Malta: EU island of impunity and fear
By Andrew Rettman, EU Observer, 12. Jan, 2018
Jan 13, 2018 - 1:28:33 PM
Corruption allegations are not being properly investigated in Malta, MEPs have said, highlighting a case on EU passport sales and a top official.
Malta's Financial Intelligence Analysis Unit (FIAU), a government agency, wrote two reports in 2016 on Keith Schembri, the chief of staff of Maltese prime minister Joseph Muscat.
The FIAU said it had "a reasonable suspicion of money laundering" by Schembri of kickbacks from sales of Maltese EU passports.
It said three Russian passport applicants had paid €166,000 via offshore firms into Schembri's account in Pilatus Bank, a shady Maltese lender.
The information was corroborated by the so-called Panama Papers leak.
But neither the police nor Malta's attorney general ever launched investigations into the FIAU dossiers.
Some magistrates were tasked to look into it, but the MEPs said this amounted to making it go away because "they [the magistrates] can take years to come to any conclusions".
In the meantime, Schembri, "by being kept in office, may be continuing criminal activity" and was contributing to a "perception of impunity" in Malta for white-collar criminals, the MEPs said in a report out on Thursday (11 January).
The eight MEPs filed their conclusions after visiting Malta last November to look into the murder of an investigative journalist, Daphne Caruana Galizia.
The EU mission included Portuguese socialist Ana Gomes, German green Sven Giegold, and Romanian conservative Monica Macovei, who used to be an anti-corruption crusader in her country.
Their report was not binding, but it urged the European Commission to assess whether Malta's EU passport-sale scheme went "against the security of the European Union, fomenting corruption, importation of organised crime and money laundering".
They also put political pressure on the European Central Bank and the European Banking Authority to investigate whether Pilatus Bank was fit to have a licence to operate in the EU.
The bank is owned by Seyed Ali Sadr Hasheminejad, an Iranian-born man, who holds a passport from St Kitts & Nevis, and who lives in Dubai.
Ali Sadr is linked to an embezzlement case in Iran, while Pilatus Bank's entire capital, according to a whistleblower, is based on the deposits of "two or three" Azerbaijani clients.
When the MEPs visited Malta last year, Schembri and Muscat read out boilerplate statements denying wrongdoing.
The attorney general, Peter Gretch, told the EU delegation it was up to the police, not up to him, to have initiated an investigation into Schembri .
But that was not true, because under article four of the Maltese Prevention of Money Laundering Act, Gretch could have instructed the police to start a criminal investigation.
The police chief, Lawrence Cutajar, told the MEPs he had "limited competences" to act on Schembri because the FIAU reports did not give grounds for "reasonable suspicion".
But that was also not true, because under Maltese law the police are free to investigate any kind of tip-off.
The fact that Gretch, the attorney general, is at the same time an advisor to the Muscat government, and that Cutajar owes his police chief's job to Muscat undermined their credibility, the MEPs noted.
The Schembri case was just the tip of an iceberg-sized problem, however.
The attorney general and the police looked the other way on an FIAU report linking Malta's tourism minister, Konrad Mizzi, to passport-sale kickbacks, offshore firms, and Pilatus Bank.
They looked away on allegations by a Pilatus Bank whistleblower that Muscat's wife owned an offshore firm called e-grant.
They also looked away on corruption allegations by the FIAU and by the EU's anti-fraud office, Olaf, against a Maltese former EU commissioner, John Dalli, who recently got a job as Muscat's advisor.
The police, which has just one financial crime specialist, conducted a "low number of investigations and prosecutions in relation to money laundering and corruption allegations" in general, the MEPs said.
"Very few of the 425 corruption cases investigated by the Permanent Commission Against Corruption had resulted in criminal proceedings," they noted.
Conflicts of interest was also a glaring problem in Malta, the MEPs said.
They said the magistrate looking into Schembri money-laundering allegations was married to a Muscat government MEP.
They also noted that the police chief conducting the investigation into Caruana Galizia's murder was married to a minister in the very same Muscat government that Caruana Galizia had accused of corruption.
The MEPs spoke of a "culture of fear" for investigators in Malta alongside the "culture of impunity" for criminal suspects.
Caruana Galizia died in a car bomb last October amid her investigations into allegations of Muscat-circle money laundering, among other issues.
A former police chief and a former FIAU chief mysteriously resigned in 2016 after trying to press for investigations into the same topic.
The Pilatus Bank whistleblower, a Russian woman called Maria Efimova, who made the allegations against Muscat's wife opted to speak with the MEPs "from an undisclosed location" after having "decided to flee Malta, fearing for her personal and her family's safety."
Jonathan Ferris, a former Maltese police and FIAU sleuth, who also looked into the Muscat-wife allegations, told MEPs he was fired when he refused to testify against Efimova.
He has "applied for whistleblowers' status under Maltese law," the MEPs noted, adding: "Mr Ferris said he feared for his family, but did not get police protection".
Source: Ocnus.net 2018