My article in the December edition of Money Magazine. Scroll down for a text version.

Just last 23 April, the Malta Employers’ Association succinctly described the state of the country as a “national crisis”. It referred to published evidence of corruption at the very top of government in Malta and the complete inaction of the state’s institution when confronted by it. The state of affairs was deemed intolerable by the employers both on grounds of principle and on grounds of consequence, particularly on the economic activity about which employers know a thing or two.

Seven days after that statement the prime minister called a general election answering a question that was not being asked. The issue was not government stability. There was no governability crisis in early 2017. The government enjoyed an unassailable parliamentary majority and there clearly were no handcuffs being clicked around the wrists of the powerful.

The ‘national crisis’ was a product of the failure of institutions that are not hired and fired by an election. Calling an election was in itself evidence of the grossness of the wilful misunderstanding that all power and all responsibility reside with elections. The legislature is chosen periodically by popular will. But Malta is not just a democracy. It is also a republic. We have rules that go beyond the choice of who governs. There are rules that limit the governors in order to protect the governed, even if they belong to a minority of one. We call them fundamental human rights because they are irreducable even if only a single person is concerned.

The simple reality is that here we are 9 months after that dramatic statement by the community of Maltese employers and apart from their vociferousness, nothing has changed. The evidence published last April remains unverified and uninvestigated. Those on whom evidence of wrongdoing was published remain firmly in office and if anything their smugness has got worse, not better. The police and the prosecutor remain just as aloof as they’ve ever been.

And the risk of economic consequence remains just as stark.

The assassination of Daphne Caruana Galizia in mid-October has, apart from grief and horrific loss, caused the world’s attention on the goings on in Malta to be amplified and precipitated. A journalist is bombed in a western democracy. Expect her colleagues from the entire world to fly in and find out why.

They had two answers. One was the answer the Malta Employers’ Association had given already last April. A moral, ethical, institutional and political crisis is occurring in Malta and no one with the power to change that fact seems inclined to even try. When the rest of the world sees political resignations over trivia, the present breakdown is treated with contempt and disdain by a political class supremely confident in its own survival.

The alternative answer came from just those supremely confident members of the political class. Starting with the prime minister, the official story was that this place is great and it’s all business as usual. A loyal Maltese audience enthusiastically followed the government’s instructions and turned the page, drugged by the picture postcard image of a paradise in the best of times. But the world-wide press did not buy that all too readily. On the contrary the ‘there’s nothing to see here, move along’ line of government struck a note of callousness, emotional bankruptcy and the eminently reasonable suspicion that a sinister cover up was underway.

They went back home and reported on Malta in the middle of a journalistic perfect storm compounded by the publication of the Paradise Papers by the ICIJ.

Compared with the dens of fiscal iniquity like the Bahamas or the Cook Islands, Malta is objectively a centre of service provision for legitimate business activities. No doubt other countries with revenue pressures deeper than ours resent the flow of revenue from their economies to ours. No doubt it can be argued this is unfair and it is clear that this will have to be re-examined over time.

But Malta’s laws do not allow for tax evaders to hide their money. Malta’s laws do not make this country a pirate bay for arms traffickers, slavers, funders of terrorism, criminal organisations and evil dictatorships to hide their money. That keeps coming up in theoretical reviews of the state of play in Malta.

But scratch that surface and if you realise that laws on paper do not stand to slam the jail gates on those who break them, you realise that the concentrated power in the hands of corrupt politicians allows them to prevent the enforcement of the law to serve their ends.

In that context, criminals with politicians and bureaucrats in their pay are allowed to penetrate the cover of the country’s financial system and layer their illicit gains to hide it from the view of law enforcement agencies of countries the money is being stolen from.

What’s just as bad is that criminals who follow will not need politicians in their pockets to bypass emaciated, shrivelled and ineffective institutions reduced to a ghostly image of their former selves.

Now this is what the world press has seen in Malta and reported: a government that says all the right things but has stopped doing them partly to satiate the insatiable greed of the corrupt and partly to patch over the consequences of that first greed.

The pursuit of more and more and more gaming activity in Malta has opened the door to the laundering of millions of euro from the organised clans of Calabria, Campania and Sicily. That has cast a shadow on the entire gaming industry. It has forced regulators all over Europe to start rethinking their licensing regimes to prevent contamination from Malta’s porous quarantine system. It has forced gaming business owners to start rethinking their expansion strategies and of finding new balances between their business ambitions and efficiently meeting their compliance requirements.

The pursuit of more and more and more financial services clients has left the doors of money laundering and tax evasion largely unchecked, unsupervised and when found through the work of the press, let off with a gentle warning.

Considering the flowing billions that move around us and through us, it is only fair to believe we barely know the tip of the iceberg.

We still don’t know who passports are being sold to. But we do know the law empowers government to grant passports to criminals and terrorists if it wants to. It is written there so that if we do ever find out who we’ve been taking blood money from, no one is made to assume responsibility.

As intermediaries report a dwindling flow in the pipeline of crisp white clients, the pressures to keep up the invoicing flow that sustains such a large and well paid employee base is already forcing mid-scale agents to be less zealous when conducting due diligence.

As they do this, every payment made out of Malta is treated with prima facie suspicion, subjected to extra checks by overseas regulations indifferent to time sensitivities of the flow of business.

This is the perfect storm we are rolling in. Waves are crashing about us. And in the meantime the captain and the senior crew are blissfully drinking to each other’s health in their mess confident that they are riding on an unsinkable ship chugging along on auto-pilot.

Nothing has changed since the beginning of 2017. And yet, all around us, it seems like nothing will be the same again.