Mark Schapiro ends a three-year mission as US Chargé d’Affaires in Malta this summer. He spoke with Ivan Martin about the Daphne Caruana Galizia case, Malta’s chances of being put on the international money laundering naughty list and the risk of China infiltrating the island’s national security. 

Most of your time here was spent working with the Muscat administration, how was that?

During the Joseph Muscat administration, we had great access to each other and were able to have honest conversations.

At the end of the day, our job as diplomats is to work with whoever is running the country.

How are you getting on with the Abela administration?

With Robert Abela, there’s certainly a difference in character.

We didn’t really know Abela very well because he came out of the party. And so we built that relationship pretty quickly and got to know him and his team. I’d say they are different people but that is what you’d expect.  

Abela spoke a lot about continuity during the leadership elections. I think there is still a very clear Labour Party mandate; the Nationalist Party has seen better days, I think it is fair to say.

There is a clear sense [in the government] that they need to show that they are cleaning up some of the issues. 

The US embassy issued a couple of statements recently. Perhaps, the most eye-catching was a statement that said it is ‘not too late’ to deliver effective justice in the Daphne Caruana Galizia case. What did you mean by that? 

People who are predisposed to believe that the government is not doing enough, they see that statement [and say] ‘Oh... the United States government offered to help, why isn’t the government responding to that’?

That’s not how it happened and that’s not what the statement said. 

It is kind of like a Rorschach (inkblot) Test. And I would say Daphne herself is a Rorschach test. People tend to look at that statement and see what they want to see.

That wording that you picked ‘it is not too late’’...

Again, [it’s] the Rorschach phenomenon. If you are part of the Committee to Protect Journalists, for instance, you are conditioned to see everywhere in the world there are press freedom issues. 

But Daphne is a rule of law issue – that is a rule of law problem. She is not the only one who has been killed by a bombing in the last few years. [But] She’s obviously the most visible and that creates an opportunity to get at some of these rule of law issues.

I don’t have to tell you that she was quite a polarising figure here.  

And two years – actually it was only a couple of months until the Degiorgios and Muscat were locked up – to the breakthrough, that’s pretty fast by Maltese standards.

So, ‘it’s not too late’, means it’s not too late. 

If you are conditioned to look at this from a UK or US perspective, where a case can’t take years and years and years, then you will look at this and say: ‘It’s taken forever, the Maltese authorities are dragging their feet.’ But, actually, two years is pretty good, it’s a step in the right direction by Maltese standards.  

Is it still ‘not too late’?

I don’t want to talk about an ongoing investigation but it’s still active and people all across Malta and I think across the world are paying attention.

I’m optimistic, I hope that the authorities will get on with it. It’s a definite wound in Maltese society.

The next statement which came out of the US embassy concerned the Moneyval assessment of Malta’s anti-money laundering compliance. The statement said that grey-listing appears inevitable. What is your position on that? 

I don’t think it is inevitable – that was one of the opinions of our Department of Justice people.

But there is more time on the clock now. The Financial Action Task Force [that will make the final decision on Malta’s future[, because of COVID-19 and everything, has pushed this [assessment] until spring next year.

You live in a tough but fascinating neighbourhood. On Malta’s efforts... I’ve seen the capacity and will to improve things in the three years I have been here

So, there is a bit of time to get this right and there is a lot of positive action going on in the Maltese system.

The reforms that are being proposed right now, I think are positive. So, I don’t think it is inevitable.  

We have had talks with cabinet ministers and our Department of Justice attache, just like the British, has been working side-by-side with the Financial Intelligence Analysis Unit and, to a lesser extent, the Malta Financial Services Authority as they beef up their capacity.

I think people should be concerned about it. I think the Maltese government should be concerned about it. There is no way to avoid it, there is no shortcut to it other than passing the reforms.  

What about negotiations between the US and Malta?

To the matter of whether there is a quid pro quo [between Malta and the US]. There is no deal to be made, there is no way for a country to negotiate its way out of this. It is pretty objective.

There are lots of members of the Financial Action Task Force, the US is one of them. We have a voice, it is a strong voice, but it is not the only voice.

So, that decision (on whether or not to grey list Malta) will be determined by many variables.  

Malta needs to do more than pass reforms though. It needs to put heads on spikes. 

There needs to be, in a judicial system, a degree of deterrence.

People need to make the calculation for themselves that there will be a cost involved and that makes them think twice about doing whatever it is: laundering money or hiding out in Malta for whatever reason. So, yes, convictions change that equation. 

Famously, we talk about the Al Capone case in the US. At that time, everyone knew what Al Capone was doing, racketeering, this and that, but those were very difficult cases to put together, so the goal was not really to convict him on those cases per se, the goal was to neutralise him and take him out of action.

“And they did that by getting him on tax evasion – which is a much easier case to put together.

That analogy applies here and it is something we have discussed with the Maltese authorities because really there have not been any tax evasion convictions here. So what’s the magic number for Moneyval purposes and FATF?  I don’t know, I’m not one of the experts. It’s definitely not zero.

I hear that there is a lot of ‘low-hanging fruit’ out there when it comes to financial crime that the authorities could go after to bolster conviction numbers. 

I think that is true. 

The expression of low-hanging fruit is one of those expressions that drives me crazy. That suggests that it is easy and this is hard work. You have some fantastic people in the institutions here in Malta that are doing that hard work. 

I do not want to say that Kenneth Farrugia and his team at FIAU and Joe Cuschieri and his team at MFSA and now [police commissioner] Angelo Gafà and the massive work that he has on his plate – I do not want to suggest that work is in any way easy. 

But there is ‘low-hanging fruit’. I understand what you mean by that. 

What else can Malta do? 

There are things that you can do. And I know Justice Minister Edward Zammit Lewis, for instance, is working on this in parliament with the ‘unexplained wealth law’.

This would be flipping the burden of proof basically. In the US, if the authorities notice somebody has sort of a mid-level civil service job and, all of a sudden, has a yacht and it is not clear where this is coming from, the law provides that the government can seize it until you prove where those funds came from. If, all of a sudden, someone is driving a Lamborghini around... where did that come from? That’s one legislative fix. 

The speedy trial act is another: defining the length of time that various stages of a trial can take. 

To do that, and I know judges might not like to hear this, you might have to consider having the courts open all day. 

How do you see Malta’s efforts in countering transnational crime? 

First of all I would say you live in a tough but fascinating neighbourhood. 

On Malta’s efforts, I’ve seen the capacity and will to improve things in the three years I have been here.

There is some terrific work when it comes to monitoring and implementing international sanctions, which has become very relevant.  

What is going on in the police, bringing in Angelo Gafà and Sandra Mamo (who now heads the economic crimes unit) is very promising... let’s see what happens.

It is no secret to anybody that the police have been much maligned here. And, with all sympathy to the police force, I think some cleaning of the house is definitely a part of the reform effort that needs to be shown to the Maltese people.  

How worried are you about Malta’s interest in Chinese telecoms giant Huawei? 

You have to define the world and the problem set – diagnose the patient before you can prescribe medication, right? 

So, I would not look at Huawei and Chinese investment in a vacuum. I would look at it in the context that it is a very competitive landscape.  

The Chinese model is about control. That is a fact, that is not an editorial statement. That is what the government is based on. A company like Huawei has certain obligations under Chinese law.  

We made a determination a couple of years ago, based on our assessment of our national security, our IT infrastructure, and our data backroom, that Huawei would be a risk to data integrity, privacy, secrecy and sovereignty essentially. 

We did not come here and tell Malta: you should not do this. That is not our role. We came here as partners and said: ‘Hey we want to show you our assessment of our national security. Take that for what it is and let that inform your own decisions of what you decide to do with 5G and your infrastructure.’

Something that looks like a good deal today but then when you wake up a few years later and you find that you have compromised a lot of your sovereignty. That is not something that you would want to do when it comes to vital national security infrastructure.

And, what’s going on with Steward Health Care? 

I think that this government wants to be seen as the one that cleaned it up, found a way forward, and I think Steward wants the same thing. They have done really good work here, that the government is proud of and we are proud of. 

So, how do you find a way forward that enables both sides to make a break with the past?

Our interest is in supporting the negotiations in any way we can – to help find a solution if they can find one.

But it is a significant foreign direct investment. We would like to hold on to that and make sure it is clean. 

NOTE: This is an edited version of a longer interview.