The Malta Independent 16 May 2022, Monday

Editorial: Egrant saga - It’s bigger than a libel case

Wednesday, 26 April 2017, 09:42 Last update: about 6 years ago

Ever since the allegation surfaced claiming that Michelle Muscat is Egrant, the country has been holding its breath. All bets are off and ordinary business is suspended. Government continues with its normal duties, such as the inauguration of the new Delimara gas-powered power station, but meanwhile everyone keeps an ear open to further developments on this Egrant issue and related ones.

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In normal circumstances, one would expect the allegation to be replied to by a libel case, and that has indeed happened. But this is no ordinary case and it is clearly bigger than just a libel case. In fact, the prime minister got himself invited to Xarabank so that he could defend his and his wife’s honour in front of Malta’s biggest TV audience.

He asked the Leader of the Opposition to provide proof of the allegation. Dr Busuttil replied the allegation had originated elsewhere implying that any proof should be sought from the originator.

Back to square one. The magistrate investigating the allegation sent for the originator, Daphne Caruana Galizia, but she refused to turn up, against the advice of many, including this paper.

There the matter stands. Ms Caruana Galizia faces a raft of libel cases from the protagonists in this case but these have yet to get to the core of the issue.

Under normal circumstances, one would expect any proof to be produced in court during the libel proceedings. But will they?

On Sunday, The Sunday Times reported that Ms Caruana Galizia stated she has both a whistleblower and documents to prove her allegations. This puts the entire matter on a far higher plane. In normal circumstances, one would ask for cast iron guarantees that the safety of the whistleblower is ensured.

We have already had witnesses showing the Pilatus Bank owner scurrying out of the bank’s back door late at night with a bagful of presumably documents. It may be that evidence has been tampered with.

This has become far more than a cause celebre, or even a head-to-head clash between two enemies. On the one hand on this rests the credibility of the head of government himself who has staked all on his word and on the other hand the credibility of Malta’s foremost journalist. Whoever loses can kiss goodbye to any public future.

Even though we are in a pre-electoral mode, the matter will not be solved by counting the number of those who believe in one against those who believe in the other. What will count is if there is a proof and if this proof can stand the tests of veracity.

The sooner the matter is settled, given the preconditions listed earlier, the better.

Not all that has been said these past days corresponds to truth. In particular it was said that money transfers is traceable all over the world. But according to the Facebook page of FSME Partit Nazzjonalista, there can be different types of monetary movement in tax havens

“Visibility can be reduced through the use of a payable-through account. Instead of securing a license to operate in one country, a foreign bank can open a correspondent master account with a bank in the host country and allow its clients to draw checks on the bank’s master account. The account remains legally in the name of the foreign bank.

“Another option is for the criminal to use international real estate flips. Here the criminal arranges to "sell" a piece of property to a foreign investor who is, in reality, the same criminal working through one or several offshore companies. The "sale" price is suitably inflated above acquisition cost, and the money is repatriated in the form of a capital gain on a smart real estate deal.

“Bogus capital gains on options trading is preferable to real estate, as it is perfectly normal for someone to trade securities regularly. In fact, frequent securities transactions, each "making" modest capital gains, are less likely to attract unwanted attention than the occasional major gain. The trick is to "buy" and "sell" a currency, commodity or stock option back and forth between foreign and domestic companies.

“For truly regular income flows, the criminal might arrange to collect the money in the form of income rather than gambling receipts or capital gains. Personal income is easy to arrange. The criminal simply has one or more of his/her offshore companies hire him/her as an employee or, better, as a consultant. In effect the criminal can pay himself/herself a handsome salary or generous consulting fees, as well as possibly a company car or a condominium in a prime location, out of the offshore nest-egg.

\’The criminal might also choose to repatriate the money as business income. It is merely a matter of setting up a domestic corporation and having it bill an offshore company for goods sold or services provided.

“Probably the neatest solution of all is to bring the money home in the form of a business "loan". The criminal arranges for money held in an offshore account to be "lent" to his/her on-shore entity. Not only is the money returning home in completely non-taxable form, but it can be used in such a way as to reduce taxes due on strictly legal domestic income.”

And that’s just for starters.

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