Updated | Magistrate appointed for inquiry into Schembri ‘bogus loan’ allegation

The Financial Intelligence Analysis Unit could not trace the original loan transaction of 2012, made by the Prime Minister’s chief of staff Keith Schembri to Nexia BT managing partner Brian Tonna, when it carried out a review of Pilatus bank accounts.

Significantly, it is this justification that Tonna and Schembri have insisted formed the reason for a payment of €100,000 from Tonna’s offshore company Willerby Trade Inc, to Schembri’s bank account in Pilatus Bank.

But according to reports in The Sunday Times of the FIAU report concerning Pilatus Bank – ostensibly forming the core of evidence that Opposition leader Simon Busuttil has handed over to a magistrate – no evidence could be found of the original loan transaction, which is why a police investigation was required.

It will be Magistrate Natasha Galea Sciberras to lead the inquiry into the allegations against Keith Schembri. In a statement, Schembri said he welcomed the selection of the magistrate, which takes place at random. "I have absolute trust in the judiciary and I will be cooperating in full with the inquiry, and look forward to the opportunity to expose the whole truth."

While the FIAU dubbed this transaction as being of “highly suspicious nature”, Pilatus had not filed a suspected transaction report. Instead, it had asked the two men for a justification for the transfer of money, and they were presented with a loan agreement made in 2012 for a €100,000 loan.

The money, the FIAU said, was paid in two separate payments of €50,000 shortly after Willerby Trade received €166,831 in fees from three Russian applicants for Maltese citizenship. Tonna is an accredited agent for the IIP, and uses Willerby Trade as an “introducer” so that fees from successful applicants can be paid into the offshore company.

At the time, Labour was not yet in power. But the FIAU did not beat about the bush when it suggested that this could have been a “bogus loan” used to camouflage kickbacks when PEPs are involved.

While it was claimed that the loan was in relation to Tonna’s separation proceedings, the FIAU said that Tonna did enter into a deed of separation with his wife in August 2014, “[but] he appears to be sufficiently wealthy to handle the costs of personal separation proceedings without need of third party funding.”

More importantly, the FIAU says it could not trace the original loan transaction, “notwithstanding an in-depth review of several bank accounts”.

The FIAU even said that it could not be excluded that “the agreement might have been drawn up more recently and backdate in order to justify the transfers to Mr Schembri.”

But the FIAU said it could not determine this matter itself, but a police investigation could reveal the data when the document was actually draw up, in the event that Nexia BT computer servers are examined.

So far the Attorney General has insisted that he does not have any power to initiate a criminal investigation, which power is only granted to the Commissioner of Police.

Magistrate Aaron Bugeja – who is carrying out an investigation into allegations that the Maltese prime minister’s wife owns an offshore Panamanian company – said that the allegations of kickbacks to Keith Schembri will have to be investigated by a new magistrate.

Keith Schembri has reacted to the report saying that he had “never been informed or otherwise made aware of the existence of any such report. Neither have I ever been questioned by any official of the FIAU nor been asked to provide any information to the Unit.”

Schembri has said he will not comment on the “apparent conclusions” of the report “apart from re-affirming that I have never received, solicited, or otherwise induced anyone to give me monies I was not rightfully due.”

He has also stated that it would have made no sense for him to use a personal bank account, registered in his name in Malta and making use of it by means of a credit card, “making the existence of same account and funds known to all regulatory entities.”

Schembri has insisted that the timing of the publication of the “alleged” report, right in the middle of an electoral campaign, “[smacked] of political expediency.”