Panamagate has forced the Labour Party to anticipate part of its electoral strategy to hit the Opposition with ‘scandals’ from the past, according to sources.

The Labour Party’s reply to Panamagate has been a campaign targeting exponents of the Nationalist Party, the latest being deputy leader Beppe Fenech Adami and ‘irregularities’ at his private residence in Għargħur.

Prime Minister Joseph Muscat believes he can weather the Panama storm and has stood by his chief of staff, Keith Schembri, and Energy Minister Konrad Mizzi. Photo: Chris Sant Fournier

Labour Party functionaries, who asked to remain anonymous, said this campaign originally formed part of a two-pronged electoral strategy.

“The party was going to fight the election by vaunting government’s achievements and adopting a parallel campaign to undermine Simon Busuttil’s credibility on the two issues he has championed; good governance and the environment,” the sources said.

The negative campaign would have targeted key exponents of the PN and putting the onus on Dr Busuttil to live up to his commitment and take action against them, the sources said.

The latest ‘scandal’, dubbed by the Labour Party’s media house as ‘Beppe’s palace’, fell squarely within the strategy. The case tarnished the PN’s pro-environment credentials and had whiffs of bad governance, the sources said.

With Panamagate refusing to go away and the recent MaltaToday survey showing Labour losing ground, the party had to react by anticipating its negative campaigning. “It’s like fighting fire with fire,” the sources said.

They added that the current strategy was intended to cause confusion by “overloading people with scandals”. At the same time, it helped pump up enthusiasm among the grassroots for a show of force on May 1, when Labour will be holding a mass meeting in Valletta to mark Workers’ Day.

The Panama affair has hit two of the Prime Minister’s most trusted men – his chief of staff, Keith Schembri, and Energy Minister Konrad Mizzi. Both have had to admit opening secret companies in Panama while in office.

Joseph Muscat has gone on record saying he saw nothing wrong with Dr Mizzi owning a company in Panama as long as he was including it in the ministerial declaration of assets.

Dr Mizzi has pledged to close down the company after an independent audit of his financial arrangements was completed.

However, Dr Muscat has been less forthcoming in pronouncing himself on Mr Schembri’s financial arrangements, insisting his aide had made his money as a successful businessman prior to taking up his public role in 2013.

Party insiders have cautioned the Prime Minister not to allow the Panama affair to become a millstone around the party’s neck. Speaking to this newspaper last week, they said Dr Muscat was advised not to let the controversy become what the €500 ministerial salary increase was for the PN in the last legislature.

“The €500 increase kept surfacing at each turn and caused the PN a lot of damage before the election and the Panama scandal risks doing just that for Labour if the Prime Minister does not remove [Energy Minister] Konrad Mizzi and [chief of staff] Keith Schembri,” the sources said.

The Prime Minister is convinced that he can weather the storm, but there is little doubt that Panamagate has diverted a lot of the government’s energy to firefighting.

Speaking on One Radio last Saturday, Economy Minister Chris Cardona, who along with former PN Lija mayor Ian Castaldi Paris has fronted the campaign targeting Dr Fenech Adami, admitted the events of the past week had diverted his attention away from the economy.