Those who argue that corruption is endemic in politics are probably right. But the concept of state capture is relatively new. It probably started when former soviet countries began to privatise their state-owned enterprises at the end of the last century. Today, state capture represents the most destructive form of political corruption.
State capture implies that the state has lost its social autonomy and cannot function in a way that serves broad social interests or make decisions aimed at achieving long-term developmental goals for the common good.
One would be mistaken to conclude that the phenomenon of state capture is only prevalent in underdeveloped countries with no tradition of upholding democratic values. The Machiavellian behaviour of local political elites in the last few years demonstrates that this is far from the case.
That behaviour has only just started to attract a visible response in the way of prosecutions. The country is becoming more aware of how a cabal of corrupt politicians and their business cronies managed a market of political influence. This perverse alliance provided illicit private gains to public officials in return for the award of public contracts or tolerance of breaches of laws and regulations.
The extent of state capture was extensive and involved financial and gaming regulation and public procurement. A few business interests held the state to ransom in an informal, subtle, covert and surreptitious process. This abject failure in public governance eventually led to the murder of a journalist who opened the lid of the can of worms subverting the public interest.
Times of Malta’s recent revelations from the gaming sector give an inkling of the extent of state capture over the last few years. First we reported on the conversation that took place between Heathcliff Farrugia, the former CEO of the Malta Gaming Authority, and Yorgen Fenech, the businessman accused of the murder of journalist Daphne Caruana Galizia. The two colluded to try to prevent the publication of a 2018 inspection that found weak anti-money laundering controls at Fenech’s casinos.
We then revealed that, three years earlier, the MGA’s legal counsel, Edwina Licari, had helped Fenech draft a letter to the MGA itself, lobbying for an extension of the Portomaso casino licence and with the full knowledge of then MGA executive chairman Joe Cuschieri.
When the MGA should have been acting to avoid blemishes to Malta’s reputation in the world of finance, its officials were doing favours to a gaming operator whom they were supposed to be regulating.
Like others made in the last few months during public inquiries, these revelations confirm the way important state institutions performing executive, regulatory and public procurement functions were often deprived of their autonomy. State capture thrives on social and political networks through clientelism and patronage.
While this collapse of good public governance happened on the watch of former prime minister Joseph Muscat, the present prime minister, Robert Abela, has the grave responsibility of cleaning up the mess left behind by his predecessor. Instead, he prefers to back people like Johann Buttigieg, the former Planning Authority chairman, who was inappropriately close to perverse businesses interests.
The government argues that remedial action has been taken to address public governance ‘weaknesses’. But it takes more than changes to legislation to restore both local citizens’ and international institutions’ trust in Malta’s unwavering commitment to the rule of law and sound public governance.
The root cause of corruption and state capture is the prevalent feudal political strategy of rewarding loyalty rather than competence when appointing persons to lead important autonomous institutions. Before this political landscape changes, Maltese society will continue to be at risk of betrayal by politicians.