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Corruption Continues to Course Through Malta

In March, Robert Abela, Malta’s prime minister, strolled to reelection granting the 44-year-old another term in office. With Uber set to roll out operations across the nation in the coming weeks, a health care cooperation agreement being signed with Cuba, and Ridley Scott starting production of his new Napoleon biopic, it might appear that business is booming on the Mediterranean island. However, this does not tell the full story. The validation of a regime that has often found itself embroiled in corruption scandals is a damning indictment of the Maltese political system and all businesses great and small would be best advised to steer clear.

Malta was placed on the FATF’s greylist last year, a badge of shame for countries that find themselves on the list as it is considered the most trusted judge of financial crime in a nation. The Maltese government has also clashed with the European Union over its golden passport schemes which have been a window for Russian money and influence to seep into the Bloc. The EU has looked to clamp down and ban the schemes across Europe but Abela has placed money over morals and resisted these calls.

Abela’s government is now reportedly looking at ending the schemes, no doubt working behind the scenes to develop another way to attract foreign investment. Malta has become a playground for Russian oligarchs and financial criminals in recent years and this will not disappear overnight. Whether greylisted or not, the culture of impunity among the existing political elite will continue to undermine the country’s economy and financial system for as long as Robert Abela continues to reign.

Any thought that Malta had begun to change for the better was quashed earlier this month when Laura Codruţa Kövesi, the European Union’s first chief prosecutor, launched a scathing indictment on the country’s institutions. The European Public Prosecutor’s Office, set up last June, is tasked with cracking down on financial crime and fraud in the EU. Of the states that have signed themselves up to the watchdog, Malta is the only one to not have opened any investigations into financial crime or fraud. This is in contrast to the 576 total cases opened across the other participating states. This has led Kövesi to demand that the watchdog’s rules be revised.

Having met with the National Audit Office, the Commissioner of Police, the Attorney General, and the Financial Intelligence Analysis Unit, Kövesi said she was unable to identify which Maltese institution was responsible for detecting financial crime during a visit to the island in October. According to Kövesi “all of them said: ‘it’s not me, it’s them.’”

This confusing system of obfuscation is indicative of the island’s impunitive elite, who face no ramifications for their inaction on crimes that are swindling the Maltese people. Malta’s black economy was reported to be worth some 20% of the nation’s GDP in 2020.

In the current climate, with the war in Ukraine looming over everyday life, it is a wonder why any sound-minded party would choose to do business in a country that houses Russian oligarchs and their yachts. During the election campaign, it was revealed that Abela and his wife were personally involved in the issuance of passports to wealthy foreigners and that Abela had lent out his villa to a Russian oligarch who was applying for one.

The latest development on Malta’s golden passport racket is that Identity Malta, the country’s passport office, is being investigated for links to a real estate company. Between 2015 and 2018, officials at Identity Malta passed internal details about wealthy foreign applicants to the golden passport scheme to a specific real estate agency. Real estate agents were then put in contact with the prospective passport buyers in order to sell them high-value properties on the island. Officials were paid tens of thousands whenever a sale went through. The officials reinvested the money in other assets to avoid the banking system, thus avoiding suspicion. The golden passport schemes have become ingrained into Malta’s economic system, kicking its addiction to Russian money will be a painful experience for many on the island.

Malta’s property market has long been rotten so this comes as no surprise. Robert Abela himself has been involved in an illicit property deal with an alleged kidnapper, Christian Borg. Borg, whose luxury purchases include sports cars and exotic big cats, was given a lucrative contract by the Maltese transport ministry just days after Abela won reelection, no doubt a handout to his good friend. Malta’s transport minister this week denied knowledge of legal proceedings against Borg which is frankly ridiculous given Borg’s criminal charges and links to the prime minister have been a prominent story in Malta this year.

Malta last week had yet another run-in with the EU as the Bloc sued the country over its circulation tax. The EU had previously requested that Malta amend the legislation in 2021 but the country has not complied, prompting legal action. Brussels has also named Malta’s justice system as one of the slowest in Europe, especially for money laundering. On many fronts, Malta is failing the EU.

Malta is the EU’s rotten apple. Abela is obstructing the country’s ability to heal its political and financial systems by continuing to protect himself and his friends from accountability. Any company considering doing business on the island must surely reconsider or risk leaving their reputation in tatters.