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Photo Gallery: Following the Money to Malta

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Malta Leaks Playing the Shell Game in the Mediterranean

Malta poses as a model member of the European Union, but it makes its living off of large European companies seeking to avoid higher tax rates back home. DER SPIEGEL went to the island nation to investigate, and found a lot of empty offices and empty words.

As night falls over St. Julian's, the wind soft and warm after a summer-like day in May, it slowly begins to become clear, while standing on a balcony overlooking the harbor, why Malta does what Malta does. Why this small island has become a tax haven that sucks up the revenues from other countries, even though that money comes from partner nations in the European Union.

From above the waterfront promenade, one can hear the boisterous voices and laughter of the young men and women below, mixed in with a booming bass. It is the noise of northern European youth enjoying a night of Mediterranean partying, singing loudly in their hoarse, off-tune voices.

At such a moment, one can imagine what motivates the Maltese during the workweek: the idea that Europe must have more to offer than just the hordes of partying teenagers who anesthetize themselves in the nightlife quarter of St. Julian's on the strength of drink deals offering 60 shots for just 19.90 euros. The idea that Malta, poor in natural resources but rich in shrewd, hardworking people, somehow has a moral right to try to lure companies from the north to their country -- and to benefit from a small portion of the vast tax revenues that would otherwise remain in places like France, Britain and Germany. In the middle of the night, all of that seems to make some sense.

But it remains unclear why the best-known German industrial giants and the most successful of Germany's mid-sized firms take part. It isn't obvious what their moral justification might be -- why huge companies like BASF, BMW, K+S and Sixt, why smaller firms like Würth and Tchibo, or a well-known German television personality like Johannes B. Kerner, why a few thousand other companies on the Malta list assembled by the European Investigative Collaborations (EIC), are all apparently seeking to wring every last cent out of their revenues.

Why would they go so far to risk their good reputations -- and, in some cases, much more than that? A SPIEGEL investigative project in Malta shows that even global corporations are happy to share a single buzzer with three other companies on the island even as they and their subsidiaries aren't listed in the phone book. They are "unfortunately" unreachable "at the moment," nor are they available a short time later either. With their presence on Malta, the companies may be seeking to reduce their German tax bills -- but to do so, they have to be able to prove that they are in fact doing business in Malta.

Appalling Chutzpah

To find answers to these questions, it is necessary to speak with those highly respected companies, the pillars of the German economy. It is, however, also helpful to talk with lesser known people, the men and women who create such shell companies in Malta. And, particularly since Malta holds the rotating European Council presidency until the end of June, it is important to speak with Maltese officials and their opponents in the European Parliament, who are appalled by the chutzpah Malta displays in defending its tax model even as it leads one of the EU's key institutions.

And there is plenty to talk about: About the tricks used by German companies; about billionaires who scrimped on nothing when it came to their superyachts, except on sales tax, which is so much lower for ships registered in Malta; and about Maltese politicians, who are apparently used to thinking of themselves first when it comes to money.

"Malta's secrets are waiting to be discovered," reads a postcard that visitors are given before they fly home from the island nation, population 435,000. It probably isn't referring to the secrets of tax evasion, but there is certainly much to discover on the topic. The first address of interest: St. Julian's, Ross Street 7. It is an office building called "The Whispers," which is apt. This was the home of Robert Bosch Holding Malta Ltd., Robert Bosch Finance Malta Ltd. and -- because imagination seems to have been in short supply -- Robert Bosch IC Financing Malta Ltd.

Ltd., of course, stands for Limited, meaning limited liability, and it is the favorite corporate structure in Malta. The abbreviation can be found on thousands of mailboxes and buzzers -- and sometimes a half-dozen Ltd. names are stuck beneath the same letter slot. Founding a limited company is simple and requires an initial deposit of just 1,200 euros. Maltese officials brag that they sometimes don't need more than 24 hours to complete the formalities.

The words "Finance" and "Holding" are also popular elements in the names of Maltese subsidiaries of international corporations. After all, the focus is squarely on money -- money that is pushed back and forth between the parent company and its subsidiaries, often for one reason only: to reduce the amount subject to taxation back home, in Germany for example. One simple way of doing so is to show high costs back home while booking profits in Malta. The Mediterranean country may have a relatively high rate of taxation, at 35 percent, but foreign owners of Maltese-based companies, such as German parent companies, are refunded up to 30 percent by the Maltese tax authorities. Which leaves a tax rate of just over 5 percent.

That is enough to make the business model attractive to Malta -- better 5 percent than nothing at all. And it is fantastic for the companies -- 5 percent instead of closer to 30 percent in Germany. But it isn't such a good deal for the German tax office. According to calculations undertaken by the newspaper Malta Today, 2015 company profits worth around 4 billion euros flowed through Malta that would otherwise have been taxed in other countries, a sum 10 times higher than in 2006. Malta held on to just 250 million euros of that, with the companies in question holding on to the rest.

Selfish Rather than Smart

How, though, is it possible to divert profits to Malta? One vehicle involves companies transferring proprietary patents and licenses to their subsidiary on the island. Other branches of the company located in countries with higher tax rates must then pay significant amounts of money to the Malta-based subsidiary to use those patents and licenses. Another model envisions Germany-based branches borrowing money from the Malta subsidiary at high rates of interest.

Bosch, though, does none of those things because Bosch no longer has a subsidiary on the island. A woman in the real estate office on the ground floor confirms that the company used to have a subsidiary there but it had moved. She wasn't sure to where, saying it was odd that she couldn't find the new address. Perhaps, she said, her co-worker Nadia knew more, but she wouldn't be back until the next day. But it wasn't necessary to call back: Bosch decided to leave Malta in 2016, with the branches returning to Germany and the Netherlands. By January, all Malta-based Bosch branches had ceased to exist.

But why? Might it have to do with the fact that the Panama Papers were published just three months prior? The documents resulted in a massive change in perspective: Suddenly, those companies that routed their profits through a tax haven were seen as being selfish rather than smart. After all, such activity makes less money available for schools and roads -- for benefits the company takes advantage of back home while doing their best to avoid paying their fair share. Since the Panama Papers, companies with tax-friendly subsidiaries in Malta have been confronted with the question as to whether it is worth it.

Bosch has remained silent regarding its decision to leave Malta. The company would only say that it adheres to "the principles of best business practices" and that profits were taxed in the country where they were generated. Period. Whatever the case, the Bosch situation was the exception. Most companies with Maltese addresses hadn't chosen to depart by the time we visited them.

The route to the next address of interest leads past an historical arch bearing the inscription "Deus nobis haec otia fecit," "God has granted us this peace." Then, we are standing in front of Lufthansa, which isn't happy about the peace being disturbed. Lufthansa has 17 subsidiaries in the Aragon office building, including Lufthansa Malta Pension Holding, LSI Malta Pension and DLH Malta Pension. All of them, of course, have the Ltd. suffix.

Unfortunately, Malta-based manager Markus Pawlik doesn't have any time for journalists at the moment because he has to prepare for a meeting. He can only spare five minutes to tell us that Lufthansa employs more than 500 technicians who conduct maintenance on the company's planes in Malta. But why is the entire company's retirement fund and its leasing company based in Malta and not in Germany, where the company employs 67,000 more people than it does in the Mediterranean island nation?

A Bit Confused

Pawlik says he isn't authorized to discuss the issue and suggests calling the press office in Germany. There, one learns that the location of a subsidiary depends on many factors, including taxes. The company owes it to its shareholders, after all. And one is told that it is all legal and that German tax officials are aware of it.

A few streets over is the Mayfair Business Centre, a highlight of any company tour in Malta. A company called Jacobs Management Limited is located on the top floor. Does it perhaps belong to the German coffee giant Jacobs? Two women look a bit confused when we ask to talk to Mr. Jacobs. They ask us to wait outside and the door closes. A couple of minutes later, a man emerges. He looks to be about 50 years old and his hair is heavily gelled -- and of a length that distinguishes the self-made businessman from his employees.

He declines to provide his name and isn't interested in saying much else, either. He does, however, tell us that he has been in Malta since the country joined the EU in 2004 and that he helps German companies establish themselves here. Everything, he insists, is of course legal. "No shell companies." And he says that he has nothing to do with the coffee family Jacobs.

Which is true. The man's name isn't Jacobs, it is Braun, Peter Braun. Together with his brother, he establishes companies in Malta, and he sometimes lists himself as CEO, which is advantageous for his clients. His company Jacobs Management Ltd. is under the control of a company called Jacobs Capital Ltd., which is based in the British Virgin Islands in the Caribbean -- a place that plays host to thousands of companies with names like Jacobs Capital. The man, in other words, has plenty of experience -- apparently also with shell companies.

There are four companies registered to the floor just below him, all of them well-known in Germany. BASF Finance Malta is one of them. There are also two Limited firms belonging to the farm of poultry baron Erich Wesjohann, whose brother Paul-Heinz is the head of the poultry giant Wiesenhof. Sixt is also there, with a company called Sixt Financial Services GmbH, though the word "Financial" was exchanged for "International" in March. They all share a single buzzer, which is rather odd for three companies of that size. Searching the internet for an email address or telephone number for the companies is a fruitless endeavor. And a phone call to Deutsche Telekom in the search for a phone number doesn't help either: "Unfortunately, they aren't listed," we are told.

A man emerges in a denim shirt and casualwear and claims to be from BASF. But he says he has nothing to tell us, suggesting instead that we call the press office in Germany. His reserve is hardly surprising. When it comes to Malta, BASF is rather notorious.

A Workaholic with a Trio of Management Positions

A report compiled by the Green Party caucus in the European Parliament and completed last November reached the conclusion that the German chemical giant had saved some 923 million euros in taxes between 2010 and 2014 by way of intricate structures. Those structures also included Malta and the company based in the Mayfair building. The Malta subsidiary lent money to other BASF subsidiaries and when politicians sought to limit or prevent such activity, BASF allegedly lobbied heavily against such measures. When the report came out, BASF said it was "not completly accurate," but it didn't provide any details.

And what about the car rental company Sixt? Nobody from the company was there at the moment, said the man in the denim shirt (though he later denied having said it). When will they be back? He professed not to know. But, he says, nobody from Sixt will speak to the press, so it would be best to call the press office in Germany.

It's the same story one floor below. Next to the door is a sign listing two Limiteds belong to Puma, the German sportswear company, and a third, Puma Ltd., is marked on the mailbox in the stairwell. There are also two Limiteds belonging to K+S, the commodities company Kali und Salz, which was listed on Germany's DAX blue-chip stock index until last year. There are also two firms listed for KSPG Automotiv, the automotive supplier belonging to Rheinmetall. Again, there is but a single buzzer for all of them, but it is actually labelled Jacobs -- the company belonging to Mr. Braun on the top floor. In addition, there is a sticker reading: "Please deliver registered mail and parcels to the 6th floor." In other words, Mr. Braun also apparently receives mail on behalf of the German companies.

We ring and a woman opens the door. She says that she is with K+S, but requests that all further questions be referred to the press office. The office floor has two external doors with windows, though which three rooms are visible. The inside doors are open and behind them are glass windows, tiled floors and nothing else. They are completely empty. A fourth office, which is visible through the other door, is also empty. There is, though, a printer in one room and a desk in another, though it looks unused. Such are the offices of K+S, Rheinmetall and Puma in Malta -- not much going on for such prestigious names.

So we head back upstairs to BASF and Sixt, but this time, nobody answers the door. Later, though, we find Mr. Casual Wear, the man in the denim shirt, in the internet. His name is Pall Arnason, attended university in Iceland and must be a true workaholic. On LinkedIn, he reports having three employers and three jobs concurrently. He claims to be "executive manager" of BASF Finance Malta GmbH, a position he has held "since May 2014." He has also been "finance manager" of K+S Finance Limited "since November 2015" and, most interestingly, he lists himself as "senior manager" of Jacobs Management Limited, Peter Braun's company on the sixth floor. In other words, a Jacobs man is holding down the fort for BASF and K+S.

'No Further Details'

The German companies that have offices in the Mayfair building, not surprisingly, have a different story to tell. The K+S press office later writes that the company does not share employees with other companies in the building. The Malta subsidiary, the press office insists, has four employees of its own in an office of 65 square meters (700 square feet), fully furnished, everything on the up-and-up, also when it comes to taxes. But the press office does say that K+S Finance Ltd. is in Malta due to tax considerations. "Taxes are a significant cost factor considered in business decisions. In the interest of our shareholders, K+S takes steps to reduce this cost factor."

Puma says that it founded two companies on Malta so that it could take part in a regatta there, which is a plausible, if far-fetched, explanation. Only after a follow-up question does Puma confirm the existence of a third company, Puma Blue Sea Ltd., which has more to do with finances than with a regatta. The company claims that all three companies were closed down at the end of 2014, but two of them still haven't been annulled.

Rheinmetall sent a terse statement saying that the German tax authorities were aware of the two finance subsidiaries on Malta and that the companies also had their "own employees." The BASF statement was even shorter, just seven lines long, though it did little to provide clarity. The Malta-based company was required to pay taxes in Germany, the statement said, though it also mentioned the Maltese tax refund. "No further details" would be provided, the statement said.

Sixt, by contrast, was a bit more forthcoming. The Sixt subsidiary employs six people in an office measuring 130 square meters (1,400 square feet), the statement claimed, and the office is occupied every day. On the day of SPIEGEL's visit, the statement said, employees were in the office "continuously," and the company later submitted three sworn declarations to back up the claim. Apparently, then, it isn't necessary to have a listed telephone number for tasks such as recruiting "international executives," supervising franchise partners or providing funds to company branches -- which are three out of a list of several tasks undertaken by the Malta subsidiary, at least according to the commercial register.

A Malta-based subsidiary belonging to the poultry firm Wesjohann even has a listed telephone number. A man answers, clearly annoyed that a caller would have the gumption to try three times in a single afternoon to reach such a minor Ltd., with its negligible assets of 145 million euros. The man says he is currently overseas and prefers not to be bothered with additional phone calls -- making it sound as though the Malta office was rather sparsely occupied. Later, company headquarters in Germany provided a four-line statement in answer to 13 questions. The German tax authorities are aware of the Malta subsidiary, the statement said, and the it was completely legal.

Multi-Tasking

Which leaves Peter Braun, the specialist for German companies in Malta in his sixth-floor office. He admits to accepting larger letters or packages for K+S, but says it is more of an exception than the rule -- to ensure that nothing clutters up the hallways. And the empty offices? He says that there are indeed a couple of unused offices on the floor where K+S is located and that the building owner is seeking to rent them out to a different tenant. But Braun claims to have nothing to do with K+S and says he doesn't know anything about who works for whom, like Arnason, who claims to work for both Braun and K+S.

Business life in Malta is apparently rather colorful, but it is only on special occasions that politicians in Northern Europe pay much attention. During election campaigns, for example. On Wednesday, May 10, just a few days before the important vote in the German state of North Rhine-Westphalia, the state's finance minister, Norbert Walter-Borjans of the Social Democratic Party (SPD), went after Malta during a press conference. The campaign wasn't going well for the SPD and Walter-Borjans used the press appearance to gloat about a list of 70,000 Malta-based companies that had been passed on to him -- apparently the same list that the EIC network and SPIEGEL had obtained. The SPD politician referred to Malta as the "Panama of Europe" and said that around 2,000 of the companies were of interest from the perspective of German taxpayers. Previously, only 260 such companies had been known, he said. It sounded like Walter-Borjans was taking a tough stance on tax fairness and the politician received the headlines he had been hoping for.

A tax investigator from North Rhine-Westphalia who is familiar with the list of companies has been complaining about Malta for years. "When I read Malta, the alarm bells go off," he says. But even the new list might not make the fight any easier. "According to Maltese law, most of it is legal. Malta lives off the system. The fact that it hurts other countries is something the Maltese take in stride."

One question, in particular, must be addressed in each specific case: Do the companies based in Malta have a physical presence? Do they have offices, employees, board meetings or business operations? Or are they just hiding a tax structure behind a fake address -- as could be the case in the Mayfair building? Should the latter be the case, German tax authorities are then allowed to attribute Maltese income to the Germany-based parent company and tax it accordingly.

"The system in Malta is of course precisely designed to attract companies without a physical presence," says Matthew Vella, a journalist with Malta Today who has made plenty of enemies on the island with such sentences. But Kenneth Farrugia, the chief lobbyist for the Maltese financial branch, is immovable. "If Germany were to think that the physical presence of Malta-based companies was insufficient, German tax authorities would turn off the lights. But this doesn't happen," he says.

'We're Not Talking'

That is also the case when it comes to Lindsell Finance Ltd., a company that has belonged to Deutsche Bank since 2008 and which has its offices in Level 2 West of the Mercury Tower in St. Julian's. When we went to the building and asked about Lindsell, however, we were told that the company is registered at the site but doesn't have an office. Later, Deutsche Bank was vague in response to questions about the company. The firm, Deutsche Bank claimed, had only been established for a client and had since, along with two additional Maltese subsidiaries, been liquidated.

Automaker BMW, with its 200-square-meter office, appears to be playing by the rules. Around a half-dozen employees, who actually have the appearance of business people, are sitting in the office beneath a handful of BMW posters on the walls. One of them, who introduces himself as James, leads us into the conference room. He begins by telling us that there are three BMW subsidiaries in Malta and is just about to tell us what they are called and what they do -- and again, there is one with the word "finance" in its name.

But then he stops and asks again why we are interested and "um, where are you from again? Hmm. One moment." He leaves the room, presumably to make a phone call -- and the odds are that the first word out of his mouth when he returns will be "unfortunately," "I'm afraid," or "sorry." In the event, "unfortunately" wins. James stammers something about "confidentiality reasons" and then leads us out.

The press office in Munich later provides five reasons for why the finance subsidiary BMW Malta Finance is located on the island: good personnel, political stability, etc. The list doesn't include the country's low rate of taxation. The statement insists that the company of course obeys the law and lives up to its "societal responsibilities."

It is possible to spend one's entire day in Malta in this way: ring the buzzer, "we're not talking," press office, everything is just fine. Or one can just talk to the man from Osiris Corporate Services Limited. He doesn't want to tell us his name: "Look in the register," he suggests in an impeccable Oxford accent. "It's all there." And it is. The man is named Stuart Peter Blackburn, a 70-year-old from England. But apart from his name, there aren't many questions he won't answer.

Behind his door, several Maltese subsidiaries belonging to European corporations are headquartered. The more one asks how things are generally done, the more distinct becomes the tone in his voice that can best be translated as: "How naïve can you be?" Of course nobody from these companies work here, Blackburn says. "This is just the address. A company has to have an address in Malta, that is the law and I obey it." Whether he thinks it appropriate? "I'm not here to comment on the rules, it's all legal."

Lower Taxes for Superyachts

He is there to deliver the address, as do hundreds of others working in the same industry in Malta. Like the young woman working for a different law firm who was visited recently by a reporter from frontal21, a show broadcast by German public television channel ZDF. The reporter acted as though he was interested in founding a company and the woman assured him that she could offer the complete Malta package, including an address, personnel and everything needed to make it look as though it were a real company. "There are many like me here, a great many," says Blackburn, the Englishman. He suggests that we "look in the corporate register" for answers to further questions, adding that none of it is a secret in Malta.

The register can be found next to the Malta Financial Services Authority, located on an inland bypass road, and for 20 euros per company, it is indeed possible to get information. We went there looking for information about Cloverleaf Yachting Ltd., a company registered on April 11, 2016, to Johannes B. Kerner, the German television star. The corporate objective is listed as the purchase, sale, leasing and construction of "ships of any kind."

According to the register, Kerner is still the company's chief partner. At the beginning, he was also its director, but he gave up the post on Jan. 1, 2017, handing it over to a woman who has the same Maltese address as the German lawyer Jörg Werner, who established the company on Kerner's behalf.

Why? "We don't give any interviews," we are told. But on his homepage, Werner is much more forthcoming. "We focus on consulting international clients to reduce their tax burden, especially by benfiting from the location's advantages (Maltese tax law)," the website reads. When Kerner was asked about Cloverleaf Yachting a couple of months ago, he declined to comment, saying it was a private matter. One assumes that most Germans with companies in Malta would say the same.

There are, though, a few obvious reasons to locate in Malta if a company has the word "yachting" in its name. Malta has Europe's largest maritime register and the EU member state also actively tries to attract yacht owners with special VAT offers. The standard VAT level is 18 percent, but the longer the vessel, the cheaper it becomes. The justification: Larger yachts spend much of their time in international waters and are not subject to taxation during those periods. A 23-meter (75-foot) yacht, for example, is only taxed at a rate of 7.2 percent. But the taxes on an 11-meter sailboat is also just half of the base rate. As such, it's no wonder that the number of superyachts -- vessels 24 meters and longer -- has climbed by 11 percent in Malta since 2015.

Did Kerner found his company to save taxes on a yacht, though he's not known to be a seaman? His lawyer says that Kerner hasn't leased a yacht, claiming that tax advantages in Malta only apply to those who lease. So why Malta? Kerner insists that it is a private matter and completely legal -- and is unwilling to say more.

Others can't hide quite so easily -- because their yachts are simply too big. Tchibo heir Günter Herz, the Würth family -- which owns an immense industrial fastener company -- and the artificial limb producer Hans Georg Näder (whose company is called Otto Bock) are all registered in the Maltese corporate register with their megayachts. The Würth family declined to respond to SPIEGEL inquiries. Näder spoke of "normal financial leasing" and claimed it was all legal and transparent and that the German tax authorities had been informed. Herz said that he paid the appropriate VAT in Malta and echoed Näder's claims regarding legality.

Deception, Cover-Ups and Denials

But the situation makes it look as though the richest Germans with the biggest megayachts -- the vessel belonging to the Würth family, for example, is 85 meters long and cost 141 million euros at the time of purchase -- are rather parsimonious when it comes to paying their fair share to the German state. As distasteful as it might seem, most of the Malta subsidiaries belonging to German companies and corporations are legal. Not just because Malta designed its laws to accommodate them. But also because Brussels and Berlin tolerate such laws and allow Malta to continue. As such, laying blame with Malta also necessitates pointing fingers at the political shortcomings of others and noting the fact that German politicians are fully aware of the issue. They may voice frustration, but they have done nothing.

Politically, after all, Malta is uninterested in budging. No matter whether the center-left or the center-right are in control, they agree on one thing: Both parties want Malta to remain a tax haven. To do so, they aren't above deception, cover-ups and denials. Finance Minister Edward Scicluna, for example, recently told the European Parliament's committee of inquiry into the Panama Papers, which was visiting from Brussels, that Malta isn't a tax haven. It wasn't as easy as just pointing to Malta's 5 percent tax rate, he said.

Maltese Prime Minister Joseph Muscat is fond of insisting that tax rates are purely national affairs and Malta will continue to maintain control of its own. Including that of the extremely low ones. Luckily for the country, tax issues in the EU must be decided unanimously, a principle that Malta defends vigorously -- with the consequence that Maltese Economics Minister Christian Cardona hails his country's booming finance sector and the "attractive tax environment" for companies.

The country wants to ensure that nothing changes. On the contrary: "Malta would like to attract additional foreign companies that are interested in centralizing their regional or global financial arrangements," reads a German-language image brochure. The flier also includes Malta's eternal mantra -- that the EU and the OECD have "approved" the country's tax system. Malta, in short, is eager to present itself as a model member of Europe and happy to be in the EU - while at the same time aggressively defending its national privileges.

One example is provided by an investment handbook produced by FinanceMalta, the partially state-owned financial sector lobbying group, even before Malta proudly took over the rotating presidency of the European Council in January. The handbook clearly laid out why holding the Council presidency was beneficial: It would provide the country with an opportunity to influence key EU decisions, including on the "fiscal front," where Malta would "stand its ground."

Testing the Limits of Legality

In April, Malta took the next step and presented a discussion paper at a meeting of EU finance ministers. After the shock of the Panama Papers revelations, the country recommended that care be taken with legal changes. Rapid shifts, the discussion paper noted, would unsettle corporations and would hamstring Europe in the competition with other regions of the world that aren't quite as serious about combatting tax evasion.

The European Parliament's Panama Papers inquiry committee has had a particularly difficult time with Malta. Prime Minister Muscat is scheduled to testify in front of the committee in mid-June, but it is unclear whether he will show up. Finance Minister Scicluna already skipped his own appointment in January. When the committee sent a delegation to Malta in February, the minster was quick to show annoyance when asked why so many Maltese consultants were mentioned in the Panama Papers. Providing advice isn't illegal, he snapped testily.

The limits of legality, however, were perhaps tested a bit more directly by his colleagues in government, two of whom were revealed by the Panama Papers to be in possession of shell companies -- including then-Energy Minister Konrad Mizzi and the prime minister's right-hand man, Keith Schembri. Mizzi had a foundation in New Zealand, which he claimed, in testimony to the EU committee, was completely legal. Schembri, for his part, cancelled his appointment with the Brussels delegation just minutes before he was scheduled to appear, claiming that the MEPs didn't have the right to question him.

"Malta is blocking the committee," complains Fabio De Masi, who is a member of the committee of inquiry on behalf of the German Left Party. Fellow committee member Sven Giegold, of the Green Party, says that Malta's obstruction is an "impertinence." Malta still hasn't answered a list of questions the committee sent out to all 28 EU member states.

All of that, though, could be but a foretaste of what might become the biggest political scandal in Malta's history. Three weeks ago, Prime Minister Muscat made a surprising call for snap elections, scheduled for June 3. The decision was triggered by reports that his wife Michelle allegedly maintained a shell company in Panama, into which more than a million dollars has reportedly flowed. The sender is thought to be Leyla Aliyeva, daughter of the president of Azerbaijan.

Back to Mr. Braun

Should the allegations prove true, it would be a truly bizarre episode. One of Malta's main focuses during its stint as European Council president is the push for stricter money laundering regulations. Some say that Malta is pushing hard against money laundering so that, in return, its tax system will remain untouched. Now, however, Muscat's wife is facing allegations of corruption and money laundering.

The couple has angrily rejected the allegations, saying they are an invention of dubious provenance. But opposition politicians believe that Muscat may have been bribed. They point to the fact that the prime minister, his chief aide Schembri and then-Energy Minister Mizzi flew to Azerbaijan without expert officials and came home with a deal requiring Malta to buy liquid natural gas from the country for 18 years. The price is considered a state secret -- which has fueled speculation.

The presumption of innocence applies, of course. But even if there is nothing behind the accusations, there are still plenty of reasons to approach Malta and its politicians with skepticism. Why, though, do leading EU economies, particularly Germany, refrain from exerting sufficient political pressure on the country to force it to change its tax laws? Because, De Masi believes, they're not interested in such changes either -- at least not at all costs. "It is like at a mafia dinner," he says. "They all have their weapons in their hands under the table, and if one begins shooting, they all will."

De Masi says that Malta isn't the only country that has something to lose. The larger countries are interested in protecting their companies, which are profiting from the tax structures -- and which exert pressure on politicians so that they can continue enjoying tax savings in the EU and not on some offshore island at the end of the world. Plus, he says, the EU already has enough stress with Brexit, and tiny little Malta also has to make a living somehow. That, at least, is De Masi's list of explanations for Europe's collective shoulder shrug when it comes to Malta's tax haven ways.

And that is why it remains unlikely that tax investigators will show up any time soon at the Mayfair building to test for signs of physical presence at companies such as BASF, Sixt or K+S. Instead, one has to make do with the mailman test at shortly after 10 a.m. on a morning in May. The postman jumps off his scooter, strides quickly to the collection of mailboxes at the entrance and begins distributing envelopes. Two or three go to K+S. But BASF gets nothing, and neither does Rheinmetall or the six employees of Sixt that are allegedly slaving away up on the fifth floor.

As it happens, the commercial register lists a director for Sixt International Services in Malta. His name is Mr. Braun. Peter Braun. On the sixth floor.

By Jürgen Dahlkamp, Christoph Henrichs, Gunther Latsch, Christoph Pauly and Jörg Schmitt

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