Council of Europe, Greco, Moneyval, Venice Commission − a cool cocktail

Such recent reports on Malta make interesting reading − none sing our praises yet all note that our staggered uphill fight against corruption is bearing fruit.

It is encouraging to note that in the aftermath of a number of reports (Greco, Moneyval, Council of Europe, Venice council et al) these harkened government to trigger a broad reform project. This arsenal hopes to strengthen existing institutional anticorruption framework, including law enforcement and prosecution. Most of these reports focus on the rule of law.

What is corruption and how prevalent is it in Europe? Do not hold your breath as quoting recent reports, corruption costs the economy of EU countries more than €120bn per year, with some estimates going up to €990bn.

This is no small or negligible sum. Furthermore, one notes how corruption (which seems to be endemic since the birth of Adam and Eve’s two feuding boys) instills an erosion of the rule of law and decay of democracy. In the last two years, a number of journalists, who had been investigating corruption, have been brutally killed on European soil.

Needless to say, that journalists have special duties; more duties than ordinary citizens and they need special protection. This article is partly based on the recommendations and observations of the various reports as stated in the title.

One admires certain reforms carried out as a result of these reports such as the recent election of a Commissioner for Public Standards who comes from a political background within the political party currently in Opposition. Furthermore, the European Commission has expressed concern about Malta’s failure to secure convictions in high-level corruption cases and flagged “deep corruption patterns” within the country as worthy of note. Quoting from a recent report, it comments about worrying patterns that had led to “strong public demand” for reform of rule of law.

It is encouraging to note that in the aftermath of a number of reports (Greco, Moneyval, Council of Europe, Venice council et al) these harkened government to trigger a broad reform project. This arsenal hopes to strengthen existing institutional anti-corruption framework, including law enforcement and prosecution. Most of these reports focus on the rule of law. Sadly, it flagged concern over the efficiency of the justice system “with judicial proceedings being very long at all levels and in all categories of cases”.

The rule of law report is the first of its kind and is part of a European Commission reform aimed at providing more oversight of member states’ governance issues from Brussels. The Council of Europe urges the law enforcement bodies to end the prevailing climate of impunity by robustly investigating and prosecuting those suspected of being involved in or benefitting from the scandals exposed by Daphne Caruana Galizia and her colleagues. The report reminds the relevant authorities that evidence is not a pre-condition for launching a criminal investigation, but it’s a possible result.

To prevent impunity, investigations shall be launched as soon as credible information, such as the Panama Papers, indicate that a crime could have been committed. This month, a magisterial inquiry, which took over three years, acknowledged that evidence of a money laundering crime could exist among persons who were involved in kickbacks when selling EU passports and four persons were arrested, their assets frozen and later released on police bail.

What are the main chapters that our system needs polishing? The answer is four main pillars: national justice systems, anti-corruption frameworks, media pluralism and freedom and checks and balances essential to democratic governance.

In my opinion, these warrant instant attention. To start with, all our backbenchers are appointed part-time in Parliament when in other countries these are paid as full-timers. According to the Venice Commission this inevitably affects their ability to operate independently from the executive, while this weakness is exacerbated by the habit of appointing backbenchers to important paid posts as commissioners or chairpersons at the various public commissions.

This may lead to flaws in the system of checks and balances. Another no-do is the praxis of the President appointing judges and magistrates “acting in accordance with the advice of the Prime Minister”. This anomaly has been mitigated by the introduction of a Judicial Appointments Committee (JAC). It was recently established in order to vet candidates for judicial appointment and to make recommendations to the Prime Minister, except in the case of the Chief Justice.

A stranger anomaly exists that while a minister has responsibility for his or her department, it is the Prime Minister who appoints the permanent secretary for that department (and not the minister). From a viewpoint of checks and balances, the role of the Prime Minister in deciding on permanent secretaries in all ministries seems problematic. The fly in the ointment is the custom of appointing hundreds of persons on “positions of trust” (fixed term employment) or “persons of trust” (indefinite contracts) bypassing the procedure for appointing civil servants through the Public Service Commission.

The Venice Commission recommends inter alia, adopting a constitutional amendment together with clear legal basis that strictly limits the appointments of persons of trust. Moving on, one meets with comments by the Commission on media rule. The Commission expressed concern about the effective independence of Malta’s media regulator, as well as legal and online threats to investigative journalists. It said: “The ownership, control or management by the two main political parties represented in Parliament, of multiple Maltese media outlets and broadcasters, continues to have a significant bearing on the media landscape.”

Another Commission report, dated September 2019, reveals how Malta has the highest rate of tax evasion in Europe by a wide margin and reveals that nationals owe extensive offshore wealth and stow their assets overseas. It does not rain, it pours. Another European Central Bank report, issued in 2019, reportedly indicated severe shortcomings that could have allowed money laundering or other criminal activities to continue over the years in Bank of Valletta despite repeated warnings.

In conclusion, Malta has indeed taken full notice of all recent shortcomings and started in earnest to correct them. Based on the outcome of the dialogue around the 2020 Council of Europe remarks and drawing on experiences gained in the first year of the functioning of the European rule of law mechanism, one augurs that the Commission will soon start preparing its sequel on improvements of the island nation. Such blessing merits its heritage as an isle of milk and nectar.

George Mangion is a senior partner of an audit and consultancy firm and has over 25 years’ experience in accounting, taxation, financial and consultancy services. His efforts have seen PKF be instrumental in establishing many companies in Malta and placed PKF in the forefront as professional financial service providers on the Island.