“Our company performed the necessary due diligence on Joseph Muscat and found no reason why he should not be employed as a consultant”. That was Michael Stivala, Malta Developers Association president and owner of a multi-million euro hotel and property group. He was justifying paying Muscat tens of thousands of euro within ‘months’ of his forced resignation.
What type of due diligence could Stivala have conducted about Muscat?
Muscat is by definition a high risk politically exposed person. There are multiple credible allegations of Muscat’s misconduct. There are ongoing magisterial inquiries involving Muscat. He was the prime minister of a jurisdiction with high levels of corruption, weak state institutions, weak anti-money laundering defences, a political economy dominated by a small number of people close to him, a criminal justice system vulnerable to political interference, and a culture antagonistic to the interests of whistleblowers. All those are markers of higher risk politically exposed persons according to the MFSA’s own guidance.
The guidance highlights those whose wealth derived from granting of government concessions or other significant projects. It points at those whose wealth derived from preferential access to privatisation of former State assets like Enemalta. It identifies those whose wealth or lifestyle are inconsistent with known legitimate sources of income or wealth.
But Michael Stivala has done his due diligence. And Muscat passed Stivala’s due diligence with flying colours.
Stivala couldn’t have done any half decent due diligence. He surely doesn’t have access to the Magistrate’s ongoing investigations. He couldn’t have been given access to Muscat’s cabinet minutes. They’re secret. He can’t have known what decisions Muscat took or for whose benefit. They’re secret too. He isn’t privy to the details.
Why is Stivala sticking his neck out for Joseph Muscat?
“There was nothing wrong with Muscat working as an economist after he stepped down from his role as Prime Minister, all Prime ministers before him did it,” Stivala claimed. No they didn’t. None of them worked as economists. And none returned to their profession. When Mintoff handed over to his successor Karmenu Mifsud Bonnici, he didn’t go back to architecture. When Mifsud Bonnici was voted out in 1987, he didn’t go back to the law courts. He stayed on as party leader. When Fenech Adami was voted out in 1996, he didn’t go back to be a lawyer. And when Alfred Sant called an early election in 1998 and lost, he remained party leader. Stivala is just making up fiction. “All prime ministers before him did it”. What utter nonsense. Stivala lies with a straight face. No wonder he chose Muscat as his consultant.
Stivala has good reason for defending Muscat. He has every interest in helping him launder his reputation. Because Stivala benefitted enormously through dodgy decisions while Muscat ruled the roost. He still does.
Stivala was allowed to demolish an old building in Balluta and replace it with a block of flats abutting the water’s edge. He was given a chunk of Gzira’s prime waterfront to build a lido. He was given a permit to develop an 11-storey hotel in a residential area in Sliema where such development is prohibited. The cultural heritage superintendent initially expressed “grave concern” at the “very considerable height and volume” of that development, then had a sudden change of heart describing the proposal as “acceptable in principle”.
The vociferous protests of environmental organisations and residents were completely ignored. Stivala was given a permit to develop that hotel on land which didn’t even belong to him. Carmelo Buttigieg provided evidence of his ownership of a divisible part of that land. Buttigieg even presented an appeal court sentence confirming his part ownership.
Stivala countered that this was “just a civil dispute” with no bearing on his planning application. No bearing? That land isn’t yours Mr Stivala. How can you expect to be given a permit to build on land that doesn’t even belong to you?
Unbelievably, a member of the Planning Authority board leapt to Stivala’s defence. Lorinda Vella told the objectors to Stivala’s application that they “should have raised the matter before”. It’s not the objectors’ role to provide the PA evidence on land ownership. It is the responsibility of the applicant to provide evidence of ownership and of the PA to confirm those claims. Instead the PA was haranguing objectors to leave Stivala alone. As everybody expected, Stivala got his permit. With such a brilliant consultant as Muscat, Stivala was going to get his permit no matter what all the policies stated.
Stivala had already illegally bulldozed decades old trees and torn down part of a vernacular farmhouse in the area to develop a parking area. Having destroyed those trees and farmhouse, Stivala then sought to sanction his illegalities.
In 2016 Stivala sought to double the height of his Gzira Blubay hotel in contravention of local area plans. Muscat’s friend and PA CEO Johann Buttigieg leapt to his defence. Stivala got his way.
Stivala also benefitted from Muscat’s amnesty to “fix a long standing anomaly”. Stivala owed hundreds of thousands in unpaid electricity bills on his long let-apartments. In 2014 Stivala reached a massive settlement agreeing to pay just 1 million euro. Muscat defended his decision to “settle with individuals and businessman”. Those who defrauded Enemalta should have faced criminal prosecution besides paying back what they owed with interest. Instead Muscat pardoned them. And Stivala profited handsomely from that amnesty.
Yet Stivala insisted in court that tens of thousands of euro he paid Muscat were not a reward for Muscat’s favourable treatment. Stivala’s very convincing reasons for paying Muscat was that “we saw it as a great opportunity for our group to employ such a bright economist”. It didn’t dawn on Stivala that the bright economist also happened to be the 2019 person of the year in organised crime and corruption. And what better way to boost the reputation of your publicly traded company? Stivala must be a genius.