IT sounds like the item was boxed and packaged correctly. The post had a third party carrier (air line) actually carry the item to Malta. In their care the item was crushed by what looks like the air planes wheel itself. Then it was scooped up, bagged and handed over to the Malta post who sent it on to you with an apology. They are hoping you leave it at that seeing that it is just a toy. The 3rd party has insurance and it can be tapped.
I would complain, complain, complain. The squeaky wheel gets oil, so squeak loudly, not physically but in letters to the post master. With or without insurance no company wants documented complaints on their record list. Find out what was meant by "OUTSIDE OUR AREA OF CONTROL" Typically companies will send you a quick note hoping it will blow over. Escalate it and do not let it blow over, make them take responsibility