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Panama Papers | Muscat wants united front on tax sovereignty, Busuttil wants Mizzi’s and Schembri’s heads
Joseph Muscat won’t sack minister and right-hand man unless audits reveal hidden cash • Busuttil accuses Konrad Mizzi of devising set-up to take ‘bribes’
Last updated on 4 April 2016, 8:06pm
Matthew Vella
Matthew Vella
5 min read
Joseph Muscat is under pressure over energy minister Konrad Mizzi’s offshore company in Panama he set up
Prime Minister Joseph Muscat addressed the House of Representatives at 6:30pm on Monday night, to say that he will not be sacking his chief of staff Keith Schembri or energy minister Konrad Mizzi over secret offshore companies they set up in Panama to manage their offshore trusts in New Zealand.
Muscat took comfort in the fact that Mizzi had taken the step to declare his NZ trust, a claim Mizzi repeated in the House as he insisted that he had been truthful about his business affairs.
But Opposition leader Simon Busuttil railed against Mizzi, saying he had been economical with the truth when he did not declare his Panamanian firm, which was only revealed in the Maltese press weeks ahead of the international Panama Papers exposé, by Malta Independent columnist Daphne Caruana Galizia, whose son Matthew Caruana Galizia is one of the members of the International Consortium for Investigative Journalists that led the revolutionary leak of Mossack Fonseca papers.
Panama Papers | Konrad Mizzi faces House of Representatives
While Muscat paid lip service to the ICIJ’s work as a “strong signal in favour of transparency” and said the media played a strong role in making the world a better place, his concern was focused on the effects Panama Papers would have on tax regimes like Malta’s, now under pressure by the European Commission’s plans to spike tax laws that favour BEPS, or ‘base erosion, profit shifting’ by companies seeking lower taxes on profits.
Malta is one country that guarantees up to 85% rebates on tax paid by non-domiciled shareholders on their dividends.
“Malta is not an offshore centre, and our system is EU-approved and in conformity with OECD standards. But the pressure is clear on everyone,” Muscat said, saying thousands of jobs depended on financial services.
“So my first priority is to keep the financial services sector strong... the attack on our tax sovereignty will become stronger, as and when happened during Offshore Leaks, Swiss Leaks and Lux Leaks. The national challenge before us is that partisan games will take us nowhere. Our position should be clear, internationally, that Malta is a transparent jurisdiction.”
Muscat said that the Commissioner of Inland Revenue had requested both the ICIJ and the Panamanian government for information on some 676 companies that were registered in Panama from Malta, which have 59 beneficiaries and a total of 277 shareholders.
“As the ICIJ itself said, it does not mean that anyone who has such a company has broken the law, and there are valid and legal reasons to have a similar structure. The tax commissioner will be reviewing all the cases and investigating as required.”
Muscat insisted that Konrad Mizzi had said the truth on his business affairs, that he was undergoing a tax audit, and that the same audit was being carried out on his chief of staff’s set-up. “As I have said before, if these people have not said the truth, or that there are bank accounts with ‘millions’ hidden in them as alleged by the Opposition leader, they will be sacked.”
Muscat said he was adamant to take a decision only once the investigation is over.
“My regret is that these affairs have stolen the limelight from the achievements of this government, whose social revolution, economic growth and civil liberties are without precedent... a fact commended by The Economist newspaper.”
Reply to statement by Simon Busuttil
Opposition leader Simon Busuttil’s reaction to Muscat’s ministerial statement was that it was “a surreal moment” to have the prime minister talk of transparency and the stability of Malta’s financial services system when both Mizzi and Schembri were the owners of secret companies in Panama.
“Prime Minister: do what is best in the country’s interest. Sack Mizzi and Schembri, in the name of your constitutional oath,” Busuttil said.
The PN leader attacked Mizzi over having been economical with the truth when he first only declared owning a New Zealand trust, but his Panamanian offshore company, Hearnville. And he also raised the suspicion that Mizzi’s trust would receive brokerage fees, saying that this was tantamount to receiving bribes.
“Mizzi and Schembri needed to set up a bank account to receive monies for brokerage fees. When you are a minister and chief of staff and you are accepting any brokerage, this is bribery: what are these brokerage fees for if anything?”
He accused Muscat of evading the media, and said Mizzi lied to the Commissioner of Inland Revenue because by not declaring his foreign trust, and disputed his claims of having just €92 in assets in his offshore company.
“You said you would sack an MP found on the Swissleaks list… so why don’t you do the same on the Panamaleaks? Why haven’t you yet swept Mizzi and Schembri away?” Busuttil said.
He also took issue with Muscat’s call for a unified front to counter the European Commission’s onslaught against tax regimes rewarding profit shifting. “The damage you and your finance ministry have done, with this saga, by not defending the financial services industry, is enormous… you have damaged Malta’s negotiating strength when you will have to face Brussels calling you on to change our financial system and our tax system. How will you defend our country?”
Matthew Vella, a freelance journalist at MaltaToday, was formerly executive editor at Malt...
“Why haven’t you yet swept Mizzi and Schembri away?”