Update 2 | HSBC says ‘error’ led to Schembri letter being issued from shuttered branch

The prime minister’s chief of staff Keith Schembri has suggested he will take legal action against The Times over allegations that an HSBC bank reference issued to him on 27 May 2013 was fraudulent and that the bank is investigating this allegation.

Schembri, who was revealed to have created an offshore Panama firm after taking office as Joseph Muscat’s chief aide, has also taken legal action against The Malta Independent which also reported on the alleged bank probe. “These insinuations are entirely false and fabricated. As evidenced by the attached correspondence issued by the bank’s Head of Commercial Banking, the report referred to was legitimately issued in terms of standing procedures," Schembri said.

In a statement issued at 12:20pm later on Wednesday, an official spokesperson for HSBC Bank confirmed that “certain letters were issued containing the address of Attard branch after its closure due to an administrative error within the bank's correspondence system and templates. HSBC reiterates that it does not comment publicly on individual customer accounts and relationships.”

“Through my lawyers, I authorised the bank to publicly respond to any queries it may receive about the matter, however the bank felt that as a custodian of personal information it should adhere to its strict policy of only discussing client matters with its clients,” Schembri said.

In a later statement, Schembri said the HSBC statement confirmed that there is nothing "untoward or suspicious in the bank reference the bank had issued to me in May 2013."

"It is now all too clear that the whole saga is nothing but one of a very long list of fabrications and lies, in my regard intended solely to harm my reputation and by extension that of the Government. I do not expect better from certain bloggers, but the complicity by certain respected media institutions is unacceptable and a bane to democratic standards and well being of this country," he said.

The Times reported that HSBC’s branch in Attard had already stopped banking operations 15 months before the two reference letters were issued on behalf of Schembri: letters dated May 2013 for Schembri and Malcolm Scerri, who now heads the Kasco Group, the paper merchants Schembri owns (see letter below).

They are an assessment of the reputation and business performance of both Schembri and Scerri, they were sent to BTI Management Ltd, the company owned by auditor Brian Tonna, whose firm Nexia BT handled the opening of Schembri’s offshore company.

Indeed the 2013 letters further suggest that Schembri sought to create his offshore company soon after taking up his post in the OPM, when Nexia BT started inquiring with Mossack Fonseca on the creation of three offshore companies, one of which was also for newly appointed energy minister Konrad Mizzi.

The letters were used in connection with the opening of Schembri’s Tillgate Inc. in Panama by Mossack Fonseca. The letters had the words “Attard branch” written on them, but the Attard branch operated between February 2008 and early 2012. HSBC did not comment with The Times on whether it was investigating the matter, with the newspaper saying that banking probe was to establish on how the letters were leaked to the media, ostensibly when surfacing in the Panama Papers leaks.

Schembri on Wednesday morning published a letter from HSBC Malta, in which commercial banking head Michel Cordina states that the bank letters were "legitametly issued on [his] request in terms of standing procedures."

“Unfortunately, despite the libel proceedings issued against the Independent on Sunday and Independent Online, and despite having informed the Times about the letter issued by the bank, certain journalists within the Times, for reasons known only to them, felt the need to repeat these same unfounded insinuations,” Schembri said in a statement. “I shall be instructing my lawyers to ensure that the Times provides effective remedy for this ‘oversight’.”

The Malta Independent, which first published the reference letters issued for Schembri and Scerri, said in an updated version of its online article that its “newsroom is now satisfied that in this matter no wrongdoing can be attributed to Mr Keith Schembri and Mr Malcolm Scerri, or their financial consultants Nexia BT. The newsroom acted in good faith and probed the issue until it was finally cleared by HSBC in its statement today.”