How Malta became a den of thieves

The revelations emerging from the public inquiry into Daphne Caruana Galizia’s assassination have revealed the dark underbelly of a country which was held back by its government from being able to investigate financial and economic crime, allowing lawlessness and impunity to flourish unfettered.

This transformed Malta into a haven for criminals in a very short time.

Wherever there is crime there is almost always financial gain. A person who has gained money illicitly needs to be able to provide a plausible explanation of how he or she came by this money. An inability to explain the provenance of funds can lead to a money laundering conviction which carries very heavy penalties.

Criminals use money laundering techniques to make money that was acquired through illegal activity appear as if it was generated through legitimate and legal means. They do this for a number of reasons: not to have crimes traced to them from the flow of money, to enjoy the proceeds of their crimes, and to “reinvest” the money in further crime. If they cannot enjoy or utilise the proceeds of their crimes, crime does not remain profitable and attractive.

It’s only logical that a country that means business about reining in criminality would resource its law enforcement agencies adequately to be able to investigate, prosecute and obtain convictions for money laundering offences. In Malta, the relevant law enforcement agency would be primarily the Economic Crimes Unit within the Malta Police Force.

Yet the current Maltese government does not subscribe to this logic.

The Financial Intelligence Analysis Unit (FIAU) is the national central agency in Malta that is responsible for the collection and analysis of information to combat money laundering. It is an intelligence agency rather than a law enforcement agency.

If the FIAU investigates a case and believes that there is a reasonable suspicion of money laundering, it is passed on to the police for investigation. Though the police need to conduct their own investigations, thanks to the work done by the FIAU they know what to look for and where to look for it.

Yet former FIAU director Manfred Galdes, testifying at the public inquiry said that even if a country has the best FIAU in the world but an Economic Crimes Unit consisting of just three police inspectors to work money laundering cases, the system could never be effective. They never had the time to investigate any complex cases, he said.

“You can fund it with millions but if the report goes to the police and nothing happens, what’s the point? Even Moneyval flagged this as a major issue in Malta,” Galdes said.

Moneyval is a permanent monitoring body of the Council of Europe tasked with assessing compliance with the principal international standards to counter money laundering and the financing of terrorism.

It conducted an evaluation on Malta towards the end of 2018 and concluded that limited resources, both human and financial, allocated to the investigation and prosecution of money laundering weighed negatively on Malta’s capability to effectively fight it.

“Money laundering investigations and prosecutions do not appear to be in line with the country’s risk profile and the growing size and complexity of its financial sector. The assessment team is not convinced that the law enforcement authorities are currently in a position to effectively and in a timely manner investigate and prosecute high level and complex money laundering cases related to financial, bribery and corruption offences,” the report states.

This was confirmed by Superintendent Ray Aquilina from the Economic Crimes Unit who also testified during the public inquiry. Aquilina said that resources at the Economic Crimes Unit were poor, both in terms of funding and staff, and investigations into serious corruption allegations are still ongoing two years down the line.

He also testified that there were periods when the unit was a one or two-man show, adding that he was ashamed to say that sometimes he had to sift through large amounts of information manually as the police do not have the software to do it electronically.

Former FIAU inspector Jonathan Ferris also testified, saying that the lack of resources was one of the main reasons why he left his post at the Economic Crimes Unit in the police force and moving to the FIAU.

It’s now clear that in a day and age where tackling crime depends on the ability of intelligence and law enforcement forces to “follow the money”, resources were are still being held back by the government.

In other words, corruption and crime are given free rein.

That must have been very convenient for Keith Schembri, the former prime minister’s chief of staff, and former minister Konrad Mizzi, who had an arrangement with Yorgen Fenech, the alleged mastermind behind Caruana Galizia’s assassination, for them to receive some €5,000 a day from a corrupt deal.

That must be convenient for quite a few criminals.

If Robert Abela is ‘the real thing’ then addressing the lack of resources for combatting money laundering should be one of his most urgent priorities. Otherwise, like his predecessor, he is just an enabler of corruption and crime through his inaction – inaction that led to the assassination of a journalist.