The Sorrows of Malta (2): Sleaze Island

How a Corrupted Micro-State Became the Mirror of a World Gone Bad

Visitors who catch the ferry from the Cospicua dockyard to Valletta will immediately the modernised warehouse building overlooking the rows of yachts and boats moored off Grand Harbour, with its elegant combination of glass and traditional Maltese limestone.  Pause at the entrance to the dock and you can read the plaque, in which the American University of Malta (AUM) announcing its commitment to provide ‘top quality education that empowers our students and provides them with the necessary kills to become global citizens and leaders in their professional and personal lives.’

Some visitors may notice the absence of students and wonder where they are.  Delve a little deeper – it doesn’t take long – and the plot quickly thickens.  In 2015 the journalist and blogger Daphne Caruana Galizia denounced the AUM, with her usual acerbic pen, as the ‘University of Baksheesh’, and asked why the Jordanian Sadeen Group had been ceded an enormous parcel of prime development land by the Maltese government with no parliamentary scrutiny in order to build a university.

Others also questioned why a Jordanian construction and hotel company with no experience in the university sector would want to build a ‘private, American-style liberal arts college’ in a small country that already has a well-regarded public university?

According to a spokesman for the Labour Party government of Joseph Muscat in 2015 this initiative was intended to regenerate the Cospicua  docklands and the south of Malta - an aspiration supposedly based on the Sadeen Group’s promise to have 1,200 students by its fourth year of operations, increasing to 10,000 by its tenth year.

Today the AUM is in its fourth year and it has less than 150 students.  According to the investigative website The Shift, it registered more than $11 million in losses in 2018 and 2019 and has made almost no money from tuition.  In these four years the AUM has become a byword for dishonesty, corporate mismanagement, deceit, and incompetence.  

Former faculty members have described how they were lured to Malta with golden handshakes purely because they were American, before the entire faculty was sacked in little more than a term by the original provost, whose main academic experience beforehand was running the Khazar University in Azerbaijan.

The purpose of this ‘university’ is not clear.   Was it a money-laundering scam?  A vehicle for visa fraud? A pretext to get hold of historic buildings for free so that the Sadeen Group could to turn them into a luxury waterside hotel at some point in the future?

No one seems to know. For the time being the university that is not a university remains theoretically open for its non-existent global leaders - a white elephant that symbolises the hollowness of the Maltese former Prime Minister Joseph Muscat’s pledge in 2014 to ‘turn Malta into the next Dubai’ by ‘attracting the global rich to become citizens of Malta.’

Muscat’s attempts to realise this aspiration have transformed a country whose reputation was built on Catholic martial fervour into a byword for sleaze, criminality and outright gangsterism. To attract the ‘global rich’, his government sold ‘golden passports’ to those able to make the $1 million investment in Malta’s ‘citizen by investment’ program, and dropped corporation tax to five percent, compared with a twenty-two percent average in Europe.

Good news for rich folk looking to become EU citizens, but less so for the foreign construction workers recruited to build their houses and apartments for them or work in Maltese factories - not to mention the refugees sent back to Libya as part of Malta’s ‘pushback’ policy and detained in some of the worst migrant detention centres in Europe.

Muscat clearly liked rich people and does not appear to have been too fussed about how they made their money. He invited Yorgen Fenech – the tycoon subsequently charged with commissioning the murder of Daphne Caruana Galizia - to his private birthday party.

Caruana Galizia accused Muscat’s wife of receiving $1 million from the daughter of Azerbaijan’s president through a shell company set up by Mossack Fonseca - an allegation that was dismissed following an investigation in 2019.

In 2014 Muscat’s admistration presided over the establishment of the disgraced Pilatus Bank, which provided assistance to Maltese passport applicants. Just as the American university does not appear to be a university, so Pilatus was clearly not a proper bank, and was shut down by the European Central Bank in 2016 following allegations of impropriety and money-laundering.

The ‘Corrupting Sea’

Muscat may simply be an incompetent fool, or he may be something worse. To date his former chief-of-staff has been arrested in connection with alleged kickbacks related to the passport scheme, and three other former ministers in his administration are subject to an ongoing criminal inquiry related to a deal with a health care company.

Nor is such avarice confined to Malta’s political class.  This is a country where antimafia prosecutors estimate that the Malta Gaming Authority-licensed site RaiseBet24.com has laundered $74.2 million for the Sampaolo-Erculano clan of Cosa Nostra; where former footballers smuggle fuel into the EU in partnership with Libyan warlords; where unsolved gangland shootings and carbombings have become routine.

For years the Corleonesi mafia boss ‘Toto’ Riina holidayed in plain sight on Gozo for years. Now the European Investigation Collaborations (EIC) network describes Malta as a haven for ‘firms linked to the Italian mafia, Russian loan sharks and the highest echelons of the Turkish elite.’

In 2018 Bloomberg described Malta as a ‘cryptocurrency and online gambling hub plagued by allegations of corruption and money laundering.’ In June this year, Malta was ‘greylisted’ by the Financial Action Task Force (FATF), the world’s financial watchdog, because of concerns about money-laundering and terrorist financing.

It’s easy – and convenient - for northern European countries to see these developments as some kind of ‘southern European’ phenomenon – a manifestation of Fernand Braudel’s depiction of the Mediterranean as a ‘corrupting sea’. There is clearly a very specific historical trajectory that led the authoritarian micro-state once allied itself with Ghadaffi’s Libya and Ceaucescu to succumb to the post-Cold War temptations of our ‘borderless world’.

But Malta’s vulnerability to predators from inside and outside the island is also a mirror of the wider world - a world increasingly defined and organised by the super-rich and for the super-rich, where criminal ‘dirty’ money moves through the same clandestine networks that the rich use to hide and park their money and small and large states struggle to regulate these flows, especially when so many politicians increasingly regard themselves as handmaids of the rich, and see politics as a means to become rich themselves.

These morbid dynamics might seem clearer in a small country, but larger countries also exhibit the same characteristics, including the UK, which Roberto Saviano once described as ‘the most corrupt country in the world’. 

The penetration of Malta by ‘criminal money’ is only one more manifestation of a global economy floating on a sea of criminal money that it doesn’t - and perhaps doesn’t dare to - acknowledge, because it would make a mockery of the notion of a ‘virtuous’ global capitalism.

And it isn’t only Joseph Muscat who wanted his country to become Dubai, and he isn’t the only politician with a glassy-eyed fascination for the rich, and few scruples about where their money comes from.

We’ve all seen them, wherever we are.  When Daphne Caruana Galizia argued that ‘what we need is stronger institutions representing and working for the collective good, not conceited politicians wielding excessive power’, she was speaking about Malta.

But she could have been speaking about so many countries that are being dragged into the gutter by rich people with little interest in the common good or in anything except themselves, enabled by the governments and global institutions that too often refuse to stand up to them.