A criminal verdict answers one question. Business has to answer others. Manuel Delia asks what responsibility companies have when commercial opportunity collides with corruption, reputation and conscience, and whether Malta’s economy makes doing the right thing unnecessarily expensive.
Manuel is a civil society activist and writer.
Yorgen Fenech was acquitted of complicity in the murder of Daphne Caruana Galizia. A jury heard the evidence and returned its verdict. That verdict must be respected. But a criminal trial asks a specific question under a specific standard. Businesses have to ask different questions all the time. Would I take this person on as a partner? Would I lend them money? Would I buy from them? Would I enter a consortium with them? Would I want my company’s reputation, capital and future tied to theirs? None of those questions is answered simply by asking whether someone has been convicted of a crime.
We already know this because modern commercial life routinely requires judgments that fall short of criminal adjudication. Banks conduct due diligence. Regulated businesses examine beneficial ownership, sources of wealth and adverse information. The Malta Gaming Authority considers integrity, honesty and reputation when deciding whether people are fit and proper to participate in the industry, while financial-services regulation makes comparable assessments. These are not substitutes for criminal trials. They exist because anyone deciding whether to entrust someone with money, responsibility or a commercial relationship cannot sensibly pretend that information becomes relevant only when a criminal court records a conviction.
The aftermath of the Fenech trial therefore raises a question that goes well beyond Fenech himself. What responsibility does a legitimate business community have when businesses have sufficiently reliable grounds to believe that people operating within its economic ecosystem use corruption, bribery, intimidation or other unlawful means to gain an advantage? There is a temptation to treat this entirely as a problem for the state: if somebody commits a crime, let the police investigate, prosecutors prosecute and courts convict; until then, business is business. But markets depend on more than criminal law. They depend on competitors accepting that contracts should be won on price, quality and competence rather than bribery or political influence. They also depend on other businesses refusing knowingly to make unlawful methods profitable.
Imagine two companies competing in the same market. One competes on price, innovation, efficiency and service. The other does all those things but is also prepared to bribe, corrupt or intimidate whenever those tactics might help. If everyone else remains indifferent to that distinction, the second company possesses a competitive instrument unavailable to the first. Over time, integrity stops being merely unrewarded and becomes a competitive disadvantage. An economy organised on that principle eventually rewards whoever is prepared to go furthest and consumes those who refuse to follow.
The price of saying no
The problem is particularly acute in a country as small as Malta. Our business population is overwhelmingly composed of micro, small and medium-sized enterprises. In contrast, a relatively small number of large businesses accounts for a disproportionate share of turnover, output and investment. This does not justify the lazy description of Malta as an economy controlled by a handful of families; concentration varies across sectors and needs to be demonstrated rather than assumed. But it does describe an unusually compact commercial environment in which the same economic actors encounter one another repeatedly.
A competitor in one venture may be a partner in another, a customer in a third, and a fellow shareholder in a consortium elsewhere. This makes the apparently simple instruction, “don’t do business with them”, considerably harder than it sounds. Walking away can mean losing a customer, supplier or investment opportunity, being excluded from a consortium, or closing doors elsewhere. In extreme cases, it can place a business at a structural disadvantage against competitors willing to make compromises it will not.
None of that extinguishes moral responsibility. If a business has sufficiently reliable grounds to conclude that a prospective partner engages in bribery, corruption, violence or coercion, commercial inconvenience is not a moral absolution. A company that knowingly continues to enable such a counterparty is making an ethical choice.
“Someone else will do it if I don’t” is not a commercial ethic. But acknowledging that obligation does not require pretending it has no price attached. If we expect businesses to make ethical choices, it is reasonable to ask whether our economic institutions punish them for doing so.
Sicily offers an instructive example. In 2004, a group of young people in Palermo began putting up stickers bearing the message Un intero popolo che paga il pizzo è un popolo senza dignità – an entire people that pays protection money is a people without dignity. From that campaign emerged Addiopizzo, which organised businesses willing to publicly refuse mafia protection money and consumers willing to patronise them deliberately.
Its innovation was not in discovering that extortion was wrong. The individual shopkeeper’s moral obligation to resist already existed. Addiopizzo recognised that asking one shopkeeper to resist while everyone around them continued paying imposed an extraordinary burden on the person who did the right thing. Collective action could reduce that burden. The model has limitations and obviously did not abolish organised crime, but its economic insight travels well: businesses and consumers acting together can alter the price of integrity.
Proper due diligence costs money. Compliance costs money. Refusing a profitable but questionable relationship costs money. Walking away from a useful politically connected intermediary costs money. The company that bears those costs while its competitor does not may be punished by the market for behaving properly. That is why organisations, including the OECD and the UN Global Compact, encourage collective action on business integrity: not as a substitute for individual responsibility, but to prevent companies that accept that responsibility from being commercially isolated.
There are three responsibilities here. A business must decide what it will participate in, even when refusing to do so is commercially painful. The wider business community can establish standards that make those decisions less isolating, through trade associations, supply-chain requirements, investment decisions, finance and consumer choices. The state has a different responsibility: it should not distribute public economic advantages in ways that reward conduct it expects legitimate businesses to reject.
When the state does business
Malta already accepts this principle, although it applies it unevenly. Public procurement rules provide for exclusion and blacklisting in specified circumstances, and final convictions for offences including corruption, fraud, organised crime and money laundering can exclude an economic operator from public contracts. European procurement law also permits exclusion where appropriate means demonstrate grave professional misconduct that calls an operator’s integrity into question. Criminal conviction is therefore not the only conceivable threshold for assessing an appropriate commercial counterparty.
Any wider integrity regime would require robust safeguards. Governments must not be allowed to compile lists of businesspeople they dislike and deprive them of opportunities by ministerial fiat. In Malta, that might simply become another instrument of patronage. Clear criteria, evidence, rights of reply, reasoned decisions, proportionality, independent adjudication and appeal are essential. So is rehabilitation: a company that uncovers wrongdoing, removes those responsible, reforms its systems and demonstrates restored reliability should not necessarily be condemned forever.
Models exist elsewhere. The World Bank can debar companies and individuals from Bank-financed contracts for corruption, fraud, collusion and related misconduct through an administrative process independent of national criminal convictions. Its system frequently uses debarment with conditional release, requiring businesses to demonstrate compliance reforms before eligibility is restored. Italy addresses the incentive problem from another angle with its Rating di Legalità, intended to give economic value to demonstrably ethical corporate behaviour. A qualifying company’s legality rating can be taken into account in access to public financing and bank credit and has relevance within Italy’s public-procurement framework.
Neither model should be imported wholesale into Malta. Their significance lies in challenging the assumption that the state’s only choices are criminal conviction or inaction. There is considerable ground between the two, provided that decisions affecting economic rights are governed by evidence and due process rather than political discretion.
Consider government land. If integrity matters when the government decides which company receives a contract worth millions, why should it become irrelevant when the state grants someone control of public property worth millions? The Government Lands Act regulates the sale, lease or other disposal of state property. Still, I can find no general fit-and-proper or business-integrity regime comparable to those familiar in regulated industries. Particular transactions may impose additional conditions, but the underlying question remains: should access to valuable public land or other scarce public economic benefits carry an integrity threshold analogous to standards we already accept elsewhere?
Why should the Republic demand integrity from those it entrusts with a gaming or financial-services licence, but not apply an equivalent principle consistently when deciding whom to entrust with its land, its contracts and its money?
Beyond the verdict
None of this means businesses should punish people based on rumours, political hostility, or newspaper allegations. A spectrum exists between gossip and conviction. An allegation may warrant questions; credible adverse information may warrant enhanced due diligence; strong evidence of serious misconduct may persuade a private company to decline a relationship; an independent administrative finding may justify exclusion from specified public benefits; and a criminal conviction can produce statutory consequences. Different information warrants different responses.
The state and a private company should not apply identical tests. The state exercises public power and must provide due process before imposing punishment or exclusion. A private company that selects its customers, suppliers or partners exercises commercial judgement and must do so responsibly. Respecting an acquittal does not require directors to surrender their responsibility to assess commercial and ethical risks using information lawfully available to them. Equally, suspicion cannot become guilt simply because somebody dislikes a verdict. Criminal adjudication and commercial judgement are distinct exercises because they address different questions.
This brings us back to Fenech, but not to an argument about what his verdict should have been. The events surrounding the case exposed uncomfortable intersections among commerce, political influence, allegations of corruption, and ultimately murder. The criminal trial answered the question put to its jury. It could not answer every question that Malta’s business community must ask about the environment in which it operates.
Internationalisation offers a partial response. It is often discussed as a growth strategy: Malta is small, so businesses should seek customers abroad. Malta is already highly internationalised in key sectors, particularly services. But diversification can deliver more than export growth. A company overwhelmingly dependent on one small domestic market has less freedom to choose whom it can afford to offend. A business with customers, investors, suppliers and partners across several markets has alternatives, providing something difficult to capture in a set of accounts but valuable: the freedom to say no.
Everyone is tempted to point elsewhere. Businesses can say the government must clean up corruption first. The government can say businesses should behave ethically without regulation. Business associations can say individual companies decide whom they trade with. Consumers can reasonably say they cannot investigate every company they buy from. Each proposition contains some truth; together, they can become an excuse for inaction.
The division of responsibility is straightforward. Businesses decide what they will participate in. The business community helps ensure that those who choose integrity are not isolated for doing so. The state ensures that public wealth does not reward conduct it asks everyone else to reject. No one gets to say that its responsibility begins only when somebody else has acted first.
A free economy depends on freedom of contract, competition and the pursuit of profit. But it also depends on something that cannot be fully codified in legislation: the willingness, at times, to refuse a profitable transaction. The state can make that decision less costly; consumers can reward it; business organisations can make it collective; and internationalisation can make companies less dependent on counterparties they would prefer to avoid. But none of those mechanisms can replace conscience.
A market economy cannot survive on law alone. It also depends on businesses deciding that some ways of making money, and some relationships through which money can be made, they will refuse. Otherwise, the market does not remain neutral between integrity and corruption. Eventually, it rewards whoever is prepared to go furthest.
