The shocking developments around the investigation into the assassination of Daphne Caruana Galizia, and its earth-shattering political fallout, have intensified the spotlight shone by the international media on Malta. In so doing, it also sharpens the glare of international investors on the risks they may be taking when setting up shop in the country.
The links that have emerged between politics, shady businessmen and criminality, and the inadequate political reaction to them, risk dealing fatal blows to Malta’s reputation as a respectable jurisdiction for doing business.
The foreign media have long been projecting a grim picture of how it is believed Malta achieves its economic success. For example, sections of the Italian press have recently run stories about how organised criminals in Italy and Malta are perpetrating corrupt practices in sports and gaming. This sort of exposure does Malta no good at all. The government has in the past argued that the negative media coverage is based on perceptions.
But on reputational issues, perceptions are often as harmful as reality.
The Maltese economy, especially the services sector, has been performing well thanks to the country’s low tax regime as well as regulators’ occasional practice of closing one eye when vetting the credentials of dubious economic operators. The cases of Pilatus Bank and Satabank, for instance, show how a few bad apples can contaminate the hundreds of other respectable business organisations.
The latest damaging revelations about Malta also come against the background of the already serious criticism levelled at the island by international institutions like the OECD and Moneyval, targeting our lax controls on money laundering and our less-than-rigorous regard for the rule of law.
The Prime Minister’s effective control of appointments to the judiciary and important regulatory bodies, and lately his adamant refusal to put distance between himself and an investigation which affects him directly, have raised serious doubts abroad on the separation of powers in Malta. Potential investors are not liking what they see and read about the country.
Joseph Muscat’s long-standing resistance to the sacking of a minister and his chief of staff, when they were linked to allegations of money laundering, defied all political logic. His failure to resign immediately negates the notion of political responsibility and sends another negative message abroad. The Prime Minister is endangering the future economic wellbeing of the country.
Unfortunately, the Labour Party parliamentary group, which has the power to put an end to this highly-risky behaviour, has failed to act when it matters. Government MPs grumble in private and issue virtuous messages on social media but then fail to act as the nation’s voice of conscience by using their vote to stop someone from openly flouting democratic principles and damaging the interests of common people.
The Prime Minister was entrusted to lead the country for five years. But this does not justify his sacrificing of its future by causing such harm to its reputation. The spin around the supposed damage done by MEPs when they flag up Malta’s situation is no longer effective: Joseph Muscat is happily providing a very visible example of their concerns.
The national interest demands that he do something to prevent the country from sinking further into the reputational quagmire that is engulfing it. He can only do that by going, not staying put.
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