Good governance cannot be an empty pledge

If nothing else, the unsightly revelations concerning Energy Minister Konrad Mizzi’s (and also the prime minister’s chief of staff, Keith Schembri’s) overseas assets has highlighted the urgent need for a proper reform of financial regulations, especially concerning ministers, members of parliament, and other politically exposed persons. 

On an arguably more hopeful note, the same controversy has also heavily underscored a genuine thirst for better governance among the population at large. It bears repeating that Labour successfully rode a wave of discontent with the former PN administration, after promising a ‘new way of doing politics’ that never quite materialised.

Labour, too, had promised a political ‘earthquake’ that would set new standards in public administration. Regrettably, this promise has not been kept either.

It is of particular significance that the reaction among Labour grass roots support has been one of anger and disappointment. Admittedly, part of this anger may be directed at the sheer damage this episode has undeniably done to Labour’s re-election chances: as one PL supporter told our sister newspaper Illum, the ‘certainty’ of a second consecutive victory has evaporated. 

This in turn heavily emphasises the fact that the Maltese electorate has undeniably matured since the days when political allegiance was viewed as a matter of mere tribalism. There are now very clear expectations of how an elected government can and cannot behave; a warning shot has been fired across the bows of Prime Minister Joseph Muscat’s ship of government. It is not a warning he can afford to ignore. 

Indeed, the government appears to only now be taking stock of the seriousness of the situation. Mizzi’s declaration that he will dissolve the Panamanian offshore company following an independent audit is both welcome, and an important and swift step towards resolving worries concerning fears of secret bank accounts abroad and tax avoidance.

But on its own, this assurance does not go far enough. Certainly it does not bring about the systemic changes that are so clearly needed. Nor does it offer any guarantee that Mizzi may not simply open another company elsewhere; nor even does it address popular perceptions that other ministers and MPs may have similar arrangements, but have so far not been ‘caught’.

Above all, it does not address the root cause of the problem, which transcends the individual assets owned by individual public figures. This episode has greatly underscored the fragility of Malta’s system of checks and balances in such matters. And unless the structures that guarantee good governance are strengthened and empowered, the underlying issue can only be expected to keep returning under different guises.

Above all, we need to tighten up the way ministers and MPs declare the full extent of their wealth. Hitherto, the system has been limited only to a declaration in parliament that has traditionally been taken on trust. Regrettably, the seriousness of this exercise has often been undermined in the past… there have even been individual MPs who ‘declared’ a list of household pets.

Much more seriously, there have been notable ‘omissions’ and ‘oversights’ that would (in other jurisdictions) carry criminal penalties at law. Mizzi is hardly the first cabinet minister to have failed to declare significant overseas interests: last year it was revealed that at least three former Nationalist ministers had failed to declare overseas bank accounts, sometimes in equally secretive foreign jurisdictions. 

Such a laissez-faire attitude is perhaps unsurprising, given how weak and toothless the present set-up is. If the political establishment is to restore the trust it has lost over this issue, there must be a reform of the system to guarantee full transparency and accountability.

The declaration of assets must be reworked in such a way as to commit members of parliament to submit bank statements showing the state of their bank accounts at year-end; annual valuations of any properties they may own; a list of their private modes of transport, as well as the year of purchase and at what price; all sources of income received apart from parliamentary honoraria or professional fees; insurance policies; and a statement of their company shares’ value at year-end.

Given that all such persons are by definition politically exposed, the same requirements should also be expected of spouses and close family.

The declaration must also include gifts worth more than €500 and gifts received from other States on official visits should not be kept by ministers, MPs and political appointees.

Secondly, the National Audit Office should be tasked with an audit of offshore companies held by all MPs and ministers, and explain to the public how individual financial arrangements could allow our elected politicians to avoid tax or deferring it by parking their wealth offshore.

The present controversy affords the NAO an excellent opportunity to explain to the public the effects of offshore finance, and how this allows the wealthy to avoid tax or avoid disclosing from where they are receiving money.

Thirdly, if the Opposition is seeking further answers it should use its powers in parliament to submit Konrad Mizzi to a grilling by the Public Accounts Committee, with the same right accorded to government MPs to call its own witnesses and ask Mizzi questions. Opposition leader Simon Busuttil has responded by announcing a public protest next weekend. This is all well and good, but it does nothing to bring about systemic changes that are already within his reach.