Someone left the tap dripping...

When politicians talk about the ‘trickle-down effect’, it is normally an allusion to that (highly debatable) economic theory, which holds that the disproportionate wealth enjoyed by the celebrated “one per cent” will eventually – magically – leach its way downwards through cracks in the system… until an infinitesimal fraction of it might one day be enjoyed by the remaining 99.

I won’t go into the merits of this argument from a purely economic perspective. But I have noticed that the same theory has applications and implications that go well beyond the mere distribution of wealth.

For instance: the same ‘trickle-down effect’ theory can be applied to the spread of information, too. As with wealth, information can broadly be described as a commodity controlled by a very, VERY small minority in any given country. I don’t know if it mathematically works out at “one per cent”... but it’s probably close.

Governments, secret services and such like have access to all sorts of information the rest of us may never get to know about. I like to think of it as ‘dark info’ – along the lines of ‘dark matter’ in Physics… only the adjective is more appropriate in this context, because (as a result of failure to share this information), the “99%” is literally and deliberately kept in the ‘dark’.

Sometimes, bits and bobs of this ‘dark info’ may leach out through various cracks in the system. Investigative journalism accounts for many of those cracks in most countries, but there are other sources: whistleblowers, Wiki-leaks, articles of legislation such as the ‘Freedom of Information Act’… sometimes just plain old accidents, like a minister letting something slip during a live interview.

The bottom line, however, is that – as with the distribution of wealth – the system seems permanently geared up so that the ‘one per cent’ always gets to retain its absolute control over the flow of information. And all the ‘leaching methods’ I mentioned above actually serve a useful purpose to the powers that be… they create the illusion that the ‘99%’ will eventually (magically) get to know all the stuff that is actively withheld from public view. So it all balances out in the end, and everyone’s happy.

Right? Yeah…

The trouble, however, is that the effectiveness of this ‘trickle-down’ theory is just as questionable here as with economics.

Take the ongoing revelations surrounding Konrad Mizzi’s Panama-New Zealand trust fund, for instance. One question that is pertinent to ask at this stage is: why are we even talking about it at all? What factors led this previously hidden state of affairs to be slowly leached out, where it could eventually infiltrate the public domain?

Well, we can safely exclude that Konrad Mizzi himself volunteered all the information at the appropriate time (i.e., by declaring the assets in Parliament, as it seems he could very easily have done at any point since the fund was set up last year) because... he didn’t. In fact, had details not been circulated on the social networks over the last week, it is almost certain that he wouldn’t have volunteered any information at all, with the result that… we wouldn’t be talking about it right now, would we?

This in turn points towards the ‘system’ in which these cracks have appeared. As I write this, details of the Mizzi family’s pan-galactic asset-control trust are still slowly leaching out, drip by drip by drip. We are told that “in 2014 [Konrad Mizzi] and his wife Sai Mizzi sought advice on asset management and last year opened a trust”; that the Mizzi family wanted to “protect [their] assets and will ensure [they] realise a fair rate of return”… in a nutshell, that Mizzi wanted to pay the lowest tax possible on the wealth he had accumulated over the years. So he shopped around for the most favourable international conditions possible.

Fair enough, I suppose. Tax avoidance is not the same thing as tax evasion; and I guess that ‘trust’ is not the same thing either, when it comes to trusting your own country’s financial regime with your own hard-earned cash. 

It only starts looking decidedly pear-shaped when you realise that this New Zealand-based trust fund also operates a “dormant company” in Panama. 

“This company has never been used and has no assets or liabilities,” Mizzi said (significantly, however, only after this particular rabbit was pulled out of its Panama hat). “This pre-established shell company, which has never traded, was acquired off-the-shelf in 2015 from the service provider…”

Hmm. OK, let’s not jump the gun here and simply assume – though to be honest, it’s a difficult assumption to avoid – that this mysterious Panamanian entity is one of several ‘ghost companies’ in various parts of Latin America, routinely used by financial asset managers to ‘hide’ their clients’ assets (thereby circumnavigating various taxation regulations).

The immediate problem here is not so much that Mizzi’s revelations constitute anything directly illegal (unless you count the failure to declare such assets in Parliament, to which I shall return in a sec). Until it can be proven beyond doubt that this company – and any others that may or may not come to light in future – was indeed used to evade tax, this possibility has to go down as mere speculation. 

The problem is that the whole set-up looks downright suspicious… and surely, a man of Mizzi’s intelligence would have realised this from the very outset. And this brings us back to the question of ‘dark info’, and its habit of ‘trickling down’ somewhat unexpectedly every now and again.

Strange as it seems to me, my reading of the situation is that Konrad Mizzi didn’t actually expect the existence of this set-up to ever become known. Either that, or he assumed – naively – that an eventual declaration of such assets in parliament (“at the appropriate time”) would be enough to dispel all suspicions.

I don’t know which interpretation (if either) is correct, but what this indirectly also implies is that the system of information control – in this case, the declaration of assets of Parliament – is severely flawed. And unless I am mistaken, the Labour Party (of which Mizzi is now deputy leader) had pointed out the glaring flaw at various points while still in opposition.

This, for instance, is Joseph Muscat during a television broadcast at the height of the March 2013 campaign – on Valentine’s Day, to be precise – when he was still opposition leader.

“Austin Gatt has just admitted that he has a bank account in Switzerland.” [Pause for dramatic effect] “This is something that, when you go through Gatt’s declaration of assets in parliament […] nowhere will you find that he ever specified the existence of this Swiss bank account” […] “Nowhere in the world will you find a member of parliament who holds an account in a Swiss bank, without feeling the need […] to specify it in his declaration of assets…” 

Again, I see no point in asking whether Gatt’s ‘oversight’ (for want of a better word) in 2013 was more or less serious than Konrad Mizzi’s analogous oversight in 2016. The answer to that question depends largely on the extent of what we haven’t yet been told in the latter case… which in itself underscores why the real issue, at this stage, concerns transparency.

Speaking of which… back in 2013, Joseph Muscat clearly considered the failure of a senior Cabinet minister to declare his overseas assets to be a cause for concern. He even said at the time that “In my opinion, this is one of the things that is most seriously worrying the people today…”

The people he referred to in that televised press conference went on to elect Muscat’s party by a landslide, specifically on the promise that all such clandestine operations would become a thing of the past. 

This, more than the trust-fund itself, is the crux of the matter. It hasn’t faded into history, as promised. We still rely on the discretion of individual ministers to actually live up to their own promises, and deliver the levels of transparency they themselves promised only three years ago. There is, in brief, no functional machinery that forces MPs – who, let us not forget, are ‘Politically Exposed People’ and therefore cannot expect to be exempt from public scrutiny – to be candid about the full extent of their private affairs.

And of course, it doesn’t help much that we can’t trust the Opposition in this regard, either. After all, it wasn’t just Austin Gatt who ‘forgot’ to declare a Swiss bank account when still a Cabinet minister. Ninu Zammit and Michael Falzon were also cited in the same Swiss-leaks incident. 

Nor is it just Joseph Muscat who has contradicted himself on this issue in recent years. Already, the Konrad Mizzi revelations have spun into the usual, predictable vortex of political hypocrisy, with Beppe Fenech Adami even claiming that: “it’s unethical for a government minister to create a trust and open a company in Panama while serving as a minister, its totally unacceptable and the Code of Ethics makes it clear that ministers must declare everything.”

I don’t recall Fenech Adami expressing such concerns with ethics and disclosure at a time when three of his Cabinet colleagues had been exposed over entirely analogous revelations. Do you?

All this points to an even deeper malaise, which this time has little to do with either Konrad Mizzi’s trust fund or Austin Gatt’s overseas account. Since the last election campaign, there has been an illusion – fanned by both sides – that Malta has somehow ‘matured’ in recent years, and now longs for a culture of greater accountability at all levels. 

All horsecrap, I’m afraid. What the above scenario clearly illustrates is that Malta has simply remained the good old tribal, immature country it has always been; where half the country insists on transparency only when the other half is in power, and vice versa.

Today, we see Labour-friendly journalists and bloggers (a new species, by the way, and not terribly promising at the moment) falling over themselves to justify the unjustifiable. What do all think we’ll see if the Nationalist Party gets back into power any time soon?

Why, the same goddamn thing, of course, only with the shoe on the other foot. It will be PN-friendly journalists and bloggers covering up for their political masters, while their Labour counterparts fume and seethe over all the maladministration issues they had defended just as valiantly in their own day.

And all along, the tap keeps drip, drip, drip, dripping in the background…