We zero foreign tax and buy gas from the Caspian Corleones: does Malta play a part in foreign corruption?

Europe tends to be home to the world’s least corrupt countries, but these clean records don’t mean they are not linked to corruption elsewhere.

Azerbaijani interests

Malta also hosts Azerbaijan’s state oil company (SOCAR) since 2007 thanks to its favourable tax regime. In Malta, Socar Trading Holding Ltd (STHL) acts as the parent company to SOCAR Trading SA in Geneva, from an office in Ta’ Xbiex.

In Geneva, SOCAR sells oil from its own trading companies. In 2013, its €38 billion sales left a gross profit of $135 million, which was whittled down to €29 million after salaries, administrative expenses and banking costs.

In Malta, SOCAR also owns Socar Oil & Gas International Holding. Under Maltese tax rules, the benefits are evident: dividends paid out to foreign shareholders are taxed at 35% income tax, but then get an 85% refund on that tax.

More crucially, Malta has bound itself to an 18-year supply of gas that will be facilitated by SOCAR itself, a partner in the Electrogas consortium constructing a new 200MW natural gas power plant at Delimara. While Malta will benefit from the smooth trade of gas from Azerbaijan, the government that owns SOCAR suppresses democratic secular opposition, the independent media and civil society at home.

Should Malta say ‘no’ to Azerbaijan?

Labour MEP Miriam Dalli says Baku’s regime should not be isolated

“I believe that repression of fundamental human rights and freedom of expression particularly through punishment, detention and more so through torture is unacceptable wherever it happens. This is a principle I believe in.

“The European Parliament has been putting pressure on Azerbaijan to respect its commitments and obligations under international human rights law for quite some time, particularly through a resolution voted upon in Parliament on 10 September 2015, and which I voted in favour of.

“This pressure led also to the release from detention of Leyla Yunus (a political prisoner) and her husband Arif who are now on probation. This is definitely a welcome step even though much more needs to be done. I believe that the international community, the EU and the leaders of the EU member states should keep up the pressure on all countries, including Azerbaijan to address the human rights situations in their respective countries.

“In this regard I am sure that Prime Minister Joseph Muscat has never shied from discussing human rights related issues with the Heads of Government he meets.

“Isolating countries will only result in further deterioration of human rights. Maintaining a healthy relationship and an open line of communication will provide more possibilities for change. The EU itself has strong economic and trade partnerships with Azerbaijan particularly when it comes to the energy sector where Azerbaijan is a strategic energy partner for the EU.

“On 9 December the EU even said that it is “ready to further deepen and broaden our relation with Azerbaijan”. Having economic projects and high trade levels with Azerbaijan does not stop the EU from mounting pressure on the country to address its human rights situation and this should apply to any other EU country, including Malta.”