Following the reply by Professor Joe Bannister, chairman of MFSA on 30 September, John Christensen and Richard Murphy from the Tax Justice Network replied on 4 October.

“We note the letters from representatives of the Maltese and Swiss governments (Letters, September 24 and 30) in which both countries protest that they are not tax havens. The claim is based on the fact that the money they handle is “clean”.

“The Tax Justice Network would not dispute that both territories have established systems to tackle money laundering. But that does not stop them being tax havens. They offer substantial incentives to previous non-residents to live in their territories and pay little or no tax. Both offer corporate structures that enable companies to divert their profits to their countries and avoid taxes elsewhere.

“We do not suggest tax haven activity is illegal. What is worrying is that so many countries and professional people around the world seek to divert income from one territory into another to avoid tax payments.

“They undermine the income stream of elected governments which should have received the tax due, and they divert vital revenues from the governments of many of the poorer nations of the world, which do not have the resources to challenge this activity. The result is that tax havens directly contribute to poverty worldwide and to the particular plight of developing nations, many of which are forced to incur massive debt because they are compelled by falling tax yields to borrow on the financial markets to finance revenue and capital expenditure.”

And Professor Prem Sikka from the University of Essex noted:

“Professor J. V. Bannister (Letters, September 30) would not resonate with the Italian prosecutors chasing Parmalat’s billions and hitting brick walls in Malta. In 1998, the OECD listed Malta as a “harmful” tax haven. This forced Malta to consider reforms, to be removed from the OECD list. But the legal changes are largely cosmetic.

“Malta is now marketing itself as a desirable location for Internet betting. The lure is that the island does not impose any licence or application fees and hence cannot finance effective regulation.

“The claim that some of the Maltese laws match those of the UK simply confirms the poor state of our company law.”

Writing last Wednesday, Prof. Bannister replied:

“Professor Prem Sikka makes several fundamental errors in relation to Malta (Letters, October 4).

“In relation to Parmalat, the Italian authorities made it clear that Malta was irrelevant to their enquiries. And, far from “hitting brick walls”, the Italian authorities thanked us for our full cooperation in their investigation.

“The OECD did not list Malta as a tax haven in 1998, and the OECD report of 2000 confirmed that Malta is not a tax haven.

“It is complete nonsense to say that because Malta seeks to attract Internet gaming it cannot afford proper supervision and regulation. Our Gaming and Lotteries Act and regulations provide our gaming and betting regulator with a full set of powers and the resources to regulate Internet gaming in Malta, including levying application and licensing fees. Malta is one of the first countries to regulate and supervise internet gaming, ahead of the UK.

“While it is time wasting to reply to comment that is ill-informed and simply wrong, my primary concern is that those who criticise without foundation may also cause damage to our economy and the livelihoods of many of our citizens.”