MEPs want investigations into IIP, Pilatus, Nexia, MFSA, Mizzi and Schembri

The MEP delegation who came to Malta, following the assassination of journalist Daphne Caruana Galizia, to investigate the rule of law has released a damning report calling on the European Commission to investigate or assess the serious concerns raised over Pilatus Bank, Nexia BT, the MFSA, and the IIP citizenship scheme.

The IIP scheme, in particular, is accused of “distorting the Internal Market and attempt against the security of the European Union, fomenting corruption, the importation of organized crime and money laundering.”

The report also calls for the persons perceived to be implicated in serious acts of corruption and money laundering, as a result of Panama Papers revelations and FIAU reports, such as Minister Konrad Mizzi and the Prime Minister’s chief of staff Keith Schembri, “should not be kept in public office and must be swiftly and formally investigated and brought to justice.

“Keeping them in office affects the credibility of the Government, fuels the perception of impunity and may result in further damage to State interests by enabling the continuation of criminal activity,” the report reads.

There are also calls for investigations into the SLAPP lawsuits Pilatus Bank and Henley and Partners imposed upon Maltese media houses.

A change in method for appointment of the Commissioner of Police and the Attorney General has also been recommended.

The Report does not conclude the work of the delegation, who were in Malta between 30 November and 1 December 2017, as further meetings have been requested with Chief Justice Silvio Camilleri, among others. The Mission Report will now be debated at Committee level later in January. Key findings in the report are below:

Pilatus Bank, Nexia BT, MFSA

The recommendations call for investigations by European Banking Authority and the European Central Bank into the licensing of Pilatus Bank.

The report also specifically asked the European Banking Authority to investigate whether the Malta Financial Services Authority (MFSA) is carrying out its duties as a national supervisory authority in view of the fact that Pilatus Bank and Nexia BT are still licensed in Malta, despite the serious allegations both enterprises face.

“The European Banking Authority should also assess whether the MFSA is fully equipped and free from conflicts of interest to perform its supervisory duties.”

It has also been proposed that the functions of Chairman of the MFSA and the function of promoting investments into Malta should be separated.

SLAPP and the media

The European Commission has also be called upon to investigate SLAPP, the practice used by Pilatus Bank and Henley and Partners to silence media houses by threatening them with incredibly expensive legal proceedings in jurisdictions outside the EU, and “actively ensure the protection of media freedom and journalism across the EU by proposing legislation that would curtail these abusive practices.”

Work is also needed to ensure stronger checks and balances in the Maltese legislative framework to better separate powers and to limit possible interference of the Prime Minister in the judiciary and the media; an assessment of media pluralism and independence from political power should be conducted.

Panama Papers and FIAU

The report calls for persons perceived to be implicated in serious acts of corruption and money laundering, as a result of Panama Papers revelations and FIAU reports, should not be kept in public office and must be swiftly and formally investigated and brought to justice.

“Keeping them in office affects the credibility of the Government, fuels the perception of impunity and may result in further damage to State interests by enabling the continuation of criminal activity.”

The Maltese Government should start an action programme against corruption and financial crime and increase the number of investigations and prosecutions.

This should include special units in police and judiciary with sufficient and highly qualified staff.

IIP (Individual Investors Programme)

With regards to the IIP (Individual Investors Programme), the MEPs called on the European Commission to assess its implication on “European citizenship and Schengen Residence areas, for the distortion of the Internal Market and attempt against the security of the European Union, fomenting corruption, importation of organised crime and money laundering.”

There are also recommendations for the Maltese Government to separately publish the list of persons being granted Maltese Citizenship under the Individual Investment Programme and should start an independent assessment of this programme and of the anti-money laundering procedures applied to it.

Whistleblower Act

The Whistleblower Protection Act should be revised to cover workers in the public sector. Mr Ferris should be granted police protection and serious consideration should be given to his application for protection under the Whistleblower Protection Act

“Civil society organisations and any Maltese citizens should be encouraged to provide evidence and bring formal complaints to the Police forces, FIAU and MFSA, regarding white collar crimes and money laundering in Malta, in order to trigger criminal investigations.”

The Police Commissioner and Attorney General

The Police Commissioner should no longer be appointed by the Prime Minister but by an appropriate independent body. Similarly, the veto power of the Prime Minister should no longer exist regarding the nomination of the Maltese Chief Justice.

The AG’s role should also be reformed to separate the role advisory to the government from the role of prosecution.

The Judiciary should also be reformed, namely on the basis of recommendations made in 2013, in order to reinforce the separation of powers and the independence of the Judiciary.

Public sector promotions during elections

The MEPs also said that an investigation is needed over the alleged influence of elections through increased hirings in the public sector, issuance of construction permits and regularisations of irregular constructions, as well as pay increases and promotions in the military.

Money Laundering

The delegation proposed that the European Commission should assess whether Maltese authorities are fully compliant with the European Anti-Money Laundering directive and the Capital Requirements Directive, especially regarding the application of customer due diligence provisions.

Foreign Income

The Commission should also assess fiscal incentives which treat local income of individuals or corporations differently than international income.

David Casa and PL reaction

In a statement PN Head of delegation MEP David Casa said that this damning report is very clear. “Konrad Mizzi and Keith Schembri should be immediately removed from public office and should be swiftly investigated and brought to justice.”

Casa said that, “we need an overhaul of the offices of the Police Commissioner and the Attorney General that have not prosecuted clear cases of corruption and money laundering despite the overwhelming evidence in their possession.

“Pilatus Bank and Nexia BT continue to operate in Malta with impunity, despite the overwhelming evidence that they are complicit in corruption and money laundering. Their continued presence in Malta constitutes a significant threat to our financial services sector and our economy,” stated Casa.

“It is disgraceful that it has come to this. This institutional mess was created by design. It is intentional. The objective being the protection of people in power that were caught in criminal activity.

“Maltese people have a right to strong institutions that should protect them and not corrupt politicians and the dodgy firms that make the laundering of their ill-gotten gains possible. I will continue to work until this is the case,” stated David Casa.

In a statement the Labour Party said that the only new thing that there is in this report is that, the Russian whistleblower Maria Efimova had told the MEPs that she was not the original source who had provided information on the prime minister's alleged links to Panamanian company Egrant to Daphne Caruana Galizia.

In its statement the PL said that the claims that were said about Egrant were lies and the Prime Minister had said that he will step down if a hint of truth about them was found.