Secrecy must be attacked

Leaks are par for the course in the media world, and - rightly or wrongly – they are part of the lifeblood of this profession. Secrets must betrayed, if they are to benefit the public interest by lifting the lid on wrongdoing.

In this sense, we reject the spirit communicated by minister Manuel Mallia in Parliament, where he argued that whistleblowers, or those who make use of leaked information from FIUs, could be criminalised.  Mallia called for an investigation into claims that the Nationalist Party had received or seen FIAU reports; and if so, how they were leaked, and by whom. The Opposition, he argued, was encouraging people to ‘commit a crime’ when it boasted of being in possession or having seen reports by the FIAU (Financial Intelligence Analysis Unit).

This sort of reasoning is contradictory, coming from a government that sets much store on having introduced the Whistleblower’s Act. But much more pertinently, it overlooks the actual reason for the leak in the first place.

The confidentiality of FIAU information is something mandated by the lawmakers who brought into force the Anti-Money Laundering Directive (AMLD), which empowers member states to provide penalties for the breach of confidentiality. As such, the penalties enforced by the FIAU on money laundering information are not in question.

But when FIAU information was leaked, this information was communicated out of its protected department because of the suspicion that a proper police investigation into the Panama Papers was never going to be launched. This is the crux of the entire matter, and the root of many problems this country is dealing with at this time.

This was also the spirit of stories published by this newspaper when money laundering allegations flagged by police investigators in the CapitalOne case were conveniently ignored by police superiors. The events occurred under different administrations, but the underlying issue was the same. It concerns a reluctance of Malta’s institutional watchdogs to ever properly oversee the hand that feeds them.

Under circumstances where these institutions cannot be trusted to undertake their responsibilities, information leaks are not only bound to happen... but they have to happen, if the institutional rot is ever going to surface. Minister Mallia ought to be aware that there is an entire body of European case-law which determines that professional secrecy cannot always be invoked in such cases.

Moreover, his approach is discordant with his own government’s claims to want to reach to the bottom of the ongoing investigations into its own alleged maladministration. Either one wishes to expose the truth, or one wishes to keep it hidden. Threatening to criminalise those who did the leaking, and those who benefitted from it, strongly suggests that the real concern is the latter.

Meanwhile, the institutionalised rot which keeps the government from ever being properly scrutinised remains very firmly in place. Unless the Malta Police Force is reformed from the ground up - with new leadership, with resource investment and salaries that reflect the skill-set needed for the force’s improved effectiveness – it will continue to fail in prosecuting the powerful and State functionaries when they abuse of their positions.

Politically, too, reforms are needed. It is scandalous, for instance, that all government functionaries, in Cabinet and beyond, who were revealed in the Panama Papers still retain their positions in the Labour administration. Small wonder the Prime Minister finds it so hard to convince the international press that ‘the rule of law is supreme in Malta’. There is clearly one law for Malta, and another for its government.

But the underlying issue goes beyond politics. With the last days dominated, in part, by the latest leak of tax data in the Paradise Papers, Malta’s role in enabling the global system of kleptocracy is not being given the rightful space it deserves.

The social media commentariat looks barely interested in the implications of global tax avoidance; how it punishes countries and the poorest, while the rich and global elite can move their cash around freely to find the lowest tax rates possible.

There is nothing illegal about this, but the ethics of ‘tax-shopping’ have been questioned. The entire wealth investment industry – the industry that caters for the likes of Bono, Shakira, Isabel dos Santos, SOCAR, Odebrecht and so many others in Malta – is a small part of the offshore world. Their job is to reduce the tax base of sizeable profits which were generated overseas on legitimate (and also illegitimate) businesses. Those with the most cash can employ secrecy with great ease, through the use of trusts, and create more layers of secrecy as they employ individual tools provided by various jurisdictions.

The Paradise Papers reveal yet again the tip of the iceberg on global kleptocracy, but unless there is a concerted EU-wide effort at reining in questionable tax practices, nothing will change.

This is also why secrecy has to be attacked, registers must reveal real ownerships, corporate services firms cannot be used to hide ownership, and taxation should also be levied according to revenues generated inside a country – so that it may reflect a proper levy on the profit that is generated within the borders of a national market.