Listen on * Spotify * Apple Music * Amazon Music Brussels was jolted this week by dawn raids and an alleged fraud probe involving current and former senior EU diplomats. Host Sarah Wheaton speaks with Zoya Sheftalovich — a longtime Brussels Playbook editor who has just returned from Australia to begin her new role as POLITICO’s chief EU correspondent — and with Max Griera, our European Parliament reporter, to unpack what we know so far, what’s at stake for Ursula von der Leyen, and where the investigation may head next. Then, with Zoya staying in the studio, we’re joined by Senior Climate Correspondent Karl Mathiesen, Trade and Competition Editor Doug Busvine and Defense Editor Jan Cienski to take stock of the Commission’s first year — marked by this very bumpy week. We look at competitiveness, climate, defense and the fast-shifting global landscape — and our panel delivers its score for von der Leyen’s team.

BRUSSELS — Ursula von der Leyen is separating herself from the corruption allegations engulfing the EU’s diplomatic service, with staffers saying it is a non-issue for the Commission chief. After Belgian authorities conducted dawn raids on Tuesday and detained the EU’s former top diplomat Federica Mogherini and ex-European External Action Service Secretary-General Stefano Sannino, Commission officials dismissed it as an EEAS problem — noting that while Sannino took on a top job at the Commission earlier this year, the probe dates back to his previous role. “It’s not the Commission distancing itself, it’s a different institution that’s being investigated,” an EU official said. Helpfully for von der Leyen, Sannino fell on his sword Wednesday, with the Commission announcing he was gone from the helm of its Middle East, North Africa and the Gulf department (DG MENA). Three Commission officials forcefully argued the investigation launched Tuesday — into allegations the EEAS fraudulently awarded a tender to run a training academy for future EU diplomats to the College of Europe in Bruges — had nothing to do with von der Leyen, given the diplomatic service is a separate institution from the Commission. An EU official characterized attacks on the Commission chief as unfair and unwise, coming at a sensitive time when von der Leyen is attempting to shore up support for Ukraine ahead of a crunch December summit of EU leaders. The events take place against the backdrop of tensions between von der Leyen and the current boss of the EEAS, Kaja Kallas. Kallas, who was not in office at the time of the alleged corruption, has also sought to distance herself from the probe. On Wednesday, the former Estonian prime minister sought to drive home the idea that she had been working to clean up the EEAS since her appointment as the EU’s high representative in December 2024. In a letter to EEAS staff seen by POLITICO, the top EU diplomat wrote that she found the allegations against Mogherini and Sannino “deeply shocking,” but that these had predated her time at the EEAS. In the months since then, her team had launched internal reforms including setting up an “Anti-Fraud Strategy” and building stronger cooperation with the EU’s anti-fraud agency, OLAF, and the EPPO, she said. But at issue is who knew what in relation to the claims against Sannino. According to four EEAS employees, speaking to POLITICO in interviews prior to Tuesday’s raids, wider questions were raised about the way Sannino handled appointments for coveted diplomatic posts during his time at the service, including allegations that he had awarded them to favorites. Officials from OLAF visited the secretary-general’s offices prior to his departure from the EEAS, according to two people familiar with the matter. Kaja Kallas, who was not in office at the time of the alleged corruption, has also sought to distance herself from the probe. | Dursun Aydemir/Getty Images But an EU official said the Commission was not aware of prior complaints about Sannino when he was hired to be the head of a new department covering the Middle East and North Africa. In its statement announcing Tuesday’s raids, the EPPO said it had requested that authorities lift the immunity ― typically given to diplomats, protecting them from legal action ― of “several suspects” prior to the probe, and that this was granted. It did not specify which bodies it had made the requests to. The EU official mentioned above said the EPPO had directed a request to lift Sannino’s immunity to the EEAS in September, and that the Commission had not been made aware of it. An EEAS official did not respond directly to a question about whether such a request had been received. The official said the EEAS would have followed the law in such circumstances. The allegations are not proven and Mogherini, Sannino and the other individual who was detained are presumed innocent until deemed guilty by a court. Sannino did not immediately respond to a request for comment via his European Commission office. Tuesday’s events could also aggravate tensions between EU politicians and Belgian authorities. Two officials questioned the quality of the Belgian justice system, noting that authorities had held flashy press conference and detained suspects but then failed to advance cases in the 2022 “Qatargate” scandal and this year’s bribery probe into Chinese tech giant Huawei’s lobbying activities.

BRUSSELS ― Belgian police raided the EU’s foreign service and the College of Europe on Tuesday in a bombshell corruption probe — and detained two of the EU’s most powerful officials. Federica Mogherini, who once served as the EU’s top diplomat, and Stefano Sannino, a director-general in the European Commission, were questioned over allegations of fraud in the establishment of a training academy for diplomats. Mogherini was born in Rome, the daughter of a film set designer. She was elected to the Italian parliament in 2008 as an MP with the center-left Democratic Party and became Italy’s foreign minister in 2014, an appointment that, at the time, took many by surprise. The 52-year-old’s tenure was short-lived, as she was made the EU’s high representative — the foreign policy chief — the same year, a position she held until 2019. Her time in the job is perhaps most notable for her work on the 2015 Iran nuclear deal. At the end of her five-year term, she became the rector of the Bruges-based College of Europe, a position she’s been in ever since. But her appointment was mired in claims of cronyism, as professors and EU officials argued that she was not qualified for the post, did not meet the criteria and applied after the deadline. She has also served as the director of the EU Diplomatic Academy, a program for junior diplomats across EU countries that is run by the College of Europe, since August 2022. It’s the academy that is at the center of the probe. The European Public Prosecutor’s Office (EPPO) said it has “strong suspicions” that rules around “fair competition” were breached when the EEAS awarded the tender to set up the academy. Sannino, a career diplomat from Naples with a packed CV including various roles in Rome and Brussels, has served as director-general of DG Enlargement, permanent representative of Italy to the EU, Italian ambassador to Spain and Andorra and secretary-general of the European External Action Service (EEAS). He has championed LGBTQ+ rights and is married to Catalan political adviser Santiago Mondragón. He started his current role as director-general of DG MENA, the EU’s department for the Middle East, North Africa and the Gulf, in February. He has lectured at the College of Europe and at the diplomatic academy. None of the people questioned has been charged. An investigative judge has 48 hours to decide on further action.

BRUSSELS — Platforms including Meta and TikTok will be held liable for financial fraud for the first time under new rules agreed by EU lawmakers in the early hours of Thursday. The Parliament and Council agreed on the package of rules after eight hours of negotiations to strengthen safeguards against payment fraud. The deal adds another layer of EU regulatory risk for U.S. tech giants, which have lobbied the White House to confront Brussels’ anti-monopoly and content moderation rules. “This is a big win. A big, big step forward. We are coming from a reality where platforms are not liable under any law,” Morten Løkkegaard, the Danish Renew MEP who shepherded part of the package through Parliament, told POLITICO. “It is a historical moment.” Social media has become rife with financial scams, and MEPs pushed hard to hold both Big Tech and banks liable during legislative negotiations. EU governments, meanwhile, believed banks should be held responsible if their safeguards aren’t strong enough. As a compromise, lawmakers agreed that banks should reimburse victims if a scammer, impersonating the bank, swindles them out of their money, or if payments are processed without consent. But social media companies will have to compensate banks if it’s clear that they failed to remove an online scam that had been reported. Some MEPs had called for more amid concerns that EU consumer safeguards on social platforms have proven insufficient. “Especially, as AI and social-engineering fuel an unprecedented rise in scams,” said Lithuanian Greens lawmaker Virginijus Sinkevičius. The new rules build on the EU’s Digital Services Act and the Digital Markets Act, which respectively limit the spread of illegal content and prevent large online platforms, such as Google, Amazon and Meta, from overextending their online empires. Breaching the DSA and DMA can come with huge fines, triggering pushback from the tech sector and U.S. President Donald Trump, who has accused the EU of discriminating against American companies. U.S. Secretary of Commerce Howard Lutnick has threatened to keep 50 percent tariffs on European exports of steel and aluminum unless the EU loosens its digital rules. Thursday’s deal triggered immediate criticism from the tech industry. “This convoluted framework undermines simplification efforts and conflicts with the Digital Services Act’s ban on general monitoring — ignoring multiple studies warning it will be counterproductive,” said CCIA Europe Policy Manager Leonardo Veneziani, whose trade body represents Amazon, Google, Meta and Apple. “Instead of protecting consumers, today’s outcome sets a dangerous precedent and shifts responsibility away from those best placed to prevent fraud,” he said.

President Donald Trump’s iron-fisted grip on his party appears to be slipping in ways unseen since the immediate aftermath of the Jan. 6, 2021, attack on the Capitol. Back then, he quickly reasserted himself as the singular, dominant force within the Republican Party, and he may do so again. But the extraordinary rebukes and headwinds the president is now facing — much of it from within his own party — are revealing a GOP beginning to reckon with a post-Trump future. That dynamic crystallized after voters surged to the polls to support Democratic candidates for statewide races in New Jersey, Virginia, Georgia and Pennsylvania, shattering expectations of close contests and signaling that even Trump can’t defy political gravity forever. Trump has spent the days since recycling old grievances, berating members of his own party and choosing sides in a burgeoning intra-MAGA debate about antisemitism and bigotry within the GOP coalition. Asked about the momentum shift, a White House spokesperson said Trump had “delivered on many of the promises he was elected to enact” — from border security to ending taxes on tips to “affordability issues.” “As the architect of the MAGA movement, President Trump will always put America First. Every single day he’s working hard to continue fulfilling the many promises he made and he will continue delivering,” spokesperson Abigail Jackson said. In addition to the election romp, here’s a look at some recent brush-offs, brushbacks and breakups that have threatened Trump’s aura of invincibility. REPUBLICANS REFUSE TO BACK DOWN ON EPSTEIN VOTE A year ago, the idea that a Republican-led Congress would vote overwhelmingly in favor of anything Trump opposed would have been fanciful. Enter the Epstein files. Trump’s coalition has long viewed the FBI’s trove of records related to the late convicted sex offender and disgraced international power broker to be a holy grail of sorts, one that could shed light on a grander sex trafficking conspiracy implicating world leaders and politicians. But Trump, a longtime associate of Epstein’s until they fell out more than a decade ago, spent the summer leaning on congressional Republicans to cease their search for records. Trump has denied wrongdoing and no evidence has suggested he took part in Epstein’s trafficking operation. What happened next was perhaps the most stinging intra-party rebuke of Trump’s presidency. Trump tried and failed to pressure Republican lawmakers to pull the plug on a vote demanding the Justice Department turn over the full library of Epstein files. An intense pressure campaign against Rep. Lauren Boebert (R-Colo.) in particular went nowhere. The fallout also claimed the relationship of Trump and Georgia Rep. Marjorie Taylor Greene, whose refusal to flinch led Trump to brand her a “traitor” and attempt to turn his coalition against her. Greene has responded by saying Trump’s attacks have endangered her life. As a full House vote expected to overwhelming support the release of the Epstein files was just hours away, Trump reversed himself and encouraged Republicans to back the measure, avoiding what looked to be an inevitable black eye. Now White House officials say Trump should get credit for transparency and seeking the release of the files. INDIANA GOP LAWMAKERS DON’T BITE ON REDISTRICTING Trump’s inability to cajole Congress into his preferred course of action on the Epstein files came at virtually the same time the president and his allies failed to move Indiana Republicans to redraw their congressional boundaries to net Republicans another seat in the 2026 midterms. Trump had been pressing for a Hoosier redistricting measure for months, but state GOP leaders signaled they simply lacked the votes to make it a reality, drawing a threat from Trump to endorse some Republicans’ primary challengers. Countermeasures by Democrats in Virginia and California could make Trump’s nationwide push a wash. WARNING SIGNS APPEAR FOR TARIFFS AT THE SUPREME COURT Trump has long proclaimed that wielding tariffs against foreign governments is the key to negotiating favorable trade deals. Never mind that business and Republican orthodoxy has long considered tariffs as a backdoor tax on Americans. But the Supreme Court appeared skeptical of Trump’s approach, with justices he appointed sharply questioning whether the president can leverage emergency powers to tariff foreign governments at will. By all accounts, the argument was a drubbing for Trump’s side. And the president seemed to discover that reality when he vented at the court in a pair of Truth Social posts last week. It’s folly to predict how the high court will rule, even when the justices send clear signals during the arguments. But Trump appears to be bracing for defeat that could have devastating consequences for his economic agenda. His administration has repeatedly emphasized the centrality of tariffs to the recent spate of trade deals he’s made around the world. NO LUCK ON THE FILIBUSTER OR THE BLUE SLIP, EITHER Trump has never had much luck telling the Senate how to run itself. But his recent incursions into Senate procedure have underscored his relative powerlessness in this arena. Trump spent the bulk of the record-setting government shutdown pressuring Senate Republicans to abolish the filibuster, the Senate rule requiring 60 votes to pass most legislation. That threshold has vexed presidents for generations but has long been defended by institutional leaders as a way to prevent national whiplash every time the chamber changes. And Senate Majority Leader John Thune made clear quickly that Trump wasn’t going to get his way. Trump fared no better leaning on Senate Judiciary Chair Chuck Grassley (R-Iowa) to scrap the Senate’s 100-year-old tradition of honoring “blue slips,” the power of home-state senators to veto nominees for judgeships and U.S. attorneys they find unacceptable. Grassley has been Trump’s loudest champion on claims that the Justice Department was weaponized against him and has helped unearth records related to those allegations, but Trump has still bristled at Grassley’s refusal to cave on blue slips. Trump has struggled to get some of his preferred nominees across the finish line. TRUMP GETS A ONE-TWO PUNCH AFTER PARDONING 2020 ALLIES Trump announced last week a sweeping pardon of dozens of allies who played roles in his bid to subvert the 2020 election. Though none on the list actually faced federal criminal charges, many had been charged at the state level with seeking to defraud voters or corrupt the election results. Presidents can’t pardon state-level crimes, and within hours of Trump’s sweeping clemency he got a stark reminder. In Nevada, the state Supreme Court revived a criminal case against six of Trump’s pardon recipients who falsely claimed to be legitimate presidential electors. And in Georgia, a supervisory prosecutor reupped the criminal case against Trump himself for seeking to overturn the state’s election results. MAGA REBUKES TRUMP ON 50-YEAR MORTGAGES, H1B VISAS Trump’s feel for his MAGA base has been unerring for most of his decade in presidential politics. And their ardent support has sustained the president through his darkest moments: two impeachments, a slew of criminal indictments and a conviction making him the first former-president-turned-felon to retake the White House. So when his core allies twice sound the alarm that he’s missed the mark on economic policy proposals, it’s worth taking note. That was the case when Trump recently pitched a 50-year mortgage for homeowners, one that was roundly panned by a wide-range of MAGA influencers and created friction between the White House and Trump’s housing czar Bill Pulte. And the reaction from the base was similar when Trump defended issuing H1B visas to foreign workers and proclaimed that U.S. citizens lack “certain talents.” The uproar was swift among some of Trump’s most reliable allies. The administration says Trump’s broader economic agenda has disproportionately benefited U.S.-born workers and is working to weed out abuses in the H1B system.

THE BOOM THAT BROKE MALTA A sprawling fraud trial involving former premier Joseph Muscat lays bare the costs of 12 years of gangbuster growth. By BEN MUNSTER in Paceville, Malta Illustrations by Naama Benziman for POLITICO 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. Advertisement 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. Advertisement 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. Advertisement 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.  Advertisement 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.  Advertisement 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.”  Advertisement 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.  Advertisement “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. Advertisement 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. Advertisement 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.

ATHENS — Greek authorities made dozens of arrests on Wednesday related to Greece’s spiraling farm fraud case, in an investigation led by European prosecutors. Some 37 people suspected of being members of an organized criminal group involved in large-scale agricultural funding fraud and money laundering activities were arrested, and searches were carried out throughout the country, according to a statement by the European Public Prosecutor’s Office. In a snowballing scandal, the EPPO is pursuing dozens of cases in which Greeks allegedly received agricultural funds from the European Union for pastureland they did not own or lease, or for agricultural work they did not perform, depriving legitimate farmers of the funds they deserved. POLITICO first reported on the scheme in February. Several ministers and deputy ministers have resigned over their alleged involvement in the scandal. The EU has already fined Athens €400 million after finding evidence of systemic failings in the handling of farm subsidies from 2016 through to 2023. Greece also risks losing its EU farm subsidies unless it provides an improved action plan on how it will stop funds being siphoned off into corruption. The original deadline was Oct. 2, but this has now been pushed back to Nov. 4. “The Commission is awaiting the submission of the revised action plan and in the meantime, it continues to be in contact with the Greek authorities,” a European Commission spokesperson told POLITICO earlier this month. Wednesday’s operation centered on a criminal network accused of illegally obtaining EU farm subsidies through false declarations submitted to the organization in charge of distributing EU farm funds in Greece, OPEKEPE. According to the EPPO, in the course of the preliminary investigation, 324 individuals were identified as subsidy recipients, causing an estimated cost of more than €19.6 million to the EU budget. Of these, 42 are believed to be involved in this case and are considered current members of the criminal group, says the EPPO. Most of them appear to have no actual connection to farming or producing, according to the Greek and EU authorities. The EPPO said that, at least since 2018, the group “allegedly exploited procedural gaps” in the submission of applications using falsified or misleading documents to claim agricultural subsidies from OPEKEPE. They are suspected of fraudulently declaring pastureland that did not belong to them or did not meet eligibility criteria. They allegedly inflated livestock numbers to increase their subsidy entitlements. To conceal the illicit origin of the proceeds, they are believed to have issued fictitious invoices, routed the funds through multiple bank accounts, and mixed them with legitimate income. Part of the misappropriated money was allegedly spent on luxury goods, travel and vehicles, to disguise the funds as lawful assets. Greece’s anti-money laundering authority is investigating Giorgos Xylouris, a farmer from Crete and until recently member of ruling New Democracy. Xylouris is one of the key characters mentioned in EPPO case files, under the nickname Frappé (“Iced Coffee”), regarding the OPEKEPE scandal. Some €2.5 million was discovered in his bank accounts during a random inspection, the Greek officials said. Authorities found that Xylouris had failed to submit the required financial documentation and could not justify the large sum. Eight vehicles were also identified in his possession, including a Jaguar luxury car. The case file has been sent to the prosecutors to examine possible violations of anti-bribery laws and an investigation is ongoing regarding whether money laundering has occurred.

ATHENS — EU fraud investigators on Monday raided the offices of the Greek agency in charge of distributing EU farm funds that is at the center of a massive fraud scandal. The inspection by agents from the EU’s OLAF fraud team lasted eight hours at the offices of OPEKEPE, the state paying agency. It is expected to continue on Tuesday, with the investigators requesting documents concerning the agency’s organizational structure and contracts, according to two Greek officials granted anonymity to discuss the sensitive matter. An OLAF spokesperson declined to comment on the raid, citing the confidential investigation and possible ensuing judicial proceedings. A massive scam to defraud the EU has convulsed Athens this year, after many Greeks improperly received farm subsidies for pastureland they did not own, or for farm work they did not do. POLITICO first reported on the scheme in February. Several ministers and deputy ministers resigned over their alleged involvement in the scandal, which is also under investigation by the European Public Prosecutor’s Office. The EU has already fined Athens €400 million after finding evidence of systemic failings in the handling of farm subsidies from 2016 through to 2023. EPPO had already raided OPEKEPE headquarters in May, meeting physical resistance to its inquiries. This was followed by a raid by Greek police in July. Greece risks losing its EU farm subsidies unless it provides an improved action plan on how it will stop funds being siphoned off into corruption. The original deadline was Oct. 2, but this has now been pushed back to Nov. 4. “The Commission has not received the revised action plans from the Greek authorities,” a European Commission spokesperson said in response to a POLITICO inquiry. “The Commission is awaiting the submission of the revised action plan and in the meantime, it continues to be in contact with the Greek authorities.” Meanwhile, the Greek government announced last week it canceled subsidies for organic farming retroactively for 2024, after being inundated with fake applications. The Organic Farming and Animal Husbandry Program was set to run from June 2024 to June 2027 and had a budget of €287.5 million. More than 60,000 farmers had applied for subsidies under the program and it is not clear yet whether subsidies for 2025 will be paid. The Commission has yet to be notified of the government’s decision to pull the plug on the payments. “The Commission expects to be informed by the Greek authorities whenever EU agricultural funds are withheld, rerouted, or intended to be. As of Oct. 13, the Commission has received no such notification,” the spokesperson said.

PIRAEUS, Greece — It’s not just Greece and Slovakia. EU farm funds and other subsidies are fueling corruption across the bloc, Europe’s top prosecutor warned Thursday. A massive scam to defraud the EU of hundreds of millions of euros has convulsed Athens this year, after many Greeks improperly received farm subsidies for land they did not own, or for farm work they did not do. Several ministers and deputy ministers resigned over their alleged involvement in the scandal. But the head of the European Public Prosecutor’s Office, Laura Codruța Kövesi, told POLITICO in an interview that Greece was far from being a one-off. “I wouldn’t say Greece is very different. We have noticed fraud with the subsidies in almost all the member states, the difference is how much and how many cases we have,” the Romanian graft-buster said. “In Greece we discovered that the way the criminal activity was committed was very systematic and very well organized, with the involvement of somehow high officials. But we see the same things also in other member states.” The European Union’s lavish farm subsidies are a tempting target for corruption schemes as they represent one-third of the entire EU budget. The European Union’s lavish farm subsidies are a tempting target for corruption schemes as they represent one-third of the entire EU budget. | Angelos Tzortzinis/AFP via Getty Images In a press conference earlier in the day, Kövesi also revealed she had received a letter from a Greek farmer claiming honest applicants were excluded from EU funds because others resorted to bribery. “Let’s talk about this: how honest farmers had no access,” she said. Another of Kövesi’s major targets is the Recovery and Resilience Facility, set up in the wake of the coronavirus pandemic to dole out huge sums of cash to help countries get back on their feet. Hundreds of RRF cases are currently being investigated by EPPO. “Now we have these RRF funds. Of course, the organized crime moved the attention to that because they can make money,” she told POLITICO. Kövesi was speaking in the customs office in Piraeus, Greece’s largest port. Beyond the window lay thousands of shipping containers full of Chinese goods seized by European prosecutors, who uncovered a scheme designed to evade the payment of antidumping duties applicable to Chinese imports, in the biggest investigation of its kind. The message she sought to send to the criminals behind this fraud was: “The rules of the game have changed, no more safe havens for you. We have discovered a new continent of crime.  Organized crime is growing stronger by defrauding the EU and national budgets.” In order to deal with these cases she is seeking a bigger team, both in Athens and elsewhere. She has requested more European delegated prosecutors to work on her team, leading cross-border investigations into crimes related to the EU budget, as well as dedicated national financial investigators, from police, customs and tax authorities to work exclusively on EPPO cases. “There is no clean country. Everyone is affected by corruption and financial fraud,” she said. Some of her investigations are hitting brick walls when it comes to potential political involvement. In Greece, Kövesi’s team is investigating dozens of cases, including alleged misappropriation of EU funds in connection with a train accident in Tempi that caused the deaths of 57 people. Greece’s conservative New Democracy government rejected EPPO’s call for action against two former ministers after the crash. “Corruption can kill. Tempi is one of those examples,” she repeated. The government also blocked a probe into ministers allegedly involved in the snowballing farm fraud. EPPO is investigating how the scheme involved businesspeople, political figures and people working at the organization responsible for overseeing the distribution of the EU subsidies, a state agency called OPEKEPE. “OPEKEPE has become the acronym for corruption, nepotism and clientelism,” she said during the press conference. “Just like in the Tempi case, this criminal investigation could not develop its full reach because of the Greek constitution.” Based on a peculiarity of the Greek constitution, only the national parliament has the power to investigate and prosecute members or former members of the Greek government. EPPO has raised the issue with the European Commission, as well as with the Greek authorities and said it had received assurances that this provision would change. Asked about the ongoing investigation in the Greek parliament, the EU’s top prosecutor referred to high-profile attempts to intimidate her investigators in Greece. “Justice cannot become a TV reality show. A cat with a bell cannot catch mice,” she said. “EPPO is here to stay. Despite intimidation attempts we are very proud of the EPPO team in Athens.”

LIVERPOOL — Controversial new plans for digital ID in Britain will help the government crack down on benefit fraud, according to the minister in charge of welfare.  Ministers have insisted the digital ID rollout is aimed at ensuring people have the right to work in the U.K. in a bid to tackle illegal employment and dissuade migrants from crossing the Channel in small boats.  The issue of small boats and high levels of migration has dominated political debate in the U.K. and led to a surge in support for the right-wing populist Reform UK, who currently lead in multiple opinion polls. However, Work and Pensions Secretary Pat McFadden made clear the government is also considering how digital ID could be rolled out to other public services too, including the welfare regime.  He told a POLITICO event at the Labour conference in Liverpool it could be used to check whether benefit claimants are still in Britain and still entitled to their claims — as well as to root out fraudulent applications.  “I think we do want to explore this,” he said. “The potential for convenience for people in accessing public services is really high. The prime minister is absolutely right to ask us to do the work on this. I hope to be part of that work.” McFadden said he went to Estonia in August to hear about how the nation manages its own digital ID regime. He said the Estonian government thought Brits “searching in a draw to try to find a tatty council tax bill” to prove their identity “was a little bit quaint.”