Issue link: https://maltatoday.uberflip.com/i/652704
14 You've had three years of 'eco- nomic success and social revo- lution', but also a crisis of good governance. Is it not unaccepta- ble that energy minister Konrad Mizzi and chief of staff Keith Schembri don't resign for open- ing an offshore company? My regret is that after the good things we have done, when it comes to the economy and social revolution, with the largest eco- nomic growth and new civil lib- erties, we're talking about these issues – and with good reason. We have to get down to the root of it all, and that's why an inves- tigation and an audit are taking place. The Opposition leader says, in the House and not outside, that there are millions [held offshore]. An investigation is being held to 'open up this box' and if these mil- lions are found, Mizzi will have to leave. If any cash was present and moved elsewhere, Mizzi will have to leave. If nothing of this is found, then the Opposition leader will have to answer for his statements. Mizzi should resign because of the principle involved here: he opened up a Panamanian off- shore company because he want- ed to hide his ownership of the company [Hearnville Inc]… That's what you are saying… I know that Mizzi was preparing to declare it, the draft of which I saw. You don't declare something you want to hide – it's a non sequi- tur. I'm amazed that the PN did not wait some two weeks before breaking this story… the real story would have been Mizzi not declar- ing his company once everyone would have filed their declara- tions of assets in March. I suspect the Opposition leader knew this and that he would have lost the sensational effect of the story be- cause Mizzi would have declared the company. Was it the wisest kind of set-up? Was it a sensitive one? No, it is not. It is legal but politically naïve and insensitive. It is problematic that Mizzi felt he only had to declare the com- pany because he suspected a sto- ry would break on it, and indeed he first only declared he had a New Zealand trust – he did not first admit holding an offshore company in Panama… which is a more serious part of the entire set-up. No, absolutely. I saw the draft declaration before the story broke… someone got wind of the fact he was going to declare it. You said Nexia BT's advice to Mizzi and Schembri was 'po- litically naïve and insensitive' – didn't you think it was naïve and insensitive the moment you saw them in the draft declaration? I honestly thought, as I saw it then, that the fact he would de- clare would deflate this effect. You don't declare something you want to hide things in. Many enjoy speculating over this affair but we have to stick to the facts: this is not Austin Gatt who 'forgot' his Swiss bank account, but Konrad Mizzi who was ready to declare the com- pany but someone broke the story to make it sensational. Has it dam- aged the government? Definitely. We're talking about this and noth- ing else… And you chose not to tell him to close it. You preferred taking the risk… He would have still had to de- clare it even if he closed it. He wouldn't have managed to close it within [such a short period of time]. What message would that have sent if he opened and closed it straight away – especially with the PN? You have the Opposition leader saying you're caught up in a 'cri- sis of corruption' – in the current circumstances, Konrad Mizzi has an offshore company which can issue an invoice for the rent- al of his London property, but have that cash go to an offshore account so that the money goes to his offshore trust. Mizzi's circumstances are unlike others… The worst suspicion here is that this system can be used to invoice for 'consultancies' and have cash flow to another account or trust, without ever knowing who is pay- ing or to whom the money is ac- tually going… At the end of the day the min- ister has declared everything. His circumstances are not typical ones. He's not your average person in politics with a family settled in Malta. He and his wife live in two different continents with property in another country… I don't fault anyone asking these questions. My point of principle is that there would be a problem if he didn't declare it. The worst aspect is having Keith Schembri with an offshore company: he had to deny sugges- tions that his financial set-up could be used to accept bribes, because indeed these are allega- tions that touch upon you. He is not accountable to parliament and we cannot know what he is declaring. So people out there think, is this set-up being used on the prime minister's behalf? Richard Cachia Caruana, with his titles of nobility, businesses and properties, was never ques- tioned about his wealth. Schembri has his own business, which he created well before he ever imag- ined taking this political step; he suspended his directorships and his company does not tender for government contracts. Again, if someone wants to build some story out of this… that's why I say the advice was naïve and in- sensitive, because this advice was based on the benefit of the tax ef- ficiency and did not factor in the political effect. It's bad that you have a struc- ture that can be used for tax avoidance… You could run over someone with a car or cut someone with a knife, but you use a car to get to a destination and a knife to eat food with. So it's not what you can do with something, but what you do with something. If the audit finds something bad was going on, ac- tion will be taken and resignations will follow. The impression is that this is something superficial. It is an in- ternational audit firm carrying out the [investigation]. Which is the firm carrying out the audit? It will be announced in the com- ing days. It is not Maltese. It is one of the main firms of international repute. The terms of reference will examine all the transactions car- ried out by this company, make a forensic examination of any cash movements before and now, they will have all the information from the New Zealand trustees, and the Commissioner for Inland Revenue will have the right to all that infor- mation… Malta has no tax information exchange agreement with Pana- ma…. But both Malta and New Zea- land are signatories of OECD tax exchange agreements, and since the New Zealand trustees are the owners of the Panama company they have to give information on that company. The investigation hinges on Mizzi being honest to declare any bank account he might have in the world, otherwise we won't know anything else he might have in Panama or elsewhere… Mizzi has already given his per- mission to the Commissioner of Inland Revenue to carry out his checks on him. When you give this consent to the CIR, there are no concerns on tax information exchange. You need a tax infor- mation treaty when you don't know when person 'XYZ' has opened his accounts; once that person has given you the permis- sion for a worldwide audit, any outstanding issues on tax infor- mation become secondary. Nexia BT gave naïve and insen- sitive advice. Shouldn't they be denied direct orders and govern- ment tenders? You'd be right had Nexia BT been giving the government polit- ical advice. They are there to offer analysis… They're being paid from tax- payers' money… Yes, but they were not giving the government any political advice… They gave Mizzi and Schembri the wrong advice… But I cannot prevent a regis- tered company… the only com- panies we've blacklisted are those who use precarious employment practices. If they are legitimately offering the more competitive of services – like the Big Four do, like Ann Fenech's company does… as she herself boasted – I won't say that 'as PN executive president, Fenech's firm should not take any contracts'. If she happens to have a particular niche as her strength, it's to her that the contract should go. What do your Cabinet col- leagues say? Evarist Bartolo spoke of a political storm on his Facebook wall… And one has to weather that storm until it ends. I agree whole- heartedly with Evarist. My Cabi- net colleagues are disappointed because this has obscured all the good work we have done, our un- precedented economic growth, that we moved on from a jobs crisis to the greatest number of people ever employed. We have to weather that storm and move on to deliver even further. But 'Panamagate' is this gov- ernment's third big scandal, when considering Café Premier and the Gaffarena expropria- tion. 2016 is a crucial year for good governance, especially after it became the Opposition's rally- ing cry but now also well within the public's consciousness. It has now become a personal chal- lenge for you. I have no problem with good governance. It is a crucial issue. I made the error of letting the Op- position bandy the word 'corrup- tion' around on practically every- Interview By Matthew Vella maltatoday, SUNDAY, 13 MARCH 2016 I will use the power of delivery, delivering what we promised. There's much more to be done THE DELIVERY My Cabinet colleagues are disappointed because this has obscured all the good work we have done DISAPPOINTMENT Up to his neck