This is the main finding of a European Parliament report of its recent rule of law mission to Malta.
The report focused on the possible role of members of the current Maltese government in the Panama Papers scandal.
The MEP probe also encompassed the murder of the investigative Maltese journalist Daphne Caruana Galizia and concerns over the rule of law in Malta.
Her family are taking legal action against the island’s police, saying the investigation into the killing cannot be impartial and independent since it is being run by a senior officer married to a top government minister who was the subject of critical articles by Caruana Galizia.
The report by a cross party delegation is said to shed light on serious shortcomings in the rule of law and demands tough consequences from Malta.
One of those who compiled the report after the two-day mission, was German MEP Sven Giegold, financial and economic policy spokesperson of the Greens/EFA group.
Giegold said, “Our mission found evidence of systematic and serious deficiencies in the rule of law in Malta and the European Commission should investigate our findings seriously.”
He went on, “For the Maltese government, it is now high time to finally face serious consequences after the Panama Papers and the murder of Daphne Galizia. Members of the government with doubtful offshore accounts should be removed from office. The EU should not accept the deterioration of the rule of law in any member state.
“Corruption and financial crime has to be prosecuted effectively everywhere in Europe. The Commission and the Parliament should now intensify their work under the framework of Article 7 of the EU treaty.”
The Commission recently invoked the Article 7 procedure in its ongoing dispute over the rule of law in another member state, Poland.
One possible sanction under Article 7 is the suspension of a country’s voting rights, meaning that it would be excluded from EU decision making but still be subject to EU rules.
The fact-finding mission, led by Socialist MEP Ana Gomes, was sent to Malta late last year after the 16 October car bomb murder of Galizia, who had reported on wrongdoing by Malta’s elite.
The delegation met with the Prime Minister Joseph Muscat and various officials including the Maltese police commissioner, the chief justice, representatives of the Malta financial services authority and financial intelligence analysis unit (FIAU), as well as journalists and civil society activists.
The report, which has been seen by this website, says, “Members expressed to the Prime Minister their concern on the lack of efforts to combat corruption and money laundering in Malta and noted the shadow cast over the credibility of reforms undertaken by the government when two individuals under serious suspicions of money laundering and bribery, as per the Panama Papers and leaked FIAU reports, were still retained by the Prime Minister in his government.”
MEPs expressed serious concerns about what it called Malta’s “unclear separation of powers” as well as its “weak” implementation of anti-money laundering legislation and the “serious problems” in a programme allowing people to buy Maltese citizenship.
The Maltese government has so far refused to publish the names or nationalities of the people who are said to have paid €650,000 apiece to be granted Maltese citizenship.
The report urged the Maltese government to publish the list of foreigners granted citizenship under the programme, and said the European Commission should assess the programme to see if it has distorted European markets or EU security.
The MEPs say that keeping politicians suspected of money laundering in office affects the government’s credibility, fuels a perception of impunity and could result in further damage to state interests by enabling the continuation of criminal activity
On the banking front, the report flagged the low rate of banking investigations and called on the European Banking Authority and the European Central Bank to assess whether Maltese authorities were “fully equipped and free from conflicts of interest” to perform their duties.
The report also requested the Commission take note of practices used against the Maltese media, including strategic lawsuits against public participation, which aim to intimidate and silence media by burdening them with high legal costs. Most media in Malta have been hit by such suits, which may be winnable in court but at a prohibitively high cost.
The report called for Malta to “actively ensure the protection of media freedom” by drawing up laws to “curtail these abusive practices.”
Gomes said the delegation found it “extremely disturbing” that some of the officials it met did not answer its questions. One, Muscat’s chief of staff, Keith Schembri, read out a prepared statement, she said, while another “never showed up”.
Gomes said that she and other delegation members were “even more worried” than when they first arrived in Malta last October.
Maltese EPP group MEP David Casa said Parliament was now waiting for the Commission to respond, pointing out that if there is no action, a number of options were available to them.
“More concretely we could use a particular mechanism to draft a directive ourselves and send it to the Commission to propose.
“What is certain is that we are determined and committed to push for this legislation for as long as necessary,” Casa said.