[ANALYSIS] Resignations on 17 Black: Is Joseph Muscat lowering the bar?

Until last week, the only known magisterial inquiry related to the mysterious Dubai company 17 Black, named in connection with Malta’s Panama Papers scandal, was the one called for by former PN leader Simon Busuttil immediately after the general election.

That request for an inquiry is currently under appeal by Joseph Muscat and his men, but it would eventually have to establish whether tourism minister Konrad Mizzi and Keith Schembri should face a criminal investigation. This suggests that the PM was purposely delaying a decision on the only inquiry which would determine whether Schembri and Mizzi should stay or go.

But news confirmed in parliament on Monday that a separate magisterial inquiry had commenced a few weeks ago on 17 Black, has prompted journalists to throw back the ball in Muscat’s court, asking him whether he will now ask Mizzi and Schembri to resign in view that a new investigation was taking place on one of two ‘target clients’ of their Panama companies, from which they were set to receive “€150,000” monthly according to the same Panama Papers emails.

Muscat’s terse reply has been that it is 17 Black as a company, and not Schembri and Mizzi who are being investigated.  

In a legalistic way, Muscat remains consistent to his original script. He will only sack Mizzi and Schembri if an ongoing inquiry being led by police since March, triggers a criminal investigation that focuses on alleged wrongdoing by Mizzi and Schembri. This means that Muscat can continue buying more time, as investigations of money laundering involving offshore companies are inherently complex and also bank on the difficulty of obtaining information from secretive jurisdiction like Dubai.

Is Muscat trapped in legalism?

Surely Muscat’s explanations increasingly sound legalistic and are politically weak, prompting journalists to ask him whether the police will interrogate 17 Black (an offshore company) instead of Keith Schembri.

But this line of questioning risks missing one fundamental point, which is that irrespective of criminal responsibility, Konrad Mizzi and Keith Schembri should resign out of a sense of sheer political responsibility for engaging in offshore business activities.

In short by opening Panama companies, which identified another ‘shell company’ (17 Black) whose ownership is now attributed to Yorgen Fenech (one of the owners of the company providing Malta’s LNG plant and supply) as a target client, their position ceased to be politically tenable as it had cast a shadow on the government’s integrity.

Historical precedents

Muscat may bank on the widespread perception that Malta lacks a culture of resignations.

But even former PM Eddie Fenech Adami, who ignored continuous allegations against some of his top guns like John Dalli, Austin Gatt and Louis Galea, had to act when faced with an Alternattiva story revealing one of his MPs, Lino Gauci Borda, had a UK investment account that he had not declared for taxation purposes. It was too much of a clear-cut case for Fenech Adami to ignore.

John Dalli: forced to resign by Lawrence Gonzi 'for being under investigation'. The police later found the allegations concerning him had been false.

In 2013 Muscat had also expressed shock at Austin Gatt’s undeclared Swiss account noting that “no politician, in any country, has a Swiss bank account which he doesn’t declare in the parliamentary registry of assets.”

While in 2016 Mizzi claimed that his intention was that of declaring his offshore investments, it is doubtful whether this would have included reference to the owner of 17 Black as his ‘target client’.

For since being exposed as owners of two Panama companies, Mizzi and Schembri have also been exposed for actively seeking to open a bank account for their offshore companies, for identifying 17 Black as a target company from which they were expecting income, and finally for having an offshore business relationship with a company attributed to Yorgen Fenech… who has so far not denied owning 17 Black.

Doesn’t this make the case as clear-cut as Austin Gatt’s Swiss account and Gauci Borda’s investment account?

Betraying a promise

Moreover, Muscat continues to ignore the impression given before the 2013 general election that he would raise the bar of political responsibility.  

In fact, only months before being elected, Labour MPs teamed up with PN dissidents to force Lawrence Gonzi to sack Richard Cachia Caruana from the post of ambassador and to have Carmelo Mifsud Bonnici resign as home affairs minister. None of these two faced any criminal proceedings.

In fact, Labour had asked the House to sack Mifsud Bonnici over his failings in justice and home affairs while demanding that he should shoulder “political responsibility” for these failings. Richard Cachia Caruana was effectively sacked for going behind Parliament’s back when he discussed with representatives of other countries how Malta could rejoin the Partnership for Peace.  

Initially Muscat also showed that he had raised the bar while in office, by effectively sacking home affairs minister Manuel Mallia after a board of inquiry found that he had not ensured an official statement about a shooting incident involving his driver, was accurate. Muscat had also accepted the resignation of parliamentary secretary Michael Falzon following the NAO report on the Gaffarena expropriation which raised concern on possible collusion, but had not resulted in a criminal investigation on Falzon.  

The Muscat doctrine

The question is whether lack of action on Schembri and Mizzi has set a new yardstick to assess political responsibility of ministers and other high officials. Does it mean that Muscat will now only take action whenever minister or a chief of staff is criminally investigated?

This seems to be the line of thought of government consultant Robert Musumeci, who argues that if resignations take place before “allegations” are confirmed we would be living in a world where anyone can make up an allegation against their political adversary and force a resignation: a valid point when applied to Egrant when Simon Busuttil expected Muscat to resign over an unproven allegation, but much less so when applied to the confirmed owners of secret companies and confirmed target clients.

Musumeci even went one step further by consistently applying the doctrine universally: “I don’t think Nationalist MEP David Casa should resign just because a former aide claims he has taken cocaine,” Musumeci argued. In fact rather than expecting accountability from Opposition politicos, Labour seems intent on using cases of impropriety involving Opposition members as a counterweight for Panamagate.

Raising the stakes again

Muscat’s difficulties this time around have been compounded by Adrian Delia’s unwillingness to raise the stakes beyond forcefully reiterating his call on Muscat to sack Schembri and Mizzi. In this way Delia did not repeat Busuttil’s mistake of calling for Muscat’s head, giving him the opportunity of accusing him of subverting the electoral mandate.

Instead Delia has kept the ball in Muscat’s court using Egrant to his advantage. “Muscat said he would resign if the Panamanian company Egrant was found to be his. We know now that his chief of staff and minister have a similar offshore company in Panama... so Muscat uses a different yardstick for his men”.

But the same caution was not shown by new activist outfit Repubblika, which in its first public activity raised the stakes by calling for the resignation of the Prime Minister for failing to sack Mizzi and Schembri. Is this call legitimate? Short of proven involvement in Schembri’s and Mizzi’s offshore business activities which is presently lacking, the PM cannot be expected to resign over a political decision to keep Mizzi and Schembri in office.

Such calls may well serve to entrench Labour voters behind their leader’s defence of his two allies, despite any reservations they may have on their actions.