Malta’s Minister of Health and Energy – who by tonight will be deputy leader of the Labour Party – is behaving as though it is entirely normal for somebody on a state salary, whose wife is on a state salary, and who holds a position in the cabinet of government, to own a company incorporated in the black-listed financial services jurisdiction of Panama, which is notorious for secrecy so thick and impermeable that not even its own authorities are able to acquire information on asset-holdings, through a court order.

When The Malta Independent door-stepped Konrad Mizzi and asked whether it’s true he owns a company registered in Panama, he bluffed and blustered as though this is no different to a company registered with the Malta Financial Services Authority. “It has no assets,” he said. But the only reason people use Panama in the first place is to hide assets. There is no other purpose than secrecy. The situation is even more serious when you consider that Mizzi is a government minister in a European Union member state, and Panama is blacklisted by the European Commission as a financial services jurisdiction because - along with other shady jurisdictions like Samoa, the Bahamas and St Kitts & Nevis (there are several others) – it has consistently refused to cooperate with the European Union under the Tax & Savings Directive of 2005, which was updated in 2011.

Not all offshore jurisdictions are blacklisted by the European Commission. Several of them, including the British Virgin Islands, are not. This is because they cooperate with the European Union under the Tax & Savings Directive. People and companies with assets registered in these jurisdictions can choose between allowing the authorities there to give their details to the EU member state authorities which ask for them, who will then proceed accordingly, or suffer a withholding tax of 35% at source, 75% of which is then sent to the EU member state in question.

So if Mizzi had incorporated what he calls his “shell company” in the British Virgin Islands, for instance, he would have had to elect to allow the authorities there to send his details to the authorities in Malta, or accept instead to have the income generated by his holdings taxed at source at a flat 35% in return for anonymity. To avoid having to do either of these things, he incorporated his asset-holding company in Panama instead.

But of course, you would have to ask why he went offshore in the first place. The man is a member of the government of one of the most trusted and sophisticated financial services jurisdictions in the world: Malta (I will resist the urge to say that it’s no thanks to his party). So why hasn’t he used asset-holding vehicles incorporated in Malta, as so many very rich people from all over the world do? And the only possible explanation for that is: he doesn’t want the authorities here to know what he’s got. He doesn’t want the electorate to know what he’s got. And the reason why he doesn’t want anyone to know what he’s got is not mere tax evasion. It’s because those assets can only have been acquired illicitly in the first place.

Companies in Panama and trusts in New Zealand (or trusts anywhere else) are for the ultra-rich. They are not for individuals like Konrad Mizzi, who in his most recent declaration of assets to parliament laid claim to around 300,000 euros in bank deposits, cancelled out by bank loans of roughly the same amount, an ordinary small flat in Sliema and a flat in London which has since been sold (the proceeds of the sale should appear in his upcoming declaration of assets). Mizzi is on a state salary, his wife is on a state salary, and yet he speaks blithely about assets he plans on acquiring to justify that company in Panama, and how the trust was set up to manage his family assets because he has no time to manage his own financial affairs. Financial affairs? Family assets? The man is in his 30s and has been a minister of the government for the last three years, on a salary and with no other declared source of income.

The important thing to understand here is that Konrad Mizzi (and no doubt, Joseph Muscat) never dreamed in a million years that the company in Panama and the trust in New Zealand would be discovered. Panamanian secrecy is notoriously impenetrable. Mizzi only spoke now because he was found out, and he tries to make out that this behaviour is entirely normal and acceptable, that as long as he declares it, it’s fine. But he wouldn’t have a company in Panama if he wanted to declare it. He’d have a company in Malta. And he can’t declare it anyway, because we have no way of checking – given Panama’s strict secrecy – that the assets he declares as belonging to it are what he says they are. Just as he can lie about there being no assets now, so he can lie about the nature of any assets later on. But he shouldn’t have any assets of that nature anyway: he’s a cabinet minister on a salary. And the fact that Joseph Muscat defends him so angrily, shooting bitter hostility at the Opposition, tells you a lot else that you need to know.

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