Ninu Zammit, Michael Falzon tax returns show tax evasion while in office

Income tax returns filed with the Inland Revenue by former PN MPs Michael Falzons and Ninu Zammit paint a modest picture of their earnings in the 1970s and 1980s, and, as expected, make no mention of the money in their Swiss bank accounts.

The tax returns were obtained from the Inland Revenue after The Malta Independent on Sunday requested them from the Speaker of the House of Representatives. The Income Tax Management Act allows the press to request income tax returns filed by Members of Parliament past and present.

In a statement last week, Mr Falzon claimed that the €465,000 in his Swiss bank account came from “professional activities abroad from foreign clients” between 1975 and 1985.

“These services were provided under the aegis of a Maltese registered company of which I was shareholder and director,” Mr Falzon said in his statement.

The income was earned before he became a minister in 1987, he said. That income was made, however, when he served as an MP.

Michael Falzon’s tax returns from his days in Opposition in the 1970s show returns from his profession as an architect of €568 in 1976, €724 in 1977, €766 in 1978, €416 in 1979 and €528 in 1980.

From 1981 to 1985, Mr Falzon claimed net earnings from his profession of €5,464, €7, 763, €2,210, €10,158 and €10,468.

In total, Mr Falzon declared a total of €39,065 from professional earnings to the taxman between 1976 and 1985, a far cry from the €465,000 held in his secret Swiss bank account.

If the money in his Swiss account really did come from his “professional activities”, then Mr Falzon was evading a significant amount of tax.

His position has since been “regularised” through a government tax amnesty.

At no point were any foreign bank accounts listed in Mr Falzon’s income tax returns. By way of example, Mr Falzon ‘remembered’ to declare his wife’s savings account containing €2,641 yet ‘forgot’ to tell the taxman about his Swiss account.

Coupled with his false tax returns, Mr Falzon also breached the ministerial code of ethics by not declaring his Swiss accounts in his asset declarations to the Cabinet.

After his initial statement last Saturday and avoiding answering any questions put to him by The Malta Independent on Sunday, Mr Falzon released a statement on Wednesday apologising unconditionally for his deceit.

“I refer to my statement of last Saturday wherein I explained how – prior to 1987 – I was involved with other professionals in the provision of architectural and civil engineering consultancy services outside Malta and that, considering the political situation prevailing at that time, I opted to retain my earnings abroad.

“I acknowledge that although my fiscal position has long ago been regularised, this is not sufficient for a politically active person. I recognise that I ought to have repatriated the funds on the first possible occasion after the 1987 election and that I ought to have included the said funds in my Ministerial declaration of assets. As a result of these omissions, I have failed my Prime Minister, my parliamentary colleagues and the electorate who had given me their trust by voting for me.”

“In view of this, I unconditionally apologise for my failures,” Mr Falzon said.

The former minister suspended himself from both the Nationalist Party and the oil procurement committee, which oversees fuel purchases by the state.

His apology has been welcomed by Opposition leader Simon Busuttil, but his suspension remains in effect “until the whole matter is cleared up”.

The Malta Independent on Sunday asked Dr Busuttil what matters need clearing up, given that Mr Falzon has admitted to tax evasion and deceiving Parliament, but a spokesperson for the PN said that Dr Busuttil had nothing to add to his statement.

Another former PN MP who admitted to having a secret Swiss bank account during his time as a minister has yet to answer the million dollar question and say how much he had in the Swiss account.

In a statement last Sunday, Mr Zammit said he started depositing money abroad in the late 1970s. The money, he said, came from his professional and property business.

The Malta Independent on Sunday was only able to obtain his tax returns from 1986 onwards. Mr Zammit claimed €4,192 in 1986 from his professional work, €4,452 in 1987, €1,747 in 1988, and nothing in 1989 and 1990.

Mr Zammit listed part or full ownership of around nine properties during the same period. He also listed a loan account with Leni Enterprises, a construction company he co-owned with his brother Emanuel Zammit.

A month after the oil corruption scandal broke in January 2013, the newspaper MaltaToday reported that Ninu Zammit was to give evidence in a court case about kickbacks allegedly given in connection with the construction of the Delimara power plant in 1992, when he was parliamentary secretary responsible for the project, reporting to Infrastructure Minister Michael Falzon.

The newspaper reported that Mr Zammit’s canvasser, Paul Cutajar, had been recorded saying that he was a “front” for Mr Zammit, and that he shared “commissions” (kickbacks) on public contracts with the minister’s brother Emanuel Zammit. In the same recording, he is heard saying that when he was awarded excavation contracts for the old Delimara plant, he transferred “commissions” to Emmanuel Zammit, paying them into a bank account in Jersey.

When cross-examined about this in court, Mr Cutajar admitted that it was his voice in the recording, but said that he was “lying” at the time. He was warned by the presiding judge that he was testifying under oath.

The Malta Independent on Sunday sought to obtain the financial statements filed by Leni Enterprises.

This newspaper was informed that the company never filed any financial statements with the Malta Financial Services Authority, and was struck of the register as defunct on 8 May 2013.

Mr Zammit took advantage of a government amnesty in 2014 to regularise his tax position and transfer his secret Swiss holdings to Malta, paying a penalty fee that was arguably only a small amount, considering the years of taxes he had evaded paying.

Commissioner for Revenue Marvin Gaerty told The Times of Malta this week that “all information” that has surfaced in the Swiss Leaks accounts held by Maltese will be investigated.

“It is the Commissioner for Revenue’s responsibility to investigate any person or institution when a suspicion of tax evasion arises,” Mr Gaerty told The Times of Malta.

The Malta Independent on Sunday sent question to Mr Gaerty earlier this week, but no reply has been received so far.

Prime Minister Joseph Muscat has been rather muted in his response to the two former ministers’ tax evasion.

Dr Muscat took to Twitter this week saying “Michael and Ninu are not Austin.”

This newspaper sent an email to the Prime Minister asking him what he meant by this, but rather than answer the questions directly, he chose to shift the issue onto the Opposition.

The Malta Independent on Sunday asked:”Both Michael Falzon and Ninu Zammit evaded tax for years on end. Are you condoning tax evasion?

“Given their tax evasion, why do you feel the need to defend Mr Falzon and Mr Zammit?

“You appointed Mr Falzon to the oil procurement committee. Have you held any meetings or conversations with him after he admitted to having a secret Swiss bank account, and do you intend to reinstate him on the committee?

Through his communications coordinator, the Prime Minister replied: “Simon Busuttil is obviously afraid of Austin Gatt. He is ready to act against Michael Falzon and Ninu Zammit but not Austin Gatt. That is why ‘Michael and Ninu are not Austin’ (in reference to the tweet).

“The only person defending someone here is Simon Busuttil, who is defending Austin Gatt.”

His spokesman said the Prime Minister has not held any meetings or spoken to Mr Falzon since his Swiss account was revealed.