Exotic parrots and red flags

Joseph Muscat’s consultancy contract, with a firm owned by someone involved in a casino that had been given a generous lease extension by the government, is a classic example of ‘revolving doors’. 

Muscat took on the consultancy work with Organicum, a company dealing in exotic parrots, soon after he stepped down as prime minister in January 2020. It so happens that the company’s shareholder, Johann Schembri, is also a key shareholder in Dragonara Casino, that had been given a controversial lease extension by Muscat’s government several months earlier. 

It appears that Muscat took no time to cash in on the business contacts he made while in government. From chief policymaker with the power to influence the fortunes of the private sector, he became chief consultant for businesses that sought his counsel. 

Strictly speaking, there is nothing illegal with this. Muscat is not the first public official to have crossed the Rubicon into the business world, and certainly won’t be the last. 

We’ve had in the past examples of public officials who went from regulators and policy makers to being employed by private companies in the sectors they oversaw - a former senior official at the Malta Communications Authority, who was subsequently employed by a telecoms operator and a political functionary responsible for the introduction of the local warden system who then joined a warden company. 

Each of these cases had raised concerns over a potential conflict of interest, given the privileged public position they previously enjoyed. 

The revolving doors conundrum has never been resolved, and it remains a sticky subject everywhere. In Germany, eyebrows were raised when former chancellor Gerhard Schroeder turned up as a chief consultant to Russia’s state-owned energy firm Gazprom, after bowing out of politics. 

Many other examples abound, including the famous case involving former European commissioner Martin Bangemann, who sparked controversy when he joined Spain’s Telefonica: a company in the sector he was responsible for, as commissioner. 

Bangemann had argued there were no rules dictating how commissioners should behave after their term is over. As such, he could not be prevented from exercising his right to freedom of movement and association in a free market. 

People looking in from the outside are justified in asking whether any decisions, taken by the individuals in their capacity as public officials, were influenced by the prospect of future employment in the sectors they once regulated. 

This is a conversation that this country still needs to have. To eliminate the revolving doors conundrum, with all the negative connotations it brings about, the State would have to be ready to fork out generous transition payments to retiring senior public officials to prevent them, for a period, from joining sectors they once oversaw. 

Curbing someone’s ability to engage in work is an expensive venture but one that could have a positive influence on the credibility of policymakers. 

However, beyond the argument as to whether and how Malta should tackle the issue of revolving doors, Muscat’s consultancy contract with the parrot firm raises far more serious red flags. 

For starters, the Dragonara Casino lease extension was mired in controversy. Although it was approved in parliament in 2019, with the Opposition’s consent - then MP Jason Azzopardi had been the lone voice against the generous terms afforded by government - it raised serious question marks in the private sector, because no public call had been issued for the concession. 

In one fell swoop, government extended an expiring 10-year lease by 64 years; and, in the process, saved the casino company millions in lease payments. 

Muscat has argued that government had no obligation, at the time, to seek parliamentary approval; and yet it still took the issue to the House. 

This is a moot point at this stage, given all we now know about how Muscat’s government handled major public contracts. At least one of these contracts – the hospitals concession – was rescinded by the courts, and another – the Electrogas power station – includes murder suspect Yorgen Fenech as a shareholder. 

Furthermore, having the Opposition’s consent does not make it automatically right. If anything, it points towards the Opposition’s dereliction of duty, by failing to properly scrutinise the deal. 

The very controversial nature of the casino deal makes Muscat’s subsequent engagement as a consultant more questionable. It is more than legitimate to ask whether the lucrative consultancy contract was some form of ‘payback’ to Muscat, for the generous casino lease his government had facilitated. To any right-thinking person standing on the side lines, it certainly seems so: even if Muscat and the company owner have denied this outright. 

But there is another major red flag in Muscat’s engagement by the parrot firm. The company was a loss-making venture, and yet it could still afford to pay Muscat €11,800 per month. These payments started in April 2020. 

In financial circles, lucrative consultancy contracts awarded by failing companies are a major money laundering red flag. This does not mean that Muscat or Schembri laundered money or that the payments were a form of corruption; but the circumstances certainly merit an investigation by those responsible for preventing financial crime from happening.