Time to change tack

Sometimes I wonder if politicians ever learn, in contrast to their electorates. Or whether they ever give up making the same mistake. PN heavyweight Mario de Marco returned to the political fray from the summer lull by addressing a press conference on the report from the Council of Europe’s Moneyval on Malta’s enforcement of money laundering rules and prosecutions on financial crime.

Now let’s just stop for a minute.

Mario de Marco served in a government which in the past tolerated bad practices on banking and financial services. A lawyer by profession, and one of the best paid of all MPs, declaring incomes of over €300,000 annually, a chunk of which also comes from a Malta Enterprise consultancy, which he retains in spite of all the criticism meted out to government about jobs for the boys; as well as consultant to some of Malta’s biggest of names when it comes to business and development. And… he sits on the Strickland Foundation, which is a main shareholder in the publisher of The Times, where his role in the Adrian Hillman saga remains shrouded in secrecy.

As a lawyer he has also naturally worked with countless Maltese and foreign companies who have benefit from our generous tax avoidance system, practices which are legal yet also frowned upon by a certain European current. For indeed, Malta’s problems with money laundering and banking shortcomings also find their roots in the aggressive financial services platform Malta embraced in the 1990s.

It was an economic cornerstone embraced by both political parties, and all the fellows in law and accountancy made a killing from the business, save in the knowledge that the legality of it all need not make them stop to think about how morally acceptable such ‘tax planning’ structures are.

When Malta negotiated EU membership, the Nationalist Party single-handedly, without any help from Alfred Sant’s anti-EU Labour party, acquired special recognition for its tax rebate system, which is effectively a tax avoidance system designed at helping foreign companies get rebates on tax when their profits are remitted to a tax-resident company in Malta.

The Moneyval audit is certainly the metastization of Panama Papers and the Pilatus Bank fallout, scandals whose aftertaste lingers on. But it is also more than that, as this newspaper has also argued time and time again. It is part of a global and European crackdown on the opacity of tax regimes, an opacity which has allowed countries like Luxembourg to carve out sweetheart deals for chosen companies, or Ireland to give American tech giants zero-tax on profits – the list goes on, and you will find American states, the Netherlands, Cyprus, and so many other countries attempting to skim off cash from other countries by giving their multinationals generous tax rebates.

Certainly, it would be great if the same vigour for scrutiny  was shown with everyone and in the same measure, and without political agendas. Because Moneyval should not only concern Malta but other countries.

Having said this, it is clear that Malta does not have the same cohesive defence cohort other countries have when it comes to defending our tax laws.

That is, it is one thing having an agenda in favour of tax harmonisation and against these legal tax avoidance structures.

But if you form part of a political class that is invested in all this tax sovereignty malarkey, it is hard to paint yourself as some different breed of politician. And I think some MEPs in Europe have certainly learnt this of Nationalist politicians, whose commitment to European scrutiny is only limited to their political ends.

As Mario De Marco cried foul and asked for political responsibility to be shouldered, his colleague Kristy Debono nodded in complete approval. Needless to say, nobody recalls that Debono’s real job is with the Gaming Authority, where she hardly reports for work and still gets a pay cheque at the end of the month; she is certainly aware of the level and seriousness of the due diligence meted out to gaming companies setting up base in Malta.

But for De Marco and Kristy Debono it is of no consequence that, for example, the ills of Bank of Valletta today are the fruit of what happened under the captainship of boards that were politically appointed under a Nationalist administration.

Take the €363 million Deiulemar case against BOV, the mis-selling of complex financial products to retail clients when the bank was led by a PN-appointed chairman and CEO Tonio Depasquale and Charles Borg before 2013, the lax custodianship of so many funds; or the Malta Financial Services Authority run for twenty years by Joe Bannister, appointed way back in the days of John Dalli and who served as supreme lord at the MFSA until only recently – he was responsible for the relaxed approach to implementing the required due diligence to new companies and financial institutions.

The PN’s presser seemingly wants everyone to believe that the ills and pains of our system are the doing of Edward Scicluna, a minister who is a stickler for correctness.

It is not hard to say that De Marco and Debono have little credibility when they talk of financial correctness. Their own leader’s credentials (Adrian Delia) on this matter are so badly dented, as a result of his own legal career, that it behoves the PN to truly reconsider its political approach to the issue of financial services and the way it kow-tows to the European bludgeoning of the tax system they love.

Only this week, Spanish MPs of all colour and hue wrote in droves to Le Monde, countering claims by the French newspaper that there was no democracy in Spain. The whole EPP jumped in and supported the Socialist government of Sanchez, refuting the observation by some easy-going philosophically inclined opinion writer who managed to get his ‘damning’ article on the front page of Le Monde.

I cannot subscribe to the tax avoidance system worshipped by the Maltese financial industry and political class, but were I a politician whose part-time earnings were dependent on clients in the financial services world, I would use my head – and not my heart – to come together with my adversaries to defend my little patch.

De Marco thinks differently, believing that this kind of schizophrenia in politics is understood by the public.

He did this when he served the DB Group while his party spat venom against the business group paying him for his services on the City Centre project.

He is not alone when it comes to this; many MPs from both sides of the political spectrum suffer from this hypocritical streak. The point is that today, both political parties need to have a common stand on the financial and banking sector, just as the PN and PL had in the 1990s with John Dalli and Lino Spiteri spearheading their two parties to come together on financial services.

De Marco, more than anyone else, knows that the banking sector and the MFSA and the FIAU have raised their game. Regulation is not a second thought but a primary concern. Today Blockchain companies need a €750,000 deposit to start the process of due diligence in Malta. They can do the same for €2,500 in one of the Baltic States. Yet no one, it seems, is crying wolf.

It is probably the best time for some of our politicians and those that still support them to consider changing tack and realising once and for all that our worst enemy is none other than ourselves.