Muscat changed terminal benefits systems twice while PM, resulting in higher payments for himself

Former prime minister Joseph Muscat changed the policy of terminal benefits for those occupying Cabinet positions just before his departure in 2019, which resulted in a more substantial golden handshake for him – possibly double what he’d have been entitled to under the original arrangements, and significantly more than that awarded to the much longer-serving prime minister Lawrence Gonzi.

In response to an exclusive story by The Shift yesterday, obtained after more than a year of FOI requests and only after the Information and Data Protection Commissioner ordered the OPM to release the information, Muscat said there was nothing secretive about the lump sum he received and that he was “entitled to get what others got” – a line repeated in most newspapers on Sunday morning.

He referred to a Cabinet memo drawn up under a PN administration that determined terminal and transitional benefits for Cabinet members who lose their position either through their resignation, sacking, or a change in government.

Yet Muscat is contradicted by a response from Robert Abela to a parliamentary question by Opposition MP David Thake in June 2020 in which the current prime minister states:

“Terminal benefits for the former prime minister were based on a scheme, introduced in 2004 and amended in 2018 and 2019.”

In his response on Facebook to The Shift’s revelations that he took home a lump sum of €120,000, Muscat compared his net income to the gross income given to former prime minister Lawrence Gonzi – who served a longer term as prime minister than Muscat.

The Shift asked Gonzi what his equivalent gross and net income had been. The reply shows that Gonzi got a severance pay of €72,901 gross, which after tax deductions amounted to €47,386. This was based on his nine years as prime minister.

Muscat was prime minister for three years fewer than Gonzi, but somehow got €120,000 gross, which after tax deductions amounted to €78, 495.40 by his own admission on Facebook yesterday.

Muscat’s termination benefits were calculated all the way to when he was Opposition Leader, according to the OPM’s eventual response to the Freedom of Information requests. But even when you take those years into consideration – October 2008 to January 2020 – Muscat should have received around €60,000, not €120,000, according to the PN Cabinet memo to which Muscat referred.

In his Facebook statement on Saturday, Muscat said he had renounced his transitional allowance. The allowance is a way of bridging back to the working world after, in theory, having given it up for public service.

According to the PN Cabinet memo to which Muscat referred, he was not entitled to receive it in the first year in any case, and it stops once you’re back in the working market. Muscat himself has admitted in his asset declarations justifying the cash that he was banking that he’d earned money through his consultancy work.

The Shift asked Muscat to explain the discrepancy – why he got double what he was entitled to and how he had changed the formula –  but despite his denials of secrecy and his commitment to transparency, no answers were received.

In contrast, Gonzi explained: “On the 25 March 2013, I had received a Terminal Benefit of €47,386 (Gross €72,901) based on my nine years in political office as Prime Minister. In August 2014, I received the total net amount of €6,553.30 (Gross €8,737.30) payment of a transitional allowance for the period 13 March 2014 to 30 June 2014. According to the Cabinet memo payment of a transitional allowance is not due for the first year since I was in receipt of a Terminal Benefit on ending of my political Office as Prime Minister. My entitlement to this allowance was considered to have ceased on 1 July 2014 when I became entitled to my pension.”

Referring to Muscat’s claim that he had renounced his transitional allowance, Gonzi said: “As far as I am aware it was never possible to ask for the transitional allowance of three years to be paid in a lump sum all at one go! And there is a reason for this.”

Taxpayers have been paying tens of thousands to retired politicians for many years, but different governments have refused to reveal the scheme’s details using the excuse that Cabinet decisions are not published.

Still, Robert Abela’s administration continues to refuse to supply information on the amounts given to politicians, both PN and PL, as a result of this scheme over the years. This would run into millions.