Issue link: https://maltatoday.uberflip.com/i/1385129
Saviour Balzan 5 maltatoday | SUNDAY • 20 JUNE 2021 OPINION I cringed at reading PN leader Bernard Grech's statement on the possible outcome of FATF on Malta. A grey-listing for Malta at the hands of the FATF will have a direct impact on our financial services industry as well as our own little dominance in hosting so many foreign companies. I have no proof of this impression of mine, but I almost suspected a Richard Cachia Caruana touch in this move. Perhaps. What I do say is that Grech is reading off some teleprompter and it is doing him few favours. I can say it from this newspaper's experience when it calls out such schemes like Malta's corporate tax rebate for foreign multina- tionals: the Maltese will rally behind their government when the proverbial shit hits the fan. That's the way patriotism usu- ally creeps in when the big boys 'pick' on small Malta. I have no doubt that our finan- cial services industry and other service providers and banks are in a serious need of fine-tuning. The FIAU decisions show clear- ly the lack of due diligence that is carried out when onboarding and monitoring high-risk cli- ents. But there is no doubt that both the FIAU of today and the in- dustry has risen to the occasion, in the latter case with obvious effects to their otherwise profit- able bottom-line, and of course, having been pushed into fast for- ward after the assassination of Daphne Caruana Galizia, But the crowd that wants Mal- ta to adhere to higher standards belong to two categories: those that want Malta to flounder so that they can take the business that comes our way and second- ly those (Maltese) who believe that this particular government does not deserve a reprieve and needs to be punished. That desire may not come that easy for them. If say, the latter feel 'enlightened' to want the La- bour administration to be pun- ished, one has to remark that so many of these critics did find their voice after 2013 when this government was elected. Prior to that, it was all plain sailing with a financial services indus- try that delighted in hastening the international tax avoidance 'industry', going light on AML rules... it seemed everyone was oblivious to this financial jam- boree in Malta. I never used to believe there are those who are unwilling to see the bigger picture. By this I mean those refusing to understand how countries like the Unit- ed States, the United Kingdom and Germany are wielding their enormous influence to inflict hardship on Malta. Ironic too, given the excellent relations that Malta has historically had with these very three countries (the other two important friends, I'd say, are Italy and China... more of that later). Indeed, Malta has been histor- ically a US partner in the last 20 years on many areas of collabo- ration in terms of sea patrols and transhipment monitoring. The annual congressional budget justifications laud Maltese co- operation in this field and the US seems keen on extending its influence with its soft power and regular meetings with the press. The nastier stuff is left for the re- al political world, then. The same goes for the UK nat- urally, which, apart from its co- lonial past here, still retains the Maltese hand of friendship. The UK is the last country to patron- ise anyone over financial irregu- larities. London today is a mecca for trillions of financial transac- tions from dubious sources and jurisdictions which face much weaker regulation, transparency checks and due diligence than in Malta. And, let's admit it... the City of London is practically outside the UK. As for Germany, to seemingly allow an EU member state in the lurch after Brexit, again smacks of unkind opportunism. Why does nobody take it to task over the Cum-Ex scandal (a huge volume of transactions prior to 2012 involved exploiting a loop- hole on dividend payments that enabled a number of parties to claim the same tax refund. Ger- man authorities believe this has cost that country's treasury €10 billion euros in lost revenue. But there may be more than ten oth- er European countries affected; with estimates saying around €55 billion may have been lost to those nations' treasuries). With its own tax evasion problems, Malta is truly the minnow in a lake rife with giant fleshy Ger- man pike. Simply stated, as a small coun- try Malta will suffer greatly from a damning grey-listing far more than a larger country. My source insists the US has always diplo- matically suggested that they see US interests holistically – name- ly our refusal of accepting SOFA, an agreement that would give unprecedented advantages to the US military on Maltese soil (say if US personnel commits a crime here) or for ship-boarding Maltese ships on the high seas without national clearance. And then there's Malta's reluc- tance in selling out 'completely' to the new agreement with Stew- ard Healthcare – which is effec- tively a legacy of Muscat's big mess with privatising healthcare – another serious consideration mentioned by US diplomats in the run-up to the FATF verdict. And one might add... Malta's long-standing Chinese friend- ship, a fact that has never sat comfortably with the Western powers. It is hard to be pontificated at without exposing these coun- tries' hypocrisies: superpowers with no respect or fairness. So what happens next? The country joins forces to show it has raised its financial propri- ety standards and calls out the political and unfair verdict of these countries against one of the most stable of EU member states with a vibrant democracy and parliamentary system. Of course, it won't excite the Americans, unable as they are to see the beam in their eye when it comes to its own financial mis- demeanours, its own tax havens, ruthless self-interest, and the mortal sin of those who kow-tow to its desires in return for mili- tary assistance. An FATF grey-listing will be a tremor for many in the indus- try who have been traditionally aligned to the Nationalist Par- ty, for historically this has been a strata of decision-makers in league with bankers and their en- ablers. Of course, where profits come in, lack of probity on mat- ters financial can still sit com- fortably with the pearl-clutching classes who tut-tut 'shame' at re- ports of corruption. Never does this industry ques- tion its own role in international tax avoidance, facilitation of fi- nancial speculation, destruction of the urban and rural environ- ment on property transactions, and enabling of the global elites seeking Maltese passports. If making money is legal... why question the ethics of it, right? This is one of those moments where the schadenfreude on national mishaps is about to hit some of these brokers hard. It will be nasty to have the Ameri- cans taking out the speck of Mal- ta's eye while we are powerless to remove the beam in theirs. The beam in your eye micfal45@gmail.com An FATF plenary session from February 2020