The controversy revealing how the Minister without Portfolio deputy and the Chief of Staff at Castille had secretly engaged Nexia BT to register a New Zealand trust with a Panama subsidiary was fuelled by a recent claim that the Prime Minister's wife owns Egrant, a third Panama Company. It came like a bolt out of the blue and has shocked party apologists to the core.

In a statement sent through the Department of Information, the Prime Minister said he has asked his lawyers to contact the police commissioner and ask him to "inform a duty magistrate tonight to investigate allegations so published and to preserve all evidence and give instructions to the Attorney General and police commissioner to take all necessary steps". In a twist of fate it was reported that such a statement came after a man and woman carrying suitcases were seen late at night leaving the premises of a local bank - where it is being alleged that documents proving such a story were being stored.

Last year, this Panama allegation had triggered a motion proposed by the Opposition to pass a vote of no-confidence in Parliament. This did not pass but a lot of opprobrium was generated among the Labour Party faithful. Party apologists complain saying that spreading division and uncertainty at this crucial term so close to the election date in the political life of a Labour administration takes us back to the best forgotten feisty days of the early eighties. Nevertheless, the advice given by Nexia BT as consultants was sternly described by the Prime Minister as "naive and politically insensitive". The hullabaloo was followed by a declaration from both politically sensitive persons that they are clean and straightaway Dr Mizzi offered to be audited by the Commissioner of Tax and has filed a clean audit certificate signed by international audit firm Crowe Horwath. Dr Mizzi said he will liquidate the shell company in Panama. But with hindsight one might ask - did Nexia BT (now the anointed audit firm for mega government consultancies) have to go all the way to engage Mossfon to obtain a cosy tax shelter to protect family fortunes.

The answer in my opinion is simply no. Brussels is an easier alternative, closer and more sophisticated. It was reported last year that the EU is investigating Belgium's for its cosy tax secret deals it signed with dozens of multinationals. A recent EU ruling has obliged Belgium to reclaim millions of undercover deals on tax avoidance signed with mega businesses in many other countries. The European Commission has concluded that selective tax advantages granted by Belgium for the past 15 years under its "excess profit" tax scheme are illegal under EU state aid rules. The scheme has benefitted at least 35 multinationals mainly from the EU, who must now return €700 million in unpaid taxes to Belgium. The hybrid scheme used a twisted logic to assume that a taxpayer being a multinational generates an "excess profit" so it redeems this factor by slashing its tax charge.

Back home, we can reflect that on the eve of elections, scandals are not absent from our daily news. For instance, stop and reflect on the Gaffarena episode concerning alleged illicit property deals and collusion with officials in the Lands Department. Another case was the spurious valuation by Deloitte engaged by Projects Malta of a prime site in St Julian's. The ITS project worth over €200 million was revalued downwards to €15 million plus ground rent. In the Gaffarena case, the government took cognizance of a damning NAO investigation and blocked the property transfer. The Prime Minister is currently suing Gaffarena in court to reclaim the excess monies paid and property swaps that underpinned such allegedly illicit deals. So perhaps amid this wave of commercial volatility, one cannot help but notice that last year a number of established consultancy and audit firms felt that the temperature getting too hot in the kitchen. Firms faced a dilemma and after some deliberation engaged brokers to find them a larger partner to merge their business thereby hoping to consolidate their position in the market. They decided to bite the bullet and merge with other mega firms - with the intention of not losing their identity and, at best, improve market share.

A number of mergers come to mind particularly in the ICT, audit, legal and advisory services. Definitely, this merger activity warrants a business environment complemented by a better understanding of the basic rules of good governance and transparency. In fact, CSB Advocates recently merged with legacy law firm GVTH, and Ecubed Limited a specialist consultancy firm managed by well-known economist Dr Gordon Cordina (who inter alia conducted the Gozo subsea tunnel feasibility) joined the accountancy firm Nexia BT (a firm representing Mossfon in Malta). Dr Cordina had immediately resigned as partner of Nexia BT citing difficulties of credibility arising out of the Panama affair. Other regroupings and mergers among law firms will continue as tougher EU directives and dispositions will be transposed into domestic law. The stringent obligations imposed by CRS on all firms not to mention FACTA rules for US business has made many firms regroup or ask for outside assistance.

In this context, one reads about never ending directives  issued at EU level, some of which aim to overhaul public procurement rules and set out common standards on contracts to boost good governance, fair competition, reduce distortion in the market and ensure best value for money by introducing new award criteria. All this brings me to a positive note. It centres on a fruitful trip by a delegation from PKF which visited the head of international relations at Massachusetts Institute of Technology (MIT) and Cambridge Innovation Centre in Boston, USA to explore links to promote Malta as a potential ICT and/or Life Sciences hub for investors, inventors and entrepreneurs. Such a visit was jointly undertaken with co-operation from a technical representative of Malta Enterprise -each party paid its own expenses.

The government endorsed the initiative taken by PKF as it wishes that the island will become a centre of excellence in scientific breakthroughs and attract bio technology and oncology clinical research and development. MIT is rated as the world's best university in chemistry; economics; linguistics; materials sciences; and physics and astronomy. Needless to say, this impressive learning institution is the pride of the American intelligentsia and many countries are trying to emulate its success.

Taken to its logical conclusion, support for similar ventures undertaken by practitioners ought to be encouraged. Malta needs to explore new niches, and although the island is making respectable economic progress in a number of important sectors (having achieved the highest GDP growth in Eurozone this year), the general public waits with bated breath clarification of unfounded allegations on money transfers in the name of the Prime Minister's wife in the ubiquitous third Panama company Egrant. The saga of the third company is shrouded in secrecy and readers can brace themselves for more mudslinging in the coming weeks.

Mr Mangion is a partner in PKF an audit and business advisory firm and can be contacted at [email protected] or on +356 2149 3041.