A country built on dirty money


For almost 20 years Malta has built much of its international and national image around the online gambling industry.

In 2004, just after joining the European Union, it became the first state to adopt a comprehensive legal framework for online gambling. Over the next few years, the Malta Gaming Authority, charged with overseeing the industry, grew into one of the most respected gaming authorities in the world.

In 2019, iGaming was worth $ 2 billion to the Maltese economy, or 13.6% of gross domestic product. Even during the COVID-19 pandemic, that figure only dropped to 12%, showing the industry was almost entirely immune to mass unemployment and the global economic downturn.

Malta is home to several hundred gambling companies, affiliates, game development companies, specialist marketing agencies, recruiting firms, specialist law firms and business service providers, “IGaming consultations”, payment processors, computer hardware and software. It’s also home to thousands of iGaming employees, many of whom are from Europe and live in Sliema and Gzira with over € 3,000 in wages they spend (literally) in chic St Julians bars five nights a week.

It’s a rich and ruthless industry that only cares about making money at the expense of others, but that is not my criticism.

My criticism is that the iGaming industry in Malta is becoming the last nail in its coffin and the burden on an already sinking ship.

Earlier this year, Malta came under intense scrutiny in a Forbes coin who has dissected its long and complicated history of gambling scandals. As The Shift has also pointed out many times, the success of the gambling industry rests on ties to the Mafia, underground criminal networks, criminality. financial and fraud.

While all the warning signs were there, it wasn’t until 2017 that the country’s gambling problem started to make headlines. Leaks of emails have surfaced showing that the MGA did not follow its own rules between 2012 and 2014. Lax oversight meant that betting companies were operating under conditions where money laundering and money laundering occurred. other criminal practices were occurring.

In May 2017, Malta files exposed more than 150,000 documents demonstrating how Maltese companies and institutions were complicit in financial crime. But it was too late; the EU was already furious with Malta for growing allegations that it would let financial crime continue under its nose.

Malta tried to tackle bad public relations by introducing the Gaming Law in March 2018, but this made it easier for operators to establish themselves. The application process has been simplified which means less paperwork for those wishing to obtain a Maltese license.

Then, in January 2021, the former CEO of MGA Heathcliff Farrugia was charged with corruption. It is alleged that he was in collusion with the man accused of giving the order to assassinate Daphne Caruana Galizia, the shady businessman Yorgen Fenech. Media reported that he provided commercially sensitive information to the accused killer.

In the context of Malta’s use as a jurisdiction to avoid taxes and persistent corruption in all aspects of government and institutions, other issues were at stake. Mafia clan accounts using Malta to launder money and facilitating illegal betting multiplied.

Over the past four years, a significant amount of The Shift’s virtual columns have been devoted to these reports.

In 2015, six companies registered in Malta saw their assets seized as part of a crackdown on illegal gambling activities initiated by the Calabrian group ‘Ndrangheta. Further links were discovered because some of the Italians on the “wanted list” had businesses and addresses in Malta.

At the same time, the Malta Gaming Authority said the Italians had 10 out of 200 licenses. It was the same year that they revoked the licenses of nine companies, including BetUniq, for links to the Calabrian Mafia.

In 2017, Italian riflemen arrested 30 people as part of Operation Beta. The arrests concerned money laundering and illegal gambling carried out by the Sicilian mafia clan Santapaoloa-Ercolano. Several Maltese companies and individuals have been identified in the survey.

Benedetto Bacci was then arrested along with 31 other people in an illegal gambling case. He allegedly agreed with Cosa Nostra and used a Maltese company, Phoenix International, to launder money.

Less than a year later, Operation Galassia revealed how Mafia clans, including the ‘Ndrangheta, used Maltese companies, including SKS365 holdings, to launder the proceeds of crime of up to € 1 billion. One of the companies involved, Centurionbet, was licensed to operate a gambling site in Malta.

The Investigative Reporting Project Italy described Malta as a “Ticket machine for the Italian Mafia. “

In the same year, 2018, Malta is at the top of the list of countries where the Italian mafia is most present. The map was produced by Transcrime using annual reports from Italian anti-mafia prosecutors and the anti-mafia police directorate. The country has been highlighted as a leading jurisdiction for runaway mafia criminals.

In 2019, the aforementioned SKS665 has been accused of failing to report a staggering € 4 billion taxable income from illegal gambling in Italy. This equates to tax evasion of 124 million euros.

Then in March 2021, a Maltese public limited company has been identified as being involved in a € 600 million tax evasion scam. The individuals involved are said to be linked to the Santapaola-Ercolano clan.

Around the same time, Surgery Double Game through the Organized Crime and Corruption Reporting Project investigated some 336 people involved in illegal gambling in Sicily, Italy and Malta. They used Malta as a jurisdiction to channel money from illegal betting.

Through June 2021, Juventus coach Massimiliano Allegri was under investigation through Italian authorities for using a Malta-based company to facilitate money laundering, potentially linked to the ‘Ndrangheta mafia gang.

The Shift recently highlighted a report which discovered that a Maltese licensed company could potentially be founded and funded by a cyber scam that scammed 200,000 people and killed two under mysterious circumstances.

Current director of the company Iosif Galea, a self-proclaimed iGaming consultant linked to Nexia BT, now defunct, with his directors involved in grand corruption and money laundering, did not answer questions about the alleged infiltration of illicit funds. He continues to maintain close ties with the government and parliamentarians

It’s an exhausting list, isn’t it? And remember, this is just the tip of the iceberg. As we know all too well, one of the finest skills of Maltese governments and institutions is to cover up wrongdoing, illegality and financial crime. Plus, given their pretty impressive track record of profiting from the wrongdoing happening under their noses, I imagine they have little incentive to nip it in the bud.

Instead, the Maltese gambling industry is pushing the island’s reputation further into the pits.

I wish they could harness their skill and enthusiasm to be involved in wrongdoing and channel it to turn the country around. Maybe then we could see Malta being taken off the FATF gray list within this decade.

Instead, what we have is a nation that is shamelessly built on the proceeds of crime. Every steel beam, concrete plinth, and even government investment is stained with the stain of illicit money. There is no escaping it; if Malta is regularly cited as having received corrupt money, and these companies and licensees pay the state, it makes sense that politicians’ salaries are paid with it.

But more than that, this money is making its way into all the crevices of society. A whole industry built by upstarts and oiks, fueled by coffee and cocaine, and relentless in its quest for wealth. Corruption and links to drugs, fuel smuggling and illegal gambling are dressed up in shiny costumes and glossed over at posh conferences. Bright-faced politicians and ‘entrepreneurs’ delivering speeches on’ holistic growth ‘,’ innovative verticals’ and ‘multi-faceted integrated business solutions.

Meanwhile, the reality on the ground is that respectable operators are leaving en masse. Real international business service providers have moved away from MGA, and only the desperate and despicable remain, using terms such as “flexible tax regime” and “hands-off regulatory approach” as code words for “You can get away with murder. “

I know all this because I worked among them. I have attended lectures and heard the ruthless gossip of lawyers. I have also heard the bravado on night outings and witnessed serious wrongdoing swept under the rug and forced to quietly disappear.

This culture of impunity reigns supreme. The protagonists will continue to get richer as the average person struggles as one of their beloved country’s main sources of income dries up. Even if it does not dry up, the continued pillaging of reputation at the hands of the government and its cronies is already causing irreparable damage to Malta, its economy and its credibility.

Until something changes Malta will continue to be an EU member state built on mafia money, tax evasion, corruption and bribes, and of course, l dirty money from criminals who buy themselves Maltese nationality.

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