A Christmas carol for Jason Azzopardi

i-am-the-ghost-of-christmas-past

 

Just like Ebenezer Scrooge, Jason Azzopardi is haunted with scenes from his past. Scrooge had to deal with the Ghost of Christmas Past while Jason has been spotlighted by the Auditor General in three separate reports. These deal with issues forming part of the political responsibilities which he shouldered when part of the Lawrence Gonzi Cabinet.

The first report was presented one year ago and dealt with the issuance of encroachment permits on the eve of the 2013 general election.  The Auditor General then commented on Minister Jason Azzopardi’s intervention in the issuance of encroachment permits, emphasising that his intervention was “unwarranted”.

Pompous as ever, Jason Azzopardi insisted that he acted within the parameters of the law. He was not capable of recognising that he erred. Nor was he publicly chastised in any way by his own political party which has called for everybody’s resignation, except his own.

Two other reports were published by the Auditor General last week.  Both deal with government land: its acquisition in one case, its transfer in another.

The first report investigates the acquisition of 233, 236 and 237, Republic Street Valletta.  The Auditor General, in this investigation identified significant shortcomings in the process of negotiation, critically and negatively conditioning Government’s negotiating position. “This serious shortcoming,” states the Auditor General, “was raised in concerns raised by the Permanent Secretary,” who was over-ruled.

Notwithstanding the corrective measures subsequently taken, the process remained flawed. This, emphasised the Auditor General, represented a fundamental weakness in the process of negotiation (with HSBC), “effectively limiting Government’s bargaining power”.  Bad governance at its worst!

The second report deals with the investigation on the transfer of land at Ta’ L-Istabal, Qormi.   The Auditor General concluded that “failure in terms of good governance, to varying degrees, is a recurring theme that emerged” throughout his review of the matter. The Auditor General also noted “extraordinary haste” when as a result of problems being identified authorisations were obtained and contracts signed in a matter of two days.

The Auditor General lists a number of public officers as being responsible for the mess created when conditions attached to a contract concerning government property were cancelled illegally without Parliament’s approval in terms of legislation regulating the disposal of government land.

Describing this mess, the Auditor General states that he “did not find any direct evidence of political pressure exerted in the processes reviewed.” The emphasis obviously is on the words “direct evidence” as reading through the report it is amply clear that a selection of the top brass within the civil service would not act in such blatant defiance of the law unless they had at least tacit approval of the holders of political office to which they were responsible. The civil service officials mentioned by the Auditor General as being directly responsible are: The Director General, the Notary and the Assistant Director Contracts of the Government Property Division.

The Auditor General makes this very important consideration: “ …………… an element of political pressure was asserted by the Chair Vassallo Builders Group Ltd, who alleged that Marsovin Ltd had prior agreement with the ‘Minister’ and the GPD. The Director Marsovin Group Ltd negated this allegation, as did the Minister of Finance, the Economy and Investment and the Parliamentary Secretary for Revenues and Land, who indicated that they were not aware of the case at the time. Queried in this respect, the Chair Vassallo Builders Group Ltd indicated no knowledge of who the ‘Minister’ was. While the NAO cannot rule out pressure being exerted by any of the aforementioned, or possibly by other persons who did not come to this Office’s attention, the facts of the case render immediately evident that pressure was in fact exerted to the detriment of Government’s interests.”

Ultimately the responsibility for this mess lies on Jason Azzopardi’s lap. He has a lot of pending explanations. He will obviously not resign as clearly he only pays lip service to good governance.

In addition, this report from the Auditor General possibly throws some light on another incident: the loan of €250,000 by a certain Nazzareno Vassallo to the PN’s commercial arms on the eve of the 2013 general elections. We were then informed that the loan was of a commercial nature on commercial terms.

The proof of the pudding is in the eating. How can anyone believe Jason Azzopardi and his political party preaching adherence to good governance when as recently as 2012 they made a mess on all that they could lay their hands on?

Referring to Joseph Muscat’s gross administrative incompetence and the scandals popping up every other day is no solution. The more we unravel from the past the more clear it becomes that both the Labour Party and the Nationalist Party, each in its own way, as a result of their shady methods of operation, cannot be trusted with the reins of power.

published in The Malta Independent : Tuesday 27 December 2016

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The financing of Fawlty Towers

Townsquare.Fawlty Tower

The saga of the Mrieħel and the Townsquare towers is now entering a new phase, with the planning appeal stopwatch due to start ticking shortly –  most probably towards the end of the month. It is known that, so far, Sliema Local Council and a number of environmental NGOs will be appealing against the 4 August decision of the Planning Authority to approve the “Fawlty Towers” at Mrieħel and Townsquare Sliema .

Financing of the projects is next. The banks cannot increase their already substantial exposure to loans that are dependent on building speculation. Consequently, the developers will inevitably have to seek the involvement of private citizens and, possibly, institutional investors. Most probably, the process for financing the projects has already commenced; it will involve the issuing of bonds to the public and will normally be sponsored by a bank and a stock-broking agency.

The bank or banks and stockbrokers sponsoring the bond issue will have to ensure that the bonds are subject to an “appropriateness and suitability testing” subject to such direction as the Malta Financial Services Authority  may consider necessary and suitable. Also, in the light of past local unpleasant experiences, the Authority will undoubtedly be guided by the need to ensure  that prospective investors fully understand the inherent risks of the proposed investments.  It will also ensure that detailed information is published in the form of a suitable prospectus in which the small print is both legible and understandable.

Those who finance the high-rise projects should shoulder responsibility for their impact together with the Planning Authority and the developers. They will potentially make it happen, so they should carry the can. It is important to get this message through: those who will invest in the Gasan and Tumas bonds intended to finance the “Fawlty  Towers”  should receive more than a monetary return on their investment. The moment they sign up they will also assume co-responsibility – with the developers, the Planning Authority, the bank or banks and the sponsoring stockbrokers – for this projected development .

Word is going around on the need to boycott the services and products placed on the market by the Gasan and Tumas Groups. Journalist Jürgen Balzan, writing in Malta Today described these services and products as being wide-ranging (hotels, car-dealerships, gaming, finance and property) which easily impact on the daily life of a substantial number of Maltese citizens. However, such a boycott’s only link with  the “Fawlty  Towers”  would be through the owners.  It would be preferable for a boycott to have a direct link with the offensive action.  In this context, the forthcoming bond issue to finance the “Fawlty  Towers”  presents itself as a suitable opportunity.

A boycott is a non-violent instrument of protest that is perfectly legitimate in a democratic society. The boycotting of the forthcoming bond issue would send a clear message that people will not be complicit in further ruining the  urban fabric of Sliema and ensure that development at Imrieħel is such that the historic landscape is fully respected.

A social impact assessment, if properly carried out, would have revealed the apprehensions of the residents in particular the residents on the Tignè peninsula. But, unfortunately, as stated by Sliema Green Local Councillor Michael Briguglio, the existing policy-making process tends to consider such studies as an irritant rather than as a tool for holistic management and community participation.

We have had some recent converts on the desirability of social impact assessments, such as Professor Alex Torpiano, Dean of the Faculty for the Built Environment at the University of Malta. Prof. Torpiano, in an opinion piece published by the Malta Independent this week, stressed that spatial planning in Malta needs a social-economic dimension. Unfortunately, I do not recollect the professor himself practising these beliefs as the leading architect in the MIDI and Cambridge projects on the Tignè peninsula,  a stone’s throw from Townsquare!

Investing in this bond issue is not another private decision: it will have an enormous impact on the community.

Responsibility for this ever-increasing environmental mess has to be shouldered by quite a few persons in Malta. Even the banks have a very basic responsibility – and not one to be shouldered just by the Directors: the shareholders should also take an interest before decisions are taken and not post-factum.

I understand that the Directors of APS Bank have already taken note of the recent  statements regarding the environment by  Archbishop Charles Scicluna. As such, it stands to reason that APS will (I hope) not be in any way associated with the financing process for the “Fawlty  Towers”.  However, there is no news as yet from the other banks, primarily from the major ones – ie Bank of Valletta and HSBC.

This is a defining moment in environmental action in Malta. It is time for those that matter to stand up to be counted – and the sooner the better.

published by the Malta Independent on Sunday – 21 August 2016

Taking care of tax evaders

HSBC Geneve

 

Joseph Muscat and the Labour Party pride themselves with emphasising that this Government has removed the statutory limitation (prescription) relative to corruption when holders of political office are criminally prosecuted.

It certainly was a step in the right direction. It still however requires the test of time to verify whether it is compatible with the human rights provisions of our Constitution and the European Convention of Human Rights as was explained by former Strasbourg Judge Giovanni Bonello in his article Bribery and Genocide : the same? (Times of Malta April 20, 2013)

Such a clear stand against corruption contrasts with the provisions of Legal Notice 256 of 2014 entitled Investment Registration Scheme Regulations 2014 which launched the latest amnesty that can be utilised by Maltese citizens who evaded payment of income tax. Camouflaged through the use of Orwellian terminology as an “Investment Registration Scheme”, this amnesty, as others before it, did not treat holders of political office any differently from other tax evaders. It afforded them the same opportunities to be able to “regularise” their position absolving them from having committed an economic crime.

Apparently, this government considers tax evasion to be a crime which is substantially inferior to corruption. In fact, the recent cases brought to light by Swiss Leaks have revealed the ease with which former Cabinet Ministers have wriggled out of their tax evasion crimes that they had successfully concealed for around 40 years, including when in office.

During all these years, most of the funds which were accumulated in various bank accounts until they ended in an HSBC Genève account, reaped interest at varying rates depending on market conditions, which, as a result, increased the quantum of the undeclared funds. Had both the funds originally invested as well as the accumulated interests  been appropriately declared to the tax authorities in Malta , they would have been subject to between 35 per cent and 65 per cent  taxation in terms of Income Tax legislation. Yet the Investment Registration Scheme of 2014 allows self-confessed tax evaders off the hook subject to a  maximum 7.5 per cent registration fee! They even get a discount if they repatriate the funds! Apparently it pays to be a tax evader.

There are, however, some matters  which are not at all clear, yet.

Before insisting on his imaginary “right” not to be pestered by the press, former Minister Ninu Zammit had informed The Malta Independent on Sunday  that all his affairs were now “regularised”, having  made use of the 2014 amnesty to reap the benefits of his hoard stacked in Genève. He was also reported as having stated that the sources of his hoard was income derived from his professional activity  as well as various deals in landed property.

It is public knowledge that Zammit’s land deals were negotiated through the Malta registered limited liability company by the name of LENI Enterprises Limited of which he was both a shareholder and a director.  It is logical that any income from land deals would not only have a bearing on Ninu Zammit’s tax status but also on the reported performance and possible tax liabilities of LENI Enterprises Limited. In this respect, the  company’s financial reporting would certainly make very interesting reading.  Have its audited accounts been submitted to the Malta Financial Services Authority or its predecessors in terms of law?  Who has certified these accounts? What about the role of the auditors of LENI Enterprises Limited?  Is there the need to revisit the audited accounts of LENI Enterprises Limited due to the fact that at least one of its directors has benefited from the latest tax evasion amnesty?

As far as I am aware,  Legal Notice 256 of 2014 only absolves self-declared tax-evaders resident in Malta from their non-observance of income tax legislation. Other crimes could still be actionable .

Such other crimes would include false declarations to Cabinet in terms of the Ministerial Code of Ethics. There may also be other issues should these result from the investigations which the Commissioner of Inland Revenue is currently carrying out on the basis of the information which is now known.

There is however one important thing which we should never underestimate. The benevolence of the state towards tax evaders has no limits. It knows how to take care of these small details too.

 

published in the Malta Independent on Sunday – 1st March 2015

Swiss cheese

Swiss cheese 2

Michael Falzon and Ninu Zammit, retired for some years from politics, are back in the news for the wrong reasons. Tax evasion and false declarations.

They have tried to give some explanations. Michael Falzon has attributed his accumulated investments in HSBC Geneve to his professional earnings from overseas clients between 1975 and 1985. Zammit went one further: in addition to professional earnings in approximately the same timeframe, he has stated that they have also accrued as a result of his land dealings.

It is news that Ninu Zammit had substantial earnings from his profession. Back in the 80s, in his income tax return he used to declare that he barely earned a minimum wage. Way back in the 80s a thick book used to be published by the Commissioner of Inland Revenue listing the income declared and the income tax paid in Malta by all taxable persons. I distinctly remember  that the book used to indicate that Ninu Zammit was one of the poorer chaps on the island then!

I do remember some years back reference to the company LENI Enterprises Co Ltd co-owned between Ninu Zammit and another member of his family. Maybe some enterprising journalist could carry out searches into the assets and liabilities of LENI Enterprises Co Ltd which could  possibly lead to some very interesting results.

Politics and dealings in land were never a good mix. History has proven time and again that such a mix generally produces the worst possible cocktail.

Both Falzon and Zammit have avoided criminal proceedings by making use of one of the amnesties launched over the years. By paying a fine and repatriating their Swiss funds they have been absolved of criminal action relative to tax evasion and infringement of currency rules.

Michael Falzon, when cornered,  admitted his role and in anticipation of the full story in the Sunday papers published his side of the story. Ninu Zammit, on the other hand, was arrogant and argued that his financial affairs were now in order and that as he was no longer in politics he should be left alone.

Both Falzon and Zammit occupied ministerial office. Falzon was minister for nine years between 1987 and 1996. Zammit was parliamentary secretary for nine years (1987-96) and a minister for another ten years (1998-2008). During these years, as from 1994, they filed annual declarations in terms of the Ministerial Code of Ethics supposedly declaring their assets. These declarations were filed in the Cabinet Office and subsequently the Prime Minister notified Parliament by presenting a copy of such declarations for its scrutiny.

It now results that Michael Falzon and Ninu Zammit through false declarations misguided Prime Ministers, Cabinet and Parliament.  No amnesty has or will absolve them of this.

Up till the time of writing, no public apology has been made by either Falzon or Zammit.

It is also unfortunate that so far, Parliament has no available remedy for  this serious breach of the Ministerial Code of Ethics by these two former Cabinet members.

Pending on Parliament’s agenda is a Bill entitled Standards in Public Life Bill. When approved into law this Bill will provide for the appointment of a Commissioner and a Standing Committee with the authority to investigate breaches of statutory or ethical duties of persons in public life.

In its present format, this Standards in Public Life Bill provides for investigations into ethical breaches such as those committed by Michael Falzon and Ninu Zammit only when the persons committing such breaches are still Members of Parliament.

Article 13 of the proposed Act in fact authorises the Commissioner for Standards in Public Life to examine declarations made pursuant to the Ministerial Code of Ethics. Unfortunately, the proposed Act does not contemplate action against former Members of Parliament.  Nor does it empower investigations on misdemeanours  going back more than two years.

Hopefully Parliament will revisit the Bill and amend it to empower the Commissioner and the Standing Committee to investigate similar cases. Falzon and Zammit should be made to pay for their false declarations to Cabinet and Parliament by being stripped of their Ministerial pensions. Anything less will make the Ministerial Code of Ethics resemble Swiss cheese.

published on The Malta Independent: 25th February 2015

Learning to use chopsticks

chopsticks

We have been told that it is most worrying that China could acquire a share in our energy corporation. It is worrying, we are told, due to the strategic importance of the sector.

We tend to forget that Malta has plenty of foreign investments in other strategic sectors. Another one wouldn’t change much would it?

Our only airport is run by Austrians.

Gambling has been left to  Greek Intralot.  Banking is heavily influenced by global HSBC ironically originating from Hong Kong, the tip of the Chinese mainland.

The public  transport fiasco has an Anglo-German fingerprint through Arriva.

LPG Gas is controlled by Italians through GASCO.

The Freeport is controlled by a Franco-Turkish alliance for the next 65 years. (CMA-CGM and Yildirim Group)

When its Austria, Greece, Anglo-German interests, Italian investments, Franco -Turkish controls, or global HSBC then its globalisation.

The Chinese interest is part of the same process.

Obviously the details of the memorandum of understanding signed earlier this week are not yet known. Hence a proper discussion would have to wait until such details are known. There will surely be positive and negative impacts. China stands to gain. Whether Malta’s potential gains are adequate is still to be seen as we have only been fed titbits of information.

China obviously stands to gain through establishing a stronger foothold in Malta and within the EU.  Whether it will be similarly positive for Malta is still to be seen.

Some Chinese companies are world class. They provide stiff competition to international firms such as Lahmeyer International the one time consultants to the Malta Resources Authority and to Enemalta Corporation. Some of these Chinese companies have reached the same grade in World Bank blacklists !

We have been there before.

It may turn out not to be so difficult to learn to use chopsticks after all !