Americans put the heat on ministers with Moneyval test

Cabinet ministers have confided about growing pressure from the American government over Malta’s fight against money laundering, in a bid to extract security concessions from the island-nation.

In a confirmation of various discussions that were held in Cabinet, various ministers and regulatory chiefs who spoke to more than one MaltaToday journalist, confirmed that United States embassy representatives have cast a shadow over Malta’s forthcoming Moneyval test.

While the American government only has observer status at the Council of Europe’s Moneyval monitoring body on compliance with international standards on money laundering, it retains clout inside the international Financial Action Task Force (FATF), where the Moneyval assessment will be reviewed.

According to information gathered by MaltaToday, the US government is interested in getting the green light from Malta for a Status of Forces Agreement, as well as winning closer cooperation on intelligence to tackle the problem of arms and drug trafficking at Hurd’s Bank, a security challenge that is high on the American agenda for Malta.

Malta and the United States government are edging closer the SOFA deal, which is key towards enhanced interception of the smuggling routes around Hurd’s Bank, an offshore bank to Malta’s east that is used to bypass US sanctions on illegal transhipments.

Various ministers are concerned that Malta’s problems on money laundering prosecutions, which are needed to pass the all-important Moneyval test that starts in October, could force it to conceded on a red line on the SOFA: the issue of jurisdiction on US personnel based in Malta.

The Americans are said to be insisting on “concurrent jurisdiction”, that is a system where both American and Maltese courts have jurisdiction. But the Maltese are jittery about the demand, a situation that would lead to both parties quibbling over having any prospective criminal case heard in the court they perceive will be most favourable to them.

The US has actively encouraged Maltese requests for United Nations Security Council sanctions against fuel smugglers which also used the national oil storage tanks to store smuggled Libyan fuel; but while sanctions enforcing Libyan embargo rules would grant the US a route to easily board ships it suspects of carrying smuggled oil and weapons, a SOFA would mean having American naval muscle in its backyard to deal with such situations.

Apart from winning greater US monitoring on Hurd’s Bank, the Americans are demanding that the Chinese embassy in Pembroke is, literally, cut down to size.

The Chinese embassy wants to rebuild its headquarters here on a 19,000 square metre plot in Pembroke. The Chinese government had purchased the land from the Maltese government for €7.8 million in 2015 after the decision was approved by both sides of parliament. The Chinese had first approached the Nationalist administration about the desired land back in 2007, requesting a 10,000sq.m are of land. Since then, the size has almost doubled.

Another request in which the US embassy is leaning on the Maltese government is to achieve a favourable resolution to the Steward Hospitals impasse.

Steward Healthcare founder and boss Ralph de la Torre have already locked horns with Prime Minister Robert Abela and health minister and deputy PM Chris Fearne over the future of the hospitals’ project and an agreement signed with former minister Konrad Mizzi.

Steward had a memorandum of understanding that was expected to be followed up by a new contract in 2019, but was never formally signed because of the political crisis that saw Muscat resign.

De la Torre was accompanied by a representative of the United States embassy in talks with Abela and Fearne last July.

The American healthcare company, which stepped in to buy the mysterious Vitals Global Healthcare in December 2017, is insisting on a new contract that gives them more money to run the three state hospitals – up to €120 million annually – and wider berth on default clauses. They had already won concessions from Muscat to ensure Steward gets extra finance to continue operations while in Malta.

The Maltese are already exposed to a new kind of risk on the Steward hospitals’ concession: information received by a magistrate carrying out an inquiry into the controversial public-private partnership, revealed an “escape clause” that would turn any termination of the Steward concession into a government default. The agreement was signed by Mizzi and Steward so that should the hospitals’ concession be terminated by a court of law – for whatever reason, and even if Steward is in breach of contract – such an event would be a government default. That would mean that all debts incurred by Steward would be passed on to the government, with the American company still be liable for a €100 million contractual pay-out for its equity.

One minister who spoke to MaltaToday referred to the influence of the US embassy as being “impossible to ignore”.

“The Caruana Galizia assassination is intimately connected to shortcomings on rule of law, which is itself tied to our Moneyval performance on money laundering. The fact that someone like Yorgen Fenech is charged with the murder, throws light on the Electrogas power plant as well.”