Chair of the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament (S&D), Gianni Pitella, slammed the use of “immoral tax practices” by “some political leaders” in the wake of the Panama Papers scandal.
Revelations made by the International Consortium of Investigative Journalists (ICIJ) led to the release of a vast trove of documents and data on offshore financial dealings of wealthy, famous and powerful people including Malta’s Energy and Health Minister Konrad Mizzi and the Prime Minister’s Chief of Staff Keith Schembri.
"The fact that this [Panama’s status as a tax haven] is being used, not only by the criminal underworld, but by some political leaders, confirms how widespread these immoral tax practices can go. It discredits the political system in the eyes of the citizens," said S&D’s Mr Pitelli.
The S&D party, which is affiliated with the Labour Party, has criticised the proliferation of such tax structures, drawing attention to how these scandals call into question the entire political system.
Dr Mizzi and Mr Schembri were initially found by journalist Daphne Caruana Galizia to concurrently hold trusts registered in New Zealand which own 100 per cent of shares of two companies registered in Panama. Dr Mizzi confirmed the existence of such financial structures, but insisted that they do not contain any assets, liabilities or bank accounts.
Dr Mizzi has since argued that the release of the documents dubbed ‘Panama Papers’ has proved that he was saying the truth all along – specifically that the Panamanian company owned by his trust in New Zealand holds no bank accounts.
Dr Mizzi however failed to respond to new information presented by the Financial Review where it said that both Mr Schembri and himself tried to open up bank accounts for their companies through two banks in Panama and Dubai, but were refused.
It was revealed that they were denied the bank accounts by both banks because of their status as politically exposed persons.
Political Consequences
Irish MEP Nessa Childers, who is a member of the Group of the Progressive Alliance of Socialists and Democrats in the European Parliament, also voiced her opinion on the Panama Papers revelations.
"Any serious revelations of impropriety should be investigated and political consequences must be drawn in case of wrongdoing, irrespective of political affiliation,” she said.
The question of political responsibility and consequences has been raised on numerous occasions when the story originally broke in Malta. Prime Minister Joseph Muscat said that if proof emerges in relation to Dr Mizzi’s financial structures, he would sack him.
The Opposition, as well as Alternattiva Demokratika has said that the intent to open up secret bank accounts, and choosing Panama as the destination to register their companies is enough to doubt whether their positions are still tenable.
Opposition Leader Simon Busuttil said that the uncertainty created by this scandal will have an extremely detrimental effect on the island, and that the Prime Minister cannot continue to drag his feet.
MEP Childers has been very vocal about this scandal, especially against a backdrop where the EU has been trying to stop Member States from offering preferential tax agreements and essentially siphoning off taxable profits from other Member States.
Both sides of the House have vehemently fought to retain their fiscal independence and tax competitiveness. In the light of Minister Mizzi being part of the 140 politicians found to have links to financial set-ups in Panama, especially dictators such as Syria’s Bashar al-Assad and former Egyptian dictator Hosni Mubarak, it is questionable whether Malta will have a leg to stand on in trying to offer preferential tax agreements.