady Maltese lender.

The information was corroborated by the so-called Panama Papers leak.

But neither the police nor Malta's attorney general ever launched investigations into the FIAU dossiers.

Some magistrates were tasked to look into it, but the MEPs said this amounted to making it go away because "they [the magistrates] can take years to come to any conclusions".

In the meantime, Schembri, "by being kept in office, may be continuing criminal activity" and was contributing to a "perception of impunity" in Malta for white-collar criminals, the MEPs said in a report out on Thursday (11 January).

The eight MEPs filed their conclusions after visiting Malta last November to look into the murder of an investigative journalist, Daphne Caruana Galizia.

The EU mission included Portuguese socialist Ana Gomes, German green Sven Giegold, and Romanian conservative Monica Macovei, who used to be an anti-corruption crusader in her country.

Their report was not binding, but it urged the European Commission to assess whether Malta's EU passport-sale scheme went "against the security of the European Union, fomenting corruption, importation of organised crime and money laundering".

They also put political pressure on the European Central Bank and the European Banking Authority to investigate whether Pilatus Bank was fit to have a licence to operate in the EU.

The bank is owned by Seyed Ali Sadr Hasheminejad, an Iranian-born man, who holds a passport from St Kitts & Nevis, and who lives in Dubai.

Ali Sadr is linked to an embezzlement case in Iran, while Pilatus Bank's entire capital, according to a whistleblower, is based on the deposits of "two or three" Azerbaijani clients.

Stonewalling

When the MEPs visited Malta last year, Schembri and Muscat read out boilerplate statements denying wrongdoing.

The attorney general, Peter Gretch, told the EU delegation it was up to the police, not up to him, to have initiated an investigation into Schembri .

But that was not true, because under article four of the Maltese Prevention of Money Laundering Act, Gretch could have instructed the police to start a criminal investigation.

The police chief, Lawrence Cutajar, told the MEPs he had "limited competences" to act on Schembri because the FIAU reports did not give grounds for "reasonable suspicion".

But that was also not true, because under Maltese law the police are free to investigate any kind of tip-off.

The fact that Gretch, the attorney general, is at the same time an advisor to the Muscat government, and that Cutajar owes his police chief's job to Muscat undermined their credibility, the MEPs noted.

The Schembri case was just the tip of an iceberg-sized problem, however.

The attorney general and the police looked the other way on an FIAU report linking Malta's tourism minister, Konrad Mizzi, to passport-sale kickbacks, offshore firms, and Pilatus Bank.

They looked away on allegations by a Pilatus Bank whistleblower that Muscat's wife owned an offshore firm called e-grant.

They also looked away on corruption allegations by the FIAU and by the EU's anti-fraud office, Olaf, against a Maltese former EU commissioner, John Dalli, who recently got a job as Muscat's advisor.

Impunity

The police, which has just one financial crime specialist, conducted a "low number of investigations and prosecutions in relation to money laundering and corruption allegations" in general, the MEPs said.

"Very few of the 425 corruption cases investigated by the Permanent Commission Against Corruption had resulted in criminal proceedings," they noted.

Conflicts of interest was also a glaring problem in Malta, the MEPs said.

They said the magistrate looking into Schembri money-laundering allegations was married to a Muscat government MEP.

They also noted that the police chief conducting the investigation into Caruana Galizia's murder was married to a minister in the very same Muscat government that Caruana Galizia had accused of corruption.

The MEPs spoke of a "culture of fear" for investigators in Malta alongside the "culture of impunity" for criminal suspects.

Fear

Caruana Galizia died in a car bomb last October amid her investigations into allegations of Muscat-circle money laundering, among other issues.

A former police chief and a former FIAU chief mysteriously resigned in 2016 after trying to press for investigations into the same topic.

The Pilatus Bank whistleblower, a Russian woman called Maria Efimova, who made the allegations against Muscat's wife opted to speak with the MEPs "from an undisclosed location" after having "decided to flee Malta, fearing for her personal and her family's safety."

Jonathan Ferris, a former Maltese police and FIAU sleuth, who also looked into the Muscat-wife allegations, told MEPs he was fired when he refused to testify against Efimova.

He has "applied for whistleblowers' status under Maltese law," the MEPs noted, adding: "Mr Ferris said he feared for his family, but did not get police protection".

MEPs point finger at Malta

The European Parliament debated shady deals and rule of law in Malta after the murder of Daphne Caruana Galizia, while the Commission wanted to avoid a "political fight".

Slovak PM at risk over journalist murder

A junior party in prime minister Robert Fico's coalition has threatened to walk away unless he takes more drastic action over the killing of a reporter.

News in Brief

  1. UN chief: World suffering from 'trust deficit disorder'
  2. Stalemate in Sweden as parliament ousts prime minister
  3. Migrant rescue ship heading to French port
  4. EU angry at British tabloids on Brexit
  5. UK to allow EU flights in no-deal Brexit
  6. Greek reporters arrested after story on 'mishandled' EU funds
  7. Austrian minister urges police to out foreign sex offenders
  8. ECB's Draghi set to clarify role in secretive G30 group

Opinion

Building a Europe more resilient to terrorism

One year to the day since the terror attacks in Barcelona and Cambrils, the commissioner for home affairs spells out what action the EU is taking now to protect against further attacks.

Stakeholders' Highlights

  1. NORDIC COUNCIL OF MINISTERSThe vital bioeconomy. New issue of “Sustainable Growth the Nordic Way” out now
  2. NORDIC COUNCIL OF MINISTERSThe Nordic gender effect goes international
  3. NORDIC COUNCIL OF MINISTERSPaula Lehtomaki from Finland elected as the Council's first female Secretary General
  4. NORDIC COUNCIL OF MINISTERSNordic design sets the stage at COP24, running a competition for sustainable chairs.
  5. Counter BalanceIn Kenya, a motorway funded by the European Investment Bank runs over roadside dwellers
  6. ACCACompany Law Package: Making the Best of Digital and Cross Border Mobility,
  7. IPHRCivil Society Worried About Shortcomings in EU-Kyrgyzstan Human Rights Dialogue
  8. UNESDAThe European Soft Drinks Industry Supports over 1.7 Million Jobs
  9. Mission of China to the EUJointly Building Belt and Road Initiative Leads to a Better Future for All
  10. IPHRCivil society asks PACE to appoint Rapporteur to probe issue of political prisoners in Azerbaijan
  11. ACCASocial Mobility – How Can We Increase Opportunities Through Training and Education?
  12. Nordic Council of MinistersEnergy Solutions for a Greener Tomorrow

Latest News

  1. EU court delivers transparency blow on MEP expenses
  2. Russian with Malta passport in money-laundering probe
  3. Cyprus: Russia's EU weak link?
  4. Missing signature gaffe for Azerbaijan gas pipeline
  5. Every major city in Europe is getting warmer
  6. No chance of meeting EU renewable goals if infrastructure neglected
  7. Brexit and MEPs expenses in the spotlight This WEEK
  8. Wake-up call on European Day Against Islamophobia

Stakeholders' Highlights

  1. UNICEFWhat Kind of Europe Do Children Want? Unicef & Eurochild Launch Survey on the Europe Kids Want
  2. Nordic Council of MinistersNordic Countries Take a Stand for Climate-Smart Energy Solutions
  3. Mission of China to the EUChina: Work Together for a Better Globalisation
  4. Nordic Council of MinistersNordics Could Be First Carbon-Negative Region in World
  5. European Federation of Allergy and AirwaysLife Is Possible for Patients with Severe Asthma
  6. PKEE - Polish Energy AssociationCommon-Sense Approach Needed for EU Energy Reform
  7. Nordic Council of MinistersNordic Region to Lead in Developing and Rolling Out 5G Network
  8. Mission of China to the EUChina-EU Economic and Trade Relations Enjoy a Bright Future
  9. ACCAEmpowering Businesses to Engage with Sustainable Finance and the SDGs
  10. Nordic Council of MinistersCooperation in Nordic Electricity Market Considered World Class Model
  11. FIFAGreen Stadiums at the 2018 Fifa World Cup
  12. Mission of China to the EUChina and EU Work Together to Promote Sustainable Development

Join EUobserver

Support quality EU news

Join us