FIAU flagged suspicions of kickbacks in Enemalta sale, Mizzi issues denial

The Financial Intelligence Analysis Unit (FIAU) had reportedly flagged suspicions of kickbacks in the partial privatization of Enemalta to Chinese state-owned Shanghai Electric Power.

Citing a damning unconcluded FIAU report, the Malta Independent on Sunday reported today that kickbacks had been planned for minister Konrad Mizzi and SEP engineer Cheng Chen via their secret companies in Panama and the British Virgin Islands.

In a statement, Mizzi said he strongly rejects any allegations of impropriety in relation to the €320 Enemalta deal and decried the report as part of a “character assassination campaign, originally charted by blogger Daphne Caruana Galizia”.

“The Malta Independent on Sunday attempts to create a link between the trust setup, whose beneficiary is my family, and a separate unrelated company which it claims was set up by a Chinese individual,” he said. “I emphasise that no such link exists. This is a rehashed attempt to create the impression of link, which does not exist.”

The Panama Papers revealed last year that Nexia BT had set up a BVI company ‘Torbridge Services Inc’ for Cheng Chen, as well as two Panama companies for Mizzi and the Prime Minister’s chief of staff Keith Schembri.

The Malta Independent reported that the FIAU had spent months investigating the suspected kickbacks in the Enemalta deal, but halted its investigation, when other FIAU reports started to be leaked to the press.

‘Mizzi travelled 17 times to China on government business’

The unconcluded FIAU report also states that on the basis of information gained through Mizzi’s credit card activity, the minister travelled to China 17 times between September 2013 and March 2016.

“The volume of trips to China at a time when Malta and China were already signing deals in relation to Enemalta raises suspicion,” the FIAU said.

It also noted that, despite having family in China, Mizzi stayed in hotels for at least 16 of these trips.

In his statement, Mizzi confirmed that he visited China several times in connection with government work, as Malta’s energy minister and as a representative of Enemalta’s shareholder.

“My engagement with Shanghai Electric Power was a prerequisite to the success of attracting the €320 million investment in Enemalta and also in turning around the company,” he said. “It is worth pointing out that through the change-process led by the Minister over the last four years, Enemalta has turned around its performance. From a loss of €100 million per annum in its electricity operations, the company now registers a profit in excess of €40 million per annum. 

“Economic successes such as these require commitment and perseverance. Yet The Malta Independent on Sunday attempts to tarnish my reputation on the strength of trips made to China.”

Joseph Muscat and Konrad Mizzi at the new LNG power station

‘Mizzi’s assets don’t justify need to open Panama company’

The FIAU also warned that Mizzi’s 2014 declaration of assets – namely a house in London, an apartment in Sliema, bank deposits of €310,279, and 4,000 shares in Malta International Airport plc – do not justify the costs of setting up of a Panama company that is held under trust in New Zealand.

Moreover, it said that it only identified bank deposits totaling €92,000, held in joint accounts with his wife Sai Mizzi Liang.

“The apparent lack of these bank deposits, which would be one of the most significant assets Dr Mizzi holds, further begs the question as to why such a structure was required, given that the costs of setting up and maintaining such a structure would outweigh any financial benefit derived solely from the property in the UK.”

It also noted that the fact that Mizzi’s bank deposits and Sliema apartment are all assets held jointly with his wife means that the minister “would not be able to transfer any of these assets to a trust of which he alone is the settlor”.

The FIAU estimated that it would have cost Mizzi €9,700 to set up his offshore structure, not including the annual fee charged by the trust services provider.

“This shows that such a setup is too costly to justify it being used simply to hold a property in the UK which is expected to generated rental income of approximately GBP 20K a year and average bank deposits of €92,000 which are not even held in Dr Mizzi’s sole name.”

The FIAU report also confirmed that Mizzi had personally travelled to Dubai in an attempt to open up bank accounts for his Panama company Hearnville Inc.

In his statement, Mizzi said that he reiterates “the most fundamental fact of all”.

“My trust and company, which is now closed, never held bank account in Dubai or anywhere else in the world, never transacted and never received any funds. An independent audit by Crowe Horwath attests to these facts.”

He did not comment on the reports that his bank deposits were not in line with his declaration of assets, that his assets did not justify the setting up of such a costly financial setup, or that he would not have been able to transfer his deposits or Sliema apartment to his trust.