The law provides criminal penalties for corruption by officials, and the government generally implemented the law effectively against low-level corruption. Allegations of high-level government corruption continued during the year. Rule of law concerns over the government’s lack of criminal prosecutions and convictions for tax evasion and money laundering persisted, although both the Financial Intelligence Analysis Unit and the Malta Financial Services Authority stepped up oversight and enforcement.
Between July 2019 and August, the government enacted reforms, including constitutional amendments and legislation, to strengthen provisions of the law against corruption. The reform measures included the establishment of a legal framework to facilitate the dissolution of a credit institution to prevent money laundering and the funding of terrorism; the revision of the method for appointing the chairman and the members of the Permanent Commission against Corruption; and a law that transposes into Maltese law EU directives on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing.
Corruption: There were developments during the year on allegations of high-level government corruption stemming from international investigations into Pilatus Bank, established in the country in 2014, and the work of investigative reporter Caruana Galizia. Before Caruana Galizia was killed, she alleged the prime minister’s wife was the ultimate beneficial owner of a Panamanian offshore account connected to transactions involving Pilatus, and she was investigating separate government corruption allegations that the prime minister’s chief of staff, Keith Schembri, and former energy minister Konrad Mizzi took part in a 1.8 million euro ($2.2 million) kickback scheme related to an energy deal with the consortium Electrogas. Both Schembri and Mizzi resigned in November 2019. In September a continued public inquiry into the death of Caruana Galizia showed the government authorized a 40-million-euro ($48 million) tax and excise exemption for Electrogas.
In the wake of the developments in the Caruana Galizia case in November 2019 and protests by civil society calling for his resignation, former prime minister Muscat stepped down on January 12. Prime Minister Robert Abela was elected to replace him on January 13. In November 2019 police arrested business magnate and former Electrogas board member Yorgen Fenech, eventually charging him in court with several violations in connection with the Caruana Galizia murder case. The arrest followed a presidential pardon granted to an alleged middleman, Melvin Theuma, who revealed information about Caruana Galizia’s killing.
In a July report, the auditor general noted that correspondence indicated collusion between government officials and representatives of Vitals Global Healthcare (VGH) over a government contract. This followed a November 2019 court decision to reverse earlier rulings and begin a criminal inquiry into the roles of ministers Edward Scicluna, Christian Cardona, and Konrad Mizzi in the VGH deal.
On August 24, police investigators working on the journalist’s murder case interrogated former prime minister Joseph Muscat. In September, Keith Schembri was arrested and subsequently released on bail for allegedly receiving kickbacks amounting to 100,000 euros ($120,000) for Malta’s Individual Investors Program, a citizenship-in-exchange-for-investment scheme, from financial and business advisory services firm Nexia BT. On November 11, police released former Minister Konrad Mizzi and Schembri following fresh interrogations by police investigating financial crimes and money laundering. Both are reportedly still under investigation but have not yet been formally charged.
Financial Disclosure: Government officials are subject to financial disclosure laws, and declarations are available to the public. Courts can compel disclosure from officials not complying with the regulation.