Questions over financial deals involving his inner circle have dashed Prime Minister Joseph Muscat’s hopes of even higher office, according to a report in UK newspaper The Guardian.

The newspaper, which forms part of a consortium of journalists working on stories that had been followed by Daphne Caruana Galizia and releasing reports as part of the Daphne Project, said Muscat was being named for the EU’s top spot – President of the European Council – but his hopes have been dashed by the latest revelations and developments.

“Muscat, who has decisively won two elections in Malta, is facing serious questions, including from the European parliament, about whether the island has become a rogue state at the heart of the EU,” the newspaper says, referring to the murder of Daphne Caruana Galizia, the arrest of Pilatus Bank chairman Ali Sadr and his failure to take action against Konrad Mizzi and Keith Schembri.

“Young and charismatic, Muscat had been touted in Brussels as a potential successor to Donald Tusk, the president of the European council.

While still popular at home, his hopes of securing high office in Europe appear to be in tatters,” The Guardian reports.”

Asked about his relationship with the Iranian banker, Muscat said he had met Sadr “a number of times” and described his attendance at Sadr’s wedding as an “unexceptional event”.

“I know Mr Sadr as I would know any person who invests in Malta and meet a number of times,” Muscat told the newspaper.

Asked about the apparent failure to take action against his close aide and the tourism minister, Muscat said: “An important element of the rule of law is the principle of innocent until proven guilty. We are in a world today where misinformation, gossip and speculation have become potent forces in society. In Malta, I am determined that proper process and rule of law should prevail.”