Urgent plea: save the financial services sector

We join and make our own the heartfelt plea made these past days by the former Governor of the Central Bank, Francis Vassallo, for the Malta financial services sector to be saved.

In a television interview he gave on Sunday, more than in an interview he gave to The Times, Mr Vassallo explained how recent events have given Malta a bad name in financial services.

Banks are stopping doing business with banks and with companies in Malta, Mr Vassallo claimed on Sunday.

Allegations of widespread corruption at the highest echelons of government, a minister who was found with a secret account in a compromised country such as Panama, an election campaign waged on claims and counter-claims of corruption and this during the six months of Malta’s Presidency of the European Council.

The world sits back and gazes with wonder at this small country who used to be looked at as a model EU member state now engulfed in this internecine feud with allegations of corruption flying around.

The financial services sector has grown apace these past years and now employs some 15,000 persons.

Built painstakingly on the experience and close cooperation of the past years, the sector has its own regulatory regime and authorities but for some reason or other these authorities have been hiding themselves in this crisis instead of carrying out their regulatory duties. Or else, this is what practically all Malta thinks.

Let us admit it: there are quite a few bad apples and these have been for quite some time operating with some impunity. Mr Vassallo warned Malta was on track to get the same kind of negative publicity that Cyprus used to get until reverses forced it change its tack.

It is being argued now by the party in Opposition that only a change of government will, to use Donald Trump’s slogan, ‘cleanse the stables’. More than a change of government what is really, but really, needed is a general understanding by all in the sector, in the regulatory authorities and in government that the rule of law must once again become paramount.

Financial services are based on trust and likewise the regulatory authorities cannot exist in an ethical vacuum. Trust cannot be imposed but must be earned.

Unfortunately it seems we must first get over the hump of a tough election before this matter can be tackled.

It will be a great pity if this sector is allowed to suffer because of inaction by the regulatory authorities for it carries with it great potential. Malta cannot afford to become known as a tax haven.