If you’re looking for a prime example of the profound ugliness and moral decay inflicted on this tiny island nation by a decade of misrule, you could do worse than a visit to the coastal party district of Paceville.
Sickly, meaty smells permeate the air, house music booms behind high walls, and throngs of tourists frequent strip clubs in ungainly new builds that, like malign vines, are beginning to encroach on the district’s neighboring suburbs.
“It’s grab, grab, grab,” griped local Mayor Noel Muscat, who was up in arms last year about plans for a gargantuan luxury hotel near his own quiet constituency of Swieqi. The structure, he said, was both widely unpopular and conceptually incoherent: a tower so large it would cast a shadow over the very sliver of beach developers hope rich clients will pay a hefty sum to access.
But despite all that, most residents are likely to support it, he said — being merely happy that the value of their own adjacent properties will go up.
Since the once-dominant ex-premier Joseph Muscat (no relation to Noel) took power in 2013, this tiny Mediterranean island nation has witnessed an astonishing economic boom, fueled by a no-holds-barred drive to court the world’s wealthy. But the giddy growth spurt has led to serious deformities — most visibly in the country’s increasingly stunted living environment.
In towns like Paceville and countless others, weary locals complain that powerful construction firms have been allowed to run roughshod over politicians and planning laws, erecting foreboding skylines over the tiny island’s once-pristine coast, while critical infrastructure rots. Politics has degraded in tandem, producing endless corruption scandals and a persistent feeling of impunity as major trials continued to produce zero high-level convictions. A Eurobarometer survey last year in Malta reported that some 95 percent of respondents believed corruption to be “widespread.”
That all appeared to change in May 2024, when Joseph Muscat and 33 others were charged in connection with a sprawling, international fraud that seemed to epitomize this disregard for Malta’s towns and cities. Top officials, including the former premier, were accused of stealing thousands of euros in taxpayer money intended for the overhaul of three crumbling state-run hospitals. They deny the charges.
To activists, the scale of the so-called Vitals case made it the first real shot to hold accountable a government they say has spent the past 10 years plundering the public purse with impunity. But as proceedings wear on inconclusively after a full year and a half, there is growing anxiety about the prospects for the trial, which has run aground amid an array of baffling procedural blunders and a ferocious political counteroffensive. An opaque and vulnerable justice system has left prosecutors floundering with a hole-ridden charge sheet, and the government, for all its critics, continues to trounce the weak opposition — enjoying ironclad support from swaths of the population that have grown rich off its policies.
As change looks increasingly improbable, it’s raised an uncomfortable question: When corruption becomes so lucrative that it entrenches itself at the heart of politics, can it ever be rooted out?
Original sin
Squeezed between Sicily and North Africa, Malta’s half-a-million citizens occupy a mass of urban sprawl barely a fifth the size of London — less a country than a city-state marooned in the Mediterranean, indelibly shaped by millennia of foreign rule.
From 40,000 feet above sea level, that history rolls into view as a near-unbroken series of parchment-yellow settlements stretching from coast to coast across three tiny islands, punctuated by patches of dry scrub and deep red earth from which little grows. Upon closer inspection, you’ll see the eclectic architectural legacy of a panoply of imperial invaders — the Phoenicians, Romans, Normans, Arabs, Spanish Habsburgs, Napoleon, and the British Empire — and their baroque palaces, Umayyad forts, and colonial-era barracks.
Since the departure of the British in 1964, the island’s inhabitants have been in search of a homegrown national identity beyond textiles and piracy. The 20th century saw a bitter conflict over language, political violence and a long flirtation with Libya-style nonalignment. The country finally hitched its fortunes to Europe in 2004 with its entry into the EU — but its true transformation began in 2013 with the election of Joseph Muscat on a sweeping platform of renewal after years of economic hardship.
Muscat was the dynamic young leader of the Labour Party, which along with the Nationalist Party is one of two century-old factions that command fanatical bases of support in Malta. Muscat’s strategy was to exploit the tiny nation’s newfound access to the world’s largest trading bloc, catering to an increasingly footloose global elite. Under his watch, the government radically changed its business model, selling passports to wealthy foreigners and making it trivially easy to set up financial services, crypto and internet gaming firms that could then operate across the EU.
Malta quickly became a playground for international investors. Between 2013 and 2024, the stock of foreign direct investment — much of it in shell companies, trusts and holding companies — surged from €9.6 billion to a staggering €460 billion, 68 times faster than Malta’s equally breakneck domestic growth. At the same time, gross domestic product per capita leaped by almost 70 percent, over four times the European average, creating a class of newly prosperous citizens who were hard-pressed to quibble with the new order.
But prosperity also brought an increasing coziness between business and politics. The perception of corruption crept up steadily. Desmond Zammit Marmarà, a former Labour lawmaker-turned-critic, said he was routinely solicited for bribes (he assured POLITICO he turned them down), and observed a tendency in the public sector to fraudulently inflate budgets. Another former Labour lawmaker lamented that centuries of colonial domination had taught his countrymen that it was a virtue to rob the state.
Unease over this new dynamic figured most prominently in the construction sector. Upon taking office, Labour supercharged an anything-goes approach to development kicked off by the previous government. The dream was to transform Malta into a cosmopolis for the super rich — a Mediterranean Dubai of luxury hotels and towering office blocks.
Malta’s urban landscape soon witnessed an extraordinary transformation. Cranes filled the heavens, sawdust choked the thoroughfares, and neat rows of 19th-century townhouses gave way to graceless slabs of glass and steel. The endless construction brought in waves of migrant workers, tourists and businessmen, all flocking to the new country being built piecemeal over the old one, dramatically swelling the population in summertime and causing an enduring housing crisis.
Critics said the whole system was broken and corrupt. A planning process spread across a tangle of local bodies, public institutions and ministerial portfolios was easily exploited by developers looking to ram through at times legally dicey projects, often with the tacit support of government and municipal officials. According to Emanuel Delia, the co-founder of the rule-of-law nongovernmental organization Repubblika, the policy changes featured a mix of genuine deregulation — for instance around building limits for real estate — and “selective enforcement” of existing rules that favored firms with close ties to government. Just this summer, Malta’s National Audit Office triggered a fresh round of public outrage when it alleged that Muscat’s powerful chief of staff, Keith Schembri, had helped Malta’s land authority conceal an evaluation report on behalf of a large developer in 2019, costing the taxpayer nearly €16 million. Schembri has denied any wrongdoing.
In Delia’s view, Malta has fallen victim to a kind of “amoral familism” in which wealthy and well-connected clans put enriching themselves and their relatives above all else. Some locals, while acknowledging the blight of overdevelopment, privately defended it on those terms, arguing that those who exploited the flawed rules were blameless — victims of financial incentives too attractive to resist.
The Vitals scandal
On the face of it, the plans in 2015 to privatize three crumbling hospitals took the same logic that characterized Muscat’s boom — quick growth through private deals — and applied it to Malta’s failing public services.
As outlined by top officials, the idea was to hand over Karin Grech, Gozo General and St. Luke’s hospitals to a homegrown health care consortium, Vitals Global Healthcare, which would renovate the hospitals along the lines of a “health tourism” model that it could export across Europe.
But despite the €456 million infusion from the government, Vitals failed to deliver on many of its commitments, according to a scathing report by the National Audit Office in 2021. In 2017, after dozens of deadlines were missed, the concession was handed over to a local subsidiary of the U.S.-based Steward Health Care, which then missed its own deadlines and declared bankruptcy amid a hail of lawsuits in 2024, prompting federal investigations in the U.S. The concession itself was ultimately annulled after a Maltese court deemed it “fraudulent.”
According to the audit office and a 1,200-page magisterial inquiry, it was a ruse from the get-go.
In reality, Vitals was a thinly capitalized shell company conjured by a group led by Shaukat Ali, a prominent Pakistani businessman who was “involved at the highest levels of Colonel Gaddafi’s notoriously corrupt regime in Libya,” the inquiry concluded. Ali, it said, concealed the involvement of key Muscat allies — Schembri, the former chief of staff, and Konrad Mizzi, a former energy minister. The whole thing, in the NAO’s words, was “fraudulently contrived” ahead of time to rig the public tender for the hospital concessions, forgoing the usual due diligence process — and bypassing ministers who might have raised a stink.
Through a series of holding companies registered in the names of his business associates (and his multiple wives), Ali also held beneficial ownership of the Steward subsidiary that would take over from Vitals, according to the inquiry. Kickbacks from the concession allegedly flowed through this opaque network into bank accounts held by Muscat, Schembri, Mizzi and a sprawling supporting cast of consultants and middlemen spanning several continents. Muscat, Schembri, Mizzi, Ali and all the other 31 co-defendants have pleaded not guilty.
Investigators allege the arrangement impoverished the three privatized hospitals.
Today, Gozo General, which caters to Malta’s second-largest island, reportedly remains derelict and rife with hazards. Karin Grech Hospital, named after a young girl murdered in 1977 by a mailed explosive intended for her father, barely survives in a state of desolate, cobwebbed disrepair as a clinic for the elderly. St. Luke’s, a limestone colossus with serried square windows in the style of a Victorian orphanage, stands unused beside it on a bleak promontory.
Lawyers representing Muscat, Mizzi and Schembri did not respond to multiple requests for comment, nor did Steward Health Care. Ali, through a lawyer, declined to comment, citing a court gag order. He has previously told the Times of Malta that “I feel that we have become the victims of a political football and the subject of vile allegations made by mendacious people.”
Failed sting
The Vitals scandal first trickled into public view through a series of investigative articles and a court case launched as a Hail Mary by a beleaguered opposition leader. Outcry built over the mishandling of the hospitals contract, and in 2019, Repubblika, the anti-corruption NGO, pushed for a broader trial, using a rule allowing civilians to trigger magisterial inquiries.
But since then, the judicial process has continuously run aground under strange and suspicious circumstances.
One notable incident took place bright and early on Jan. 7, 2022, just as the investigation was mounting. In Burmarrad, in the north of the island, a Maltese police convoy blazed down a lonely stretch of rural road, past off-licenses, a 16th-century church and a used car showroom, before taking a swift turn into a narrow side street.
As dawn trickled in, the convoy approached its target: Muscat’s family home.
It was meant to be the first shot across the bow as the probe got underway — but when the officers arrived to begin their search, trailed by several court experts, Muscat was ready and waiting, having been tipped off after news leaked that the raid was imminent. Far from an explosive and telegenic confrontation, the ex-premier cordially welcomed the officers, led them to his dining room and presented them with a sheaf of preprepared documentary evidence — then, in the aftermath, took to Facebook to blast the raid as an intolerable affront to his privacy.
According to Robert Aquilina, the other co-founder of Repubblika, as well as police and court officials familiar with the investigation, the origin of the leak was a covert war between the magistrate’s office and the politically appointed police commissioner.
The police had shown scant initial interest in examining the journalistic allegations around Vitals and offered support for the investigation only when directly ordered to by the court, the police and court officials said, speaking on condition of anonymity to avoid reprisals. That fostered an atmosphere of mutual distrust, prompting prolonged chaos, procedural stonewalling and repeated leaks of the investigative agenda. That’s how Muscat was able to get ahead of the raid; his phone was even wiped clean weeks in advance.
Jason Azzopardi, a prominent lawyer and former politician, testified in separate proceedings last year that he believed the leak came directly from Police Commissioner Angelo Gafà, based on a conversation he had with an unnamed person close to the commissioner. Gafà has in turn accused the inquiring magistrate of keeping him in the dark.
A spokesperson for the Malta Police Force said it “categorically rebuts the baseless allegations” regarding its relationship with the judiciary, which it said it cooperated with fully. The spokesperson added that Gafà was appointed following a public call and an independent selection process.
To Aquilina, the co-founder of Repubblika, the affair provided an object lesson in state capture.
The 47-year-old activist and notary has a taste for private nooks in public places, and on a morning last year he was sipping a dark coffee in the grand foyer of a hotel just off one of the main thoroughfares of the Maltese capital, Valletta. Sharply dressed, with browline glasses and the studied calm of a veteran conspirator, Aquilina likened the trial to the Italian “Maxi-Trial” of the 1980s, in which hundreds of Sicilian mobsters were rounded up and tried en masse in a specially built courtroom-bunker.
But the difference, he said, is that “in Italy, the Mafia has infiltrated the state over many years — in our case, the Mafia has been elected.”
Chilling effect
Mafia-style violence, or the threat of it, has also pervaded the Vitals proceedings, which have been menaced by the memory of Daphne Caruana Galizia, a relentless investigative journalist who was among the first to uncover discrepancies in the Vitals concession, and was killed by a roadside bomb attached to the underside of her Peugeot 108 in 2017. After a concerted effort by her bereaved sons and a sprawling group of civil society activists, including Aquilina, the murder was connected to a businessman close to the Muscat government, and several low-level mobsters were recently convicted for carrying it out. Nevertheless, the events have left a conspicuous chilling effect on broader accountability efforts.
For instance, a number of independent court experts critical to the Vitals inquiry are refusing to testify locally. A Serbian court expert, Miroslava Milenović, declined to return to court after Muscat sued her following a dramatic hearing in which she admitted she wasn’t registered in Malta as a chartered accountant. Another, Jeremy Harbinson, has asked to testify from London, saying he would never return to Malta because he fears for his safety. Two people familiar with the matter said Harbinson has been nervous about visiting the country since 2022, when his hotel room was mysteriously broken into and his passport stolen during a trip to assist with the raid on Muscat’s residence. Schembri has since asked the police to investigate Harbinson, too. Neither he nor Milenović could be reached for comment.
Aquilina himself told POLITICO that he requires constant police protection — which the police removed in July — and recently had to bat off domestic violence claims, which were ultimately dropped. The police said the removal of protection followed a threat-to-life assessment led by a multidisciplinary oversight committee.
Aggressive interventions by top politicians have also weighed heavily on the proceedings, with figures on both sides of the spectrum exploiting the intensely tribalistic nature of Maltese politics. Even the government has weighed in, seizing on the alleged unreliability of the court experts to dismiss the trial as a stitch-up. As it got underway last May, Prime Minister Robert Abela — Muscat’s successor — went so far as to blast the inquiry as a politically motivated attack by “establishment” forces.
In a statement, Abela defended his comments, arguing that the former premier was entitled to the presumption of innocence — but then doubled down, urging POLITICO to “have a closer look at the happenings within the court process.” He also asserted, without offering evidence, that the court experts who refused to testify were hired by way of “opaque” processes and paid “millions of euros.”
While some have condemned such comments as judicial interference, they also speak to genuine puzzlement at various aspects of the inquiry that have lent credence to the defendants’ claims of victimhood, including the apparent rift between the police and magistrates’ office, the absence of the court experts and seeming inconsistencies within the inquiry itself.
Consider the case of Central Bank of Malta Governor Edward Scicluna, who served as finance minister under Muscat and stands accused — in one of several parallel trials associated with a raft of lesser charges — of fraud and misappropriation, which he denies. In light of the institutional discord, Scicluna was never interrogated by the police and was notified of the charges against him via a leak to the media. The inquiry’s assessment of him is also contradictory and appears not to back up the fraud claims.
Activists worry these sorts of discrepancies could bolster defense lawyers’ arguments that the body of evidence presented in the inquiry is inadmissible. Currently, the parallel proceedings are grinding through a preliminary information-gathering phase; an effective attack on the inquiry’s credibility could result in the evidence being thrown out before the prosecution gets to present it before a jury — killing the proceedings stone dead.
Final throes
Indeed, some are nervous the whole thing will be a flop. Aquilina reckons it could go on until 2028 — and even then, he’s not optimistic much will come of it.
The grinding pace of the trial isn’t just an activist’s lament: It’s reflected in continued criticism from international organizations, including the Organization for Economic Cooperation and Development and the Council of Europe, which have accused Malta of being too slow in implementing anti-corruption reforms. The EU’s own annual rule-of-law report has consistently highlighted an absence of high-level convictions.
Prime Minister Abela rejected these institutional slights, arguing that he had strengthened Malta’s anti-corruption and anti-money-laundering authorities, bolstered the independence of the police and magistrates, and changed the rules around magisterial inquiries to prevent the system being “abused for partisan political aims.” (Critics say he made it harder for NGOs to trigger them.) He also pointed to recent praise from the Council of Europe and added that his administration had improved protections for journalists.
“Our robust anti-corruption strategy has also served as a deterrent and the efficacy of such a strategy should not be measured by the volume of arraignments or convictions, but rather by the way such a strategy minimizes or eliminates corruption at the roots,” Abela said. He also emphasized that his government was pushing new legislation to support “sensible and responsible planning” and force “individuals who have erred in the past” to pay retroactive compensation.
But for those aching for a complete overhaul of Malta’s cozy culture of business, politics and corruption, there’s little cause for optimism. Despite the endless scandal, Labour maintains a consistent lead in the polls — a testament to the economic growth that took hold under its watch.
The question is whether it can survive its links to Muscat. The former premier has been out of government since he resigned in 2020, after the investigation into the Caruana Galizia killing singled out a prominent tycoon with links to his ally, Schembri. (Both Muscat and Schembri have denied any involvement in the killing.) But he still looms large over the Labour Party, and many people made rich by his policies feel like they “owe” him, said one government official. On the flip side, recent polls suggest that the Nationalist Party is narrowing the gap under new leadership, with some arguing that Abela’s continued contact with Muscat-era officials — the premier said last month that he still talks to Schembri — could alienate moderates.
But a change in government might not matter much. Senior Labour and government officials, speaking on condition of anonymity, argued that Labour’s problems were not unique and that the courting of foreign investors began under the Nationalist government that secured EU accession. It’s true enough: The country’s most influential property tycoon, Joseph Portelli, who is unconnected to the hospitals scandal, makes a point of donating money to both parties. (Portelli says he expects nothing in return.)
The status quo is indeed sustained by an irresistible economic logic. In the view of Alexander Demarco, the deputy governor of Malta’s central bank, supporting the vast numbers of foreigners who enter the country requires continuous development — and on such a tiny island, the only way for developers to build is up. Blocking builders of high-rises could be a “serious impediment to economic growth,” he said, while emphasizing that such development should be limited to special areas.
The Vitals debacle, meanwhile, continues apace. Recently, an international arbitration court ruled against government efforts to recoup some $466 million from Steward. Abela, during a heated parliamentary debate, said the judgment proved no money was stolen. Opposition lawmakers argued that the ruling — which explicitly holds “no view” on whether collusion occurred — did no such thing.
Still, some dare to hope that the trial around the deal, whatever its outcome, will serve as a break from a culture of impunity that has thwarted efforts to strengthen Malta’s institutions. “When there’s a public inquiry, people realize that politicians are not gods, and that they can be held accountable,” said Matthew Caruana Galizia, an investigative journalist and one of the three sons of Daphne, the murdered journalist.
The bigger struggle will be to keep the momentum going. “While these people are being brought to trial, it’s also the system itself being brought to trial,” Caruana Galizia said. “Unless something is done about this impunity … there will be more of this kind of crime, more corruption, more contract killings.”
‘A country has to survive’
All of this, perhaps, is the inevitable fate of a tiny, resource-poor, services-heavy economy whose politicians have little to offer beyond privileged access to a market captured by private interests.
Scicluna, the central bank governor, echoed that sentiment last year atop Valletta’s lush botanical gardens. A professorial 79-year-old who was summoned to serve under Muscat in 2013 after a long stint as a TV pollster, the former finance minister said he was proud of his tenure, during which he reduced Malta’s deficit and boosted financial stability. In his view, Malta’s woes are the result of bad actors exploiting loopholes created by otherwise legitimate government policy.
“If you bought a boat because you made a lot of profit from a government contract, then good luck to you — this is how people get rich,” he said. He took pains to add that he was referring to “legitimate” contracts.
But on the whole, Malta’s transformation has been to the good, he said. Under the cool evening sun, he turned to gaze over a low-rise wall giving way to a precipitous drop, and gestured below at a vista of seemingly boundless delights: sparkling Mediterranean waters dotted with colorful fishing boats, deep creeks giving way to soaring defensive ramparts, a small town of old limestone villas and pretty churches.
Right below, a little closer, he pointed out the wide bay and array of inlets that lie to Valletta’s east. These, he said, were the basis of a grand natural harbor that once made it such an attractive target for foreign fleets.
“A country has to survive,” he murmured, acknowledging that tiny nations have always had to find canny ways to win the protection of bigger powers. Now, of course, the Ottoman corsairs rot in the depths, and the bays are filled with gleaming superyachts and mountainous cruise ships. Perhaps such latter-day conquerors of Malta recognize that to get at the island today, there’s no need for a hard-fought siege. Instead, its leaders simply invite them in.