Prime Minister and Labour Party Leader Joseph Muscat is facing his first strong internal conflict since he took the helm of the party. Sources from different factions within the PL have revealed to this newsroom that members from all sectors have voiced their disdain and complained that the recent Panamagate events involving Deputy Leader and Minister Konrad Mizzi and the Prime Minister’s Chief of Staff Keith Schembri should not be tolerated.

Asked why PL members had not used their vote during the recent election for Deputy Leader, but instead confirmed Konrad Mizzi with 96 per cent of their votes, sources said that, “Everyone was still under shock when those revelations came out on Daphne Caruana Galizia’s blog. We don’t usually believe what she writes, but as the days rolled by and Konrad admitted that he broke the law, followed by the revelation that even the Prime Minister’s Chief of Staff had a secret account, people within the party began to realise that something is very rotten.”

Contacted by this newsroom, Government Parliamentary Whip Godfrey Farrugia confirmed that a number of MPs, over the past week, have expressed their concern: “The case was discussed in an open and candid way within the Parliamentary Group. I joined the Labour movement because I couldn’t stand the situation under repeated Nationalist governments, where it was clear that a small network of powerful friends traded in influence. The oil scandal was the tip of the iceberg in past Nationalist administrations.

“I believe Labour should learn from these mistakes and should not go, or be seen as going, down the same path. We have watched what happened to the PN.

“I want our Labour Movement to move in the right direction, and I am sure of the Prime Minister's support for my determination. I will continue to do my utmost internally within the party to make sure that loyalty to our country remains the topmost priority, and prevails.”

This newsroom also contacted former Parliamentary Secretary Michael Falzon, who had been made to step down by Prime Minister Muscat in the wake of the Old Mint Street/Gaffarena scandal. However, Dr Falzon, a former PL deputy leader, preferred not to comment.

Equally silent on this matter was former MLP Leader and current MEP Dr Alfred Sant. This newsroom asked for his reaction to the Panamagate scandal considering the fact that he was elected Prime Minister in 1996 on a strong anti-corruption campaign. He is also credited for ‘cleaning up the party’ when he took over from Karmenu Mifsud Bonnici in 1992. Yet, Dr Sant preferred to remain noncommittal on the matter.

But Justice Minister Owen Bonnici was ready to stand by Konrad Mizzi and Keith Schembri. In an interview published today in The Malta Independent on Sunday, he expressed concern that the Panamagate scandal could dissuade successful or wealthy people from entering politics.

Asked whether he believes that the government’s reputation has been tarnished by the Panamagate scandal, the minister countered with questions of his own.

“Should a person with a successful career be allowed to manage his wealth in the best way he deems fit? Isn’t a minister like Dr Konrad Mizzi, who worked abroad and earned good wages, allowed to manage his assets in the best way?”

He went on to say that the answer to this is “Yes, as long as he declares all his assets and doesn’t conceal anything from the public domain. Dr Mizzi, and I know because I was present, declared his Trust in his declaration of assets. So I believe he fulfilled this criterion. The other issue is whether we want successful people to join the political field. I worked as a lawyer in Zejtun before being appointed minister, so my financial situation is slightly different from Dr Mizzi’s. I’m not saying that we don’t need people who have worked on the ground in Malta, but we need a bit of both. We need people who have been successful in their profession abroad and have accumulated wealth, and we need people who decided to do other things”.

“What I wanted to say is that we need good people in politics. Yesterday I read Tony Blair’s autobiography and he said that the pool of talented people in politics is very limited. Well Great Britain has almost 65 million citizens, imagine the situation in Malta. What I am saying is that if we don’t create the necessary environment for successful people to enter politics, I believe we will be doing the country a disservice”.

Regarding Panama, Minister Bonnici noted that Dr Mizzi has stated that once the tax audit he has requested is complete, he will close down his [Panamanian] company.

This newsroom then indicated that one of the thorny points is the very fact that he had acquired the Panamanian company in the first place. “Yes, I think he was sensitive to what people said, he listened and he acted,” Dr Bonnici rebutted in a clear defence of the Prime Minister and fellow minister Konrad Mizzi.

He emphasised that everyone is entitled to criticise, “but let us not tell successful people that we don’t want them to join the political field. I’m slightly worried that a person who wants to enter politics, who has accumulated wealth through a successful career, would think twice before joining the political fray if he sees what is being said about Dr Mizzi and Mr Schembri”.

He said that abroad, a trust is a measure of transparency. “That’s the irony of it. So when someone creates a trust, he distances himself from the property he has. Politicians abroad usually create trusts in order to prove their own transparency. It’s ironic”.

When this newsroom indicated that many people with wealth do not have companies in tax havens, he said, “I’ve seen reports stating that although it’s been claimed that Panama is a blacklisted country, it actually isn’t. However, there are some countries that had reservations about Panama, but I’m not defending that choice of jurisdiction.”

The Minister explained that Dr Mizzi had declared that he will close down the company, meaning he had taken note of public sentiment, “…and I believe that is positive. I completely defend Dr Mizzi’s right to create trusts in order to manage his wealth in the best way he deems fit, as long as he declares his interests. If he had not declared his interests it would have been another story. Other former minsters as you know, Dr Austin Gatt for instance, forgot about his Swiss bank account for a number of years.”

Dr Gatt had in fact declared the Swiss bank account for a number of years until he stopped doing so, while Dr Mizzi, on the other hand, never declared the Panama company until faced by media reports.

Turning to article 24b of the Income Tax Management Act, which defines not declaring a Trust to the tax commissioner within 30 days as an offence, he was asked whether he believes Minister Mizzi should be prosecuted.

Dr Bonnici explained that the Commissioner for Inland Revenue has the discretion to take any steps he deems fit. “I am aware that Dr Mizzi has invited the Commissioner to audit him. We are speaking here about the fact that Dr Mizzi did not submit a form within 30 days.

“If you go and check whether anyone who registered a trust has filed this note, there would probably be very few people who have done this.”

The system allows for the issuing of administrative sanctions, even in the case of late fines, and the final discretion to take decisions on prosecution lies with the Commissioner. To this, Dr Bonnici replied, “In this case, Dr Mizzi should be treated in the same way as any Tom, Dick or Harry would be treated during the normal course of business, and I’m sure that the Commissioner for Inland Revenue will do the same thing.”

Asked whether, as a Minister of Cabinet, Minister Mizzi should be beyond reproach, Dr Bonnici replied, “We are dealing with the non-filing of a form which will result in a fine of Lm50 to Lm500. This should be taken into perspective and I’m sure this is an issue which occurs in dealings between normal citizens and the Inland Revenue Department, and that usually these matters are dealt with administratively. If Dr Mizzi has to pay some late-payment fees, I’m sure he will do so. Probably everybody in Malta has sent in a late form at some time or another. The bottom line is that the Commissioner is auditing Dr Mizzi; he will make his decisions, and I believe he will treat Dr Mizzi as any normal citizen would be treated in those circumstances.”

Asked to consider this situation in the wider context, that of a Minister, who is meant to be beyond reproach, and the whole Panama scenario, Dr Bonnici avoided the political responsibility theme altogether and said: “Dr Mizzi declared that once the audit is concluded, he will close it down and I believe this means Dr Mizzi took note of public sentiment and has acted on it.”

Asked for the date on which he found out about Dr Mizzi’s New Zealand trust and Panamanian company, the Minister said he is not the kind of person who takes interest in what other Members of Cabinet have or don’t have.

“The Prime Minister takes the declarations of assets very seriously,” Dr Bonnici said, adding that the Prime Minister asks questions and seeks clarifications on items on the declarations of assets presented by Cabinet members.

As for collegial responsibility, the Minister said this means that every Cabinet member is equally responsible for decisions taken by their colleagues on the running of the country.  He added, “I would extend this to the way members of Cabinet conduct their ethical modus operandi.”

He said he is ‘comfortable’ with the situation as Minister Mizzi “declared the trust and didn’t hide it.  What would be the difference between having a trust in New Zealand or Malta? In reality, I don’t believe that would make a huge difference. As long as Dr Mizzi declared that trust, it’s fine.”