Prime Minister of Malta Joseph Muscat speaks during a joint statement at the end of the Southern European Union Countries Summit at the Pardo Palace on April 10, 2017 in El Pardo, near Madrid, Spain | Pablo Blazquez Dominguez/Getty Images Corruption allegations threaten to wreck Muscat’s premiership Panama Papers scandal continues to dog EU’s smallest country.

Joseph Muscat must explain his involvement — or lack of — in the Panama Papers scandal, a senior MEP said Wednesday as pressure mounted on the Maltese prime minister over allegations involving his wife, the daughter of Azerbaijan’s president and a Panamanian company.

Days before Muscat flies to Brussels for a summit on the EU27's Brexit negotiating strategy, Manfred Weber, the leader of the European People's Party in the European Parliament, waded into what had hitherto been primarily a domestic affair.

"I expect [Muscat] to travel to the European Parliament next month to explain his involvement in the whole Panama Papers affair,” Weber told POLITICO.

The German MEP — whose group contains Malta's opposition Nationalist Party — had earlier demanded Muscat step down, saying it was "unprecedented" for a prime minister of a country holding the rotating presidency of the Council of the EU to be under criminal investigation. Malta has been steering the Council, representing EU governments, since January and has been tasked with drawing up new anti-money laundering rules in response to last year's Panama Papers scandal.

That same scandal has ensnared Muscat, a former MEP who leads the Labour Party. His wife Michelle is alleged to have received $1 million through a company set up by Mossack Fonseca, the law firm at the heart of the Panama Papers furor.

It gets worse for Muscat.

Late Tuesday, Simon Busuttil, the Nationalist Party leader, said he had evidence proving Muscat's chief of staff, Keith Schembri, had taken illegal kickbacks from the sale of Maltese passports to three Russian citizens. Schembri immediately threatened libel action, denying the allegations.

Last year, Schembri and Konrad Mizzi, a close ally of the prime minister and former energy minister, were named in the Panama Papers leaks, which said they had instructed lawyers to set up secret offshore trusts in New Zealand and companies in Panama.

Busuttil told POLITICO he saw no point in giving the new evidence to Maltese police. "I have no trust in them," he said, but added that he would speak to a magistrate investigating the affair. Muscat and his wife have already testified.

"The European institutions have been talking a lot about Poland and Hungary," said Busuttil. "I ask them to turn an eye to what is happening in Malta."

The prime minister has described the accusations leveled at his wife as "the greatest lie in Malta's political history" while his spokesman said, "we are pretty confident the allegations will fall flat on their face.”

A difficult week

Muscat's problems started last week when blogger Daphne Caruana Galizia said she had evidence proving that his wife was the beneficial owner of a company opened by Mossack Fonseca. She also alleged that through this company, Muscat's wife received $1 million from the daughter of Azerbaijan's president, Ilham Aliyev.

Muscat's opponents have long alleged unsavory links between Muscat and Azerbaijan. They say during visits made by the prime minister and his aides to Baku at the end of 2014 to strike gas supply deals with SOCAR, Azerbaijan's state oil company, illegal kickbacks were discussed. Muscat and his aides deny that was the case.

Caruana Galizia has refused to publish documents which she claims prove that accounts at Malta-based Pilatus Bank, established not long after the 2013 national election, were set up by Muscat aides in order to receive kickbacks from privatization deals and the country's controversial passports-for-cash scheme.

When asked why she published the revelations, Caruana Galizia — described by Labour as "a hate blogger" — told POLITICO: “It’s just my job… I was fortunate that I got access to a really good whistleblower from [Pilatus] bank, which just landed in my lap… I am not a Nationalist, I am not a politician. What’s the alternative explanation? That I suddenly lost my mind and wrote a John Grisham novel?”

The night she broke the story, Seyed Ali Sadr Hasheminejad, Pilatus' Iranian owner, was filmed leaving the bank through an emergency exit carrying heavy suitcases.

Later that night, a private jet left Malta for Baku, Azerbaijan. Opposition politicians suggest evidence implicating Muscat and his aides was on board that flight. Hashaminejad and the bank reject all the allegations, saying they have no involvement with the Muscat family or his aides.

"There is a pattern of institutionalized corruption in this country," said Busuttil. "Each day that passes is a day which increases the damage being done to our country. Who would want to live in a country where the prime minister is under criminal investigation?"

Election rumors

Rumors have been swirling for weeks that Muscat will call a snap election in June.

It's unclear whether the latest revelations will push him to call the election earlier, or delay until spring next year, the final date that he can call a ballot.

“Yes, there are rumors," a spokesman for Muscat said. "But [calling an election] is the prerogative of the prime minister. Any decision will be made by the prime minister at the appropriate time.”

"There are a great deal of rumors about an early election being called," said Busuttil. "However I am calling for the prime minister to resign, regardless of this possibility. He cannot stay in politics. He should just go."