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

Tonio Borg: his nomination and Malta’s reputation

Stephen Calleja heads the editorial team at Standard Publications, publishers of the Malta Independent as well the The Malta Independent on Sunday.

He considers himself to be “independent” so much that he did not bat an eyelid in accepting to present a TV discussion programme on the PN political TV station NET TV: l-Iswed fuq l-Abjad. Its independence can be attested by considering his choice of speakers and his myopic consideration of the  issues discussed.

In today’s edition of the Independent on Sunday Mr Calleja speaks of “restoring Malta’s reputation” when discussing the consideration by the EU institutions of Tonio Borg’s nomination as John Dalli’s successor on the EU Commission.

Calleja’s point is that The Green’s criticism of Tonio Borg’s nomination and credentials will tarnish Malta’s reputation.

It seems that those defending Tonio Borg’s nomination, including Mr Calleja, consider that he has only one positive point, that he is Maltese and they expect all to rally behind this nomination on the basis of his nationality.

Calleja fails to give due weight that Tonio Borg has destroyed his own candidacy by his utterances and actions as a Minister. His actions on immigration  when he supported Berlusoni’s agreement with Gaddafi’s Libya to send back immigrants to Libya to be tortured is compounded by the 2002 Eritrean refugee mishap documented by Amnesty International amd UNHCR. Tonio Borg as Malta’s Minister for the Interior  was responsible for sending back Eritrean immigrants. Some were tortured others disappeared.

Tonio Borg’s utterances against tenancy rights of same sex couples during the rent reform debate in Malta’s Parliament may have been forgotten by Stephen Calleja.  Calleja may even consider as unimportant the fact that Tonio Borg defied the referendum result and opposed divorce legislation.

In view of Tonio Borg’s record as pointed out above I do not consider that his nomination was the appropriate one.

When Lawrence Gonzi, notwithstanding the above decided to proceed with Tonio Borg’s nomination he was gambling Malta’ reputation.  He should have nominated someone else. There are plenty of suitable candidates amongst Malta’s  404,000 population.

It is on Lawrence Gonzi’s doorstep that Stephen Calleja should direct his criticism. But obviously, as he is “independent” he will find considerable difficulty in doing so.