October is almost here. Many have a blank 4 to 6 weeks in the heat of summer between now and then when they don’t plan to do much. Distraction will be easy. Here’s something to worry about while basking in the sun.
October ends the extended grace period within which we had to implement the Moneyval recommendations to get our financial services regulation in order and update it to the expectations of a reasonably transparent global financial system. In other words, by October we were supposed to bring down the Jolly Roger and raise a flag of respectability.
Even Panama did that after the Mossack Fonseca scandal. But here we never wanted to acknowledge that the Mossack Fonseca scandal was anything but something Konrad Mizzi needed to populate his assets. All €94 of them. Or, now we learn, something Keith Schembri wanted to leave dormant until one day he retires from politics.
It looks ever more likely that October will come and go and we’ll fail the Moneyval tests relegating us into the limbo of a grey list. This will make us the first and only EU member state that is branded as untrustworthy by the Financial Action Task Force, the FATF, of which Moneyval is the European branch.
It is hard to explain just how devastating this is. This is not an incidental embarrassment like getting our prime minister named as the world’s most corrupt political leader. Although of course the two certificates are associated. This has a direct impact on our ability as an economy to wake up tomorrow and earn our keep.
Bar some miracle, this is what will happen in October. We’ll be officially marked as a pariah state for financial services. It’s not a place we’ll want to be in for very long.
Don’t take it from me. Read this interview from last February with Chris Buttigieg, the strategy chief at the Malta Financial and Services Centre that MaltaToday carried. He explains what grey-listing for Malta might mean:
“The FATF grey list is a warning that a country might be blacklisted (uncooperative tax havens), a yellow card notice that if a jurisdiction does not curb terror funding and money laundering risks, it might face serious sanctions. Sanctions might include those from international institutions like the World Bank and the International Monetary Fund, difficulty obtaining loans from said institutions, an overall reduction in international trade, and international boycotts and embargoes.”
Even if you’re fuzzy about what all that might mean to you, you can guess it’s not likely to be fun.
The former financial intelligence boss Manfred Galdes, who resigned in disgust when the police refused to take action on his report on Konrad Mizzi’s blatant corruption, posted this comment on his LinkedIn page.
There’s the hope that we now face the fact that we’re going to be exiled from the respectable white list and what we need to be focusing on is how we are going to emerge from it as quick as we can.
Then there’s that pathetic picture of Edward Scicluna who is a bit like the fictional Salieri: the first and for now probably one of the very few to realise just how lacklustre his performance as Finance Minister has been.
Edward Scicluna has failed. He has failed to insist with his prime ministers and his colleagues that we needed to send the right signals to the world when Keith Schembri and Konrad Mizzi were caught doing the funnies. He failed to ensure that when Pilatus Bank was exposed by Daphne Caruana Galizia, the institutions that reported to him acted swiftly and without ambiguity. He failed to calm the world’s nerves about Malta. He failed to engage with the worldwide press and to protect Malta’s reputation.
And then he failed to deliver on the promises he made to Moneyval. He failed to take us out of the risks. He failed to lead the changes needed to our institutional set-up, to our law enforcement capability and to the management of our relationship with the financial world.
This is on him. In October, if we’re grey-listed and brought closer to the financial reputations of the blacklisted jurisdictions of the world than to our EU partners, all we’ll have to show for ourselves will be a quote from a mid-ranking WHO bureaucrat saying we were bullies at handling the coronavirus. It’s like taking your Religious Studies exam result from when you were in Form II to show to the bank manager considering whether to authorise your mortgage application.
Forget Germany, Sweden, France and Austria. Our closest matches in the world will be Botswana, the Bahamas, Iran, Cambodia, North Korea, Ghana, Iceland, Mongolia, Panama, Pakistan, Trinidad and Tobago, Yemen and Zimbabwe.
Edward Scicluna failed to prevent us from getting into this mess. He can’t be the one we rely on to get us out of it.
Apart from the fact that his much vaunted academic background is hardly relevant to his job, the real issue here is that he is too politically attached to the Labour Party’s corruption that brought us here, too inclined to deny it exists, too dependent on the Labour Party’s survival for his own, to take the decisions that really need to be taken.
In that respect he is like the entire government he belongs to. Robert Abela could not bring himself to fire Lawrence Cutajar even when he knew the former police chief tipped off criminals. He could not bring himself to force Konrad Mizzi and Chris Cardona out of his parliamentary party even after knowing for months about the Montenegro imbroglio in Mizzi’s case and the grave suspicions of involvement in a murder in Cardona’s. He hired Joseph Muscat as his adviser even if the disgust he expressed just last week cannot possibly be a new feeling for him.
Labour has brought us to this dark spot. They did so by drifting blindly, covering up the fact that they managed our economy by inebriating it with stolen wine. They have no idea how we really got here and have even less of an idea how to get back to the stability, the credibility and the sustainable prosperity we had before they messed it all up.
Edward Scicluna cannot fix this. The Labour Party cannot fix this.
The real fix is, who can?