Loansharking continues to be present in Maltese society and seems to have increased over the past ten years.
Caritas Malta told The Malta Independent that the number of court cases related to usury on the island is in no way an indication of the gravity of the situation in Malta when it comes to victims of usurers and the entire system of illegal money lending. It seems that the problem is an undercurrent in society and rarely goes reported or is a loanshark charged in court.
TMI spoke to Caritas after Minister for Justice, Culture and Local Government, Dr Owen Bonnici detailed the numbers of people taken to court over charges related to usury between 2010 and 2015 in response to a parliamentary question put forward by PN MP, Dr Carmelo Mifsud Bonnici.
According to the statistics presented in parliament, 25 people were charged with illegal money lending over the time period.
Drugs, gambling and poverty
Caritas PRO, Marika Mizzi, said that there is a number of reasons for which one resorts to illegal money lending, the three most prevalent ones being drug problems, gambling addictions and poverty. Contrary to popular belief, said Ms Mizzi, people afflicted by drug problems do not steal to finance their habit, many times they end up borrowing money.
In terms of gambling addictions, there are certain cases where the victims end up giving everything they have to the loan sharks until they just can’t give any more and then they turn to Caritas for help. The third and most unfortunate reason to resort to usury is poverty.
There are families in Malta who live hand to mouth who, when faced with some form of financial emergency, sudden illness, for example, must resort to borrowing money. Often times without knowing what they are getting themselves into.
The problem is poverty in Malta is a very real one, and is probably the main reason why usury rates seem to be increasing. Although official statistics from Caritas are yet to be released, indications show that although utilities do seem to be decreasing, it seems that the cost of living in general is still increasing.
In all the cases, what happens is that the victims will never actually pay off their debts because the extortionate interest rates are impossible to handle off the bat. “Banks will not give loans to poor people”, said Ms Mizzi, “so instead of having a loan at an interest rate of 8%, one can end up stuck paying off a loan with an interest rate of up to over 40%.”
Eventually, when the victims approach Caritas, what the NGO needs to do is speak to the money lender directly and, more often than not, an agreement is reached where the victim transfers money to Caritas and they handle payments to the money lender. There will also be negotiations with the lenders where Caritas members tell them that, at whatever point identified, they have been paid more than what the debt should have been and that the matter is closed.
If it turns out that the people who go to Caritas have pending court cases, then the NGO will work hand in hand with the police. That being said, if there are no current or pending charges against the victims who ask for help, then anonymity will be respected. Anonymity is also the reason why most usurers choose to settle their debts after being approached by Caritas, because it is obviously not in their interest to be identified or taken to court.