MEPs David Casa and Roberta Metsola have expressed concern that Konrad Mizzi’s situation, as revealed through the Panama Papers, has put Malta in a negative light in Europe, and that Malta’s rules and regulations regarding the financial services sector will be harder to defend at EU level as a result.
Both Dr Casa and Dr Metsola have both been appointed full members of the Panama Papers Committee in the European Parliament. Konrad Mizzi had a company in the secretive jurisdiction of Panama, which was also placed in a New Zealand Trust, resulting in one of the largest scandals of this legislature.
Dr Casa was unable to give any specifics on what the committee will focus on, as that would be the topic for discussion during the committee’s first meeting, set to take place next week or the following. “We are going to appoint the administration of the committee, set up a plan as to what we will be looking at and who to interview. The EPP is already set on asking politicians to come and be interviewed,” he said.
He explained that a number of EPP MEPs (not Maltese) who know about the Konrad Mizzi situation want to interview him. “Parliament cannot force politicians to come and be interviewed, but during the Lux Leaks investigations, Parliament asked EU Commission President Jean-Claude Juncker to attend Parliament and he did. There's nothing wrong with that. As we don’t know if there will be an agreement between the political groups for such an interview to take place, if he is invited I think he should accept especially as he is saying he did nothing wrong. So if he really believes in what he said, that he was a bit naive, then he should come here. It would be a huge mistake if he is asked to come and doesn’t show up; it would send a bad signal to the European institutions.”
Dr Casa stressed that Europe needs to make sure something like this doesn’t happen again. “We will have to look into current rules, and avoid people going around our rules in the future.”
He believes that a message from within the Committee needs to be sent, to the effect that Maltese rules and regulations never invited tax evasion. “It was a tough battle in Europe, but we always managed to show that our rules and laws are good. But with this Konrad Mizzi saga, people have started to doubt us, and our financial services sector. We have to convince people in the Committee that we are playing by the rules, that we have a good tax regime, that our financial services sector does not represent Konrad Mizzi's mentality. We do give special discounts and treatment to investors in Malta, but we are not a tax haven, and we need to stress this. We need to be very careful when dealing with the subject in this committee not to link Malta's financial services sector to Konrad Mizzi.”
There is a very big distinction between our financial services sector and what Konrad Mizzi did, he said. “My situation as a Maltese MEP is to ensure Malta's financial services are safeguarded”.
He expressed his wish for Konrad Mizzi to be removed before the Committee meetings start, “so there won’t be any need to invite the minister here”.
“There are some doubts about Malta; there is a cloud over Malta now, and I sincerely hope that these doubts are removed as quickly as possible as an outcome of this committee”.
After Brexit, the Panama committee is no longer the number one item on the agenda, he said, “but there is a big need for change felt by everyone here”.
Dr Metsola explained that the Panama Papers scandal will definitely trigger renewed efforts by certain parliamentary factions as well as certain countries to push harder for tax harmonisation.
“They have been trying for many years; they come to the European Parliament with proposals disguised as regulations combating tax evasion, but, reading between the lines, it would lead to tax harmonisation. This has been resisted successfully by successive Maltese governments as well as the UK. This is a matter in which national sovereignty still reigns and this was something the Maltese government pushed for during the Lisbon Treaty discussions. Member states have a veto in this area. The previous Maltese government also argued that even with advanced cooperation, with a number of member states going forward in a particular area, the spill-over effects of member states that remain outside that area of advanced cooperation would be negatively affected.” She stressed that she is in favour of regulating against tax evasion.
“Politically the scenario is different. So far we have been able to defend our position, saying that one cannot look at a state that has a significant part of its economy dependant on financial services and try to tell them to change the system. Let them work as they are, with the regimes set up and with everything following the rules. At the moment, this is extremely hard to defend politically, because when someone looks at Malta they see a minister implicated in a major scandal with taxation implications. Unfortunately, even for myself within the EPP, it is harder and certainly not a fun thing for me to be a full member of a committee where one of the focuses will be on one of the members of the Maltese government.”
She believes that the government and anyone representing Malta in institutions like the EU Parliament should insist that, where the EU has no business legislating, it should avoid attempting to do so.
This, she said, is along the line of the principle of subsidiarity. If there is one thing Brexit showed us is that there is a sense of frustration that the EU is trying to over-regulate certain sectors. When these sectors are crucial for a member state’s economy, that state must tell the EU that it has no legal right to intervene in that matter. This is the legal argument. From a political standpoint this is becoming increasingly difficult and I will continue to fight Malta’s corner on this as I believe the treaty should be respected and that Malta should still continue to be seen in the same positive light despite the Panama Papers scandal. Unfortunately, this has changed but I will make sure that Malta’s corner is defended when it comes to the protection of the financial services sector.”
Dr Metsola said the Panama Papers revealed that there were a lot of people who thought they could get away with shady practices by using secret shell companies. “We need to make a distinction between Politically Exposed Persons (PEPs) who have to bear certain responsibilities that go above and beyond others. So of course the suspicions and questions arise as to what was the need for the PEPs to use these vehicles, and what was not offered by the Maltese, and therefore strict EU regulations, that enticed these PEPs to move their assets or funds through a system that does not involve tax declarations in their member state.
“Of course the spotlight is on these vehicles that must be examined, which should not be seen as an escape route for a minister who had the largest portfolio in government, as a way to try to disguise the movement of certain assets. That’s what I think Dr Mizzi tried to do and I think the focus should be on the fact that his version of events changed often.” She highlighted that the Icelandic Prime Minister resigned for a lesser reason, and asked why Dr Mizzi, as well as Prime Minister Joseph Muscat’s Chief of Staff have not resigned.
Dr Metsola explained that all PEPs should automatically show a certain level of responsibility, irrespective of any new legislation that might come up. “The excuse given by Konrad Mizzi of having an international family in an attempt to justify putting his London house as part of his shell company is something that would raise eyebrows no matter the legislative initiatives. We need to increase the level of responsibility and good governance in the way we do politics, whether you are a local politician, MEP or in government etc. We need a new code of ethics which the government is clearly trying to flout.
“I would like to see better implementation of current regulations. This is a wide-ranging problem. We have a lot of criticism at EU institutional level that there is always a focus on creating new legislation without inspecting the effect of existing legislation, such as in the case of the financial regulations that were drastically overhauled after the economic crisis. I will push for the assurance that such responsibility from politicians must be vigorously requested, while ensuring that current legislation is applied while ensuring national state sovereignty is respected.”