The penny now seems to have dropped.
The finance minister has been sent post-haste to Germany and will call the press to counteract stories that have portrayed Malta in a very bad light.
This has all the trappings of an emergency and we do not know whether the minister can save the day. Certainly, every day that passes seems to justify Prime Minister Muscat’s decision to go for an early election. The reasons he gave on 1 May – that talk about an impending election had brought the economy to a standstill – are now clearly not true.
But it is also clear there is an oncoming tsunami of bad publicity about Malta and not all can be ascribed to Opposition warmongering or badmouthing of Malta. This last reason may persuade the crowds of Muscat’s supporters in the squares but it does not hold water with regards to the main body of questions. What the government has yet to understand and maybe explain to the people is that some investigations about Malta come from the financial authorities of other countries.
And they are not coming from Germany alone. Yesterday’s issue of the Italian financial paper Il Sole 24 ore carried a long article by Roberto Gaiullo which highlights, inter alia, investigations by Italian Guardia di Finanza on the ‘too easy’ registration of companies, on the Maltese low tax regime, and how easy it is to transfer one’s company to the Maltese low tax regime (thus removing it from paying taxes in Italy).
The report also mentions investigations by the Guardia di Finanza in Gallarate which discovered that a company that repairs smart phones was using spare parts made in China on which no tax had been paid.
The paper also mentions two other investigations by the GDF in Syracuse and Livorno. People have been arrested and there have been raids in offices.
The article also mentions the claim, made last week, by the outgoing Socialist Minister of the state of North Rhine-Westphalia Norbert Walter Borjans that out of some 70,000 offshore companies in Malta, some 2,000 regard German companies – an assertion that made the German minister say that Malta was ‘a sort of Panama in the Mediterranean’.
Apart from meeting the German press, Minister Scicluna was also due to meet up with his Ecofin buddy, German Finance Minister Wolfgang Schauble, with whom he has, if the photos are to be believed, an easy relationship.
The state of confusion in this regard can be seen when one considers that the prime minister first dismissed a story which appeared on The Malta Independent on Sunday only then to send the minister post-haste to Berlin.
So too, it would seem, this same minister may have been barking up the wrong tree when he ascribed this flurry of media attention to underhand attempts by the Maltese Opposition when, as we have seen, the claims in Germany and in Italy came as a result of ongoing investigations into tax evasion.
Nor can one see how the minister and his government can explain away the apparent laxness of a government that remained cool and relaxed over a minister found to have a secret account in Panama along with the prime minister’s assistant.
Most of the damage that has already been done in the financial services sector is self-inflicted. It may now be far too late to repair the damage.