Act now or else the clouds turn black
Malta’s future hangs in the balance following the announcement that it has been grey listed by the Financial Action Task Force (FATF). Right now, the country’s reputation lies in tatters. All the efforts done to promote Malta as a centre of excellence for the financial services industry since the mid-nineties risk going completely down the drain.
To put the decision into perspective, Malta is the only and first EU member state to suffer such fate. In layman’s terms a grey-listed country is one on which potential investors should tread very carefully as it has serious shortcomings on anti-money laundering and tax evasion safeguards. Countries on this list are placed under increased scrutiny as they are treated as suspicious. Malta is now in the same boat with the likes of Panama, Botswana, Pakistan, South Sudan and Yemen.
This race to the bottom has been going on for a while. In 2016 UHM Voice of the Workers had sounded the alarm bells that scandals like the Panama Papers revelations, the Vitals hospital privatisation agreement as well as shady deals like the Electrogas power station, did not bode well for the country’s reputation. Unfortunately, such warnings had not been heeded neither by the government. Instead, the Labour administration tried to absolve itself from any wrongdoing through the electorate’s decision to give it a fresh mandate in 2017. Four years down the line however, reality caught up with the government. In just eight years Malta’s reputation has gone from top notch to rubbish. Ironically, this happened as part of a road map which was meant to make us the best in the EU.
Looking ahead, the road is arduous. First of all, honest law-abiding citizens will be the ones who will bear the brunt. This might translate to job losses in the financial services industry and surely more red tape by banks whereby account holders are already facing an ordeal to withdraw money, get loans or even open an account. It seems that banks are treating everybody as a criminal by default.
Nonetheless, the only way to see light at the end of the tunnel is to work together to restore the island’s reputation. Being removed from the grey list is just the first stage of this marathon and not the end in itself. Yet, the buck stops with the government which is also bound to restore values like integrity, honesty, transparency and democracy which have been severely undermined. This is the only way to resurrect key intuitions and regulators which have been handled like government fiefdoms.
A case in point is the Central Bank of Malta. This institution is led by the same finance minister under whose watch this whole mess happened. While nobody is suggesting Prof. Scicluna was criminally involved, the decision to appoint somebody at the helm of the Central Bank who was not able to crackdown and stand up to be counted when called upon by law-abiding citizens leaves much to be desired. As things stands his appointment conveys the message that government is still unresolved to change tack.
Meanwhile, no politician has been brought to justice over money laundering, tax evasion, kickbacks and the setting of complex financial structures in shady foreign jurisdictions. The only inroads in the fight against corruption were made thanks to the initiative of former Opposition leader Simon Busuttil who had triggered a magisterial inquiry. For the rest it is mostly the small fry who are being prosecuted. Old habits die hard. We reached a stage whereby somebody has to bell the cat. Failure to do so may only bring more trouble and turn the grey clouds to pitch black.