Another Egrant in the making

Faced with a seemingly impregnable wall of ‘facts’ buttressing the argument, it is hard to really blame anyone for swallowing it hook, line and sinker

Venezuelan President Nicolas Maduro is said to be under investigation for his role in a scheme to launder over €500 million through Malta
Venezuelan President Nicolas Maduro is said to be under investigation for his role in a scheme to launder over €500 million through Malta

For the past 15 months or so, I’ve been asking myself how a fabrication like Egrant could have successfully duped so many people for so long... and continue to do so, even after having been exposed as a lie.

A few obvious explanations were apparent from the very outset. People who are motivated only by political prejudice are always going to be easy to fool: they are, by definition, willing participants in their own deception.  But there is also a more sinister side to that argument. I am far from convinced that all the conspiracy theorists who helped to propagate the Egrant myth over the past year were entirely innocent of the fraud. Judging by the zeal – sometimes bordering on pathological obsession – with which some online commentators kept banging away at it, I found myself suspecting that they were all along aware that it was a hoax... but embraced it all the same, because they shared the ultimate goal of bringing down Malta’s government at the time.

My suspicions deepened considerably after the magisterial inquiry’s executive summary was published, and the same five or six keyboard warriors chose to up the stakes on a game they’d already lost: by turning viciously on anyone who accepted the magistrate’s conclusions, and trying – very lamely, it must be said – to discredit Bugeja’s work.

But there may be another, far simpler explanation. We are after all dealing with a tiny minority that has suffered a massive (quite possibly fatal) blow to its own credibility. Under those circumstances, the tendency to ‘lash out’ is also entirely human.

No, what intrigues me more is the far broader swathe of public opinion that was genuinely (as opposed to ostensibly) duped. These people are not dishonest; and I’m not brazen enough to suggest that they are all necessarily stupid, either. At a certain level, it is actually a sign of intelligence to doubt the official version of any given event. And there were good reasons to doubt the integrity of the present government: especially when it came to Konrad Mizzi and Keith Schembri’s known offshore holdings.

Herein lies the key to the (short-lived) success of the entire Egrant strategy. It fooled so many people because it successfully pushed a number of key ‘buttons’. For starters, it preyed on Malta’s traditional weakness for automatically demonising one political faction, while lionising the other: even in the face of overwhelming evidence that they are both, ultimately, equally rotten to the core when it comes to governance issues.

For some people, it is more important to maintain that illusion than to establish the truth of any allegation. They have been brought up to believe that their own well-being depends directly on having ‘their’ party in power: so there is an element of self-preservation – i.e., the most primal and atavistic of all human instincts – already deeply embedded in the mix.

Egrant also capitalised on a few known facts – i.e., that the other two companies were owned by Mizzi and Schemberi - to extrapolate a whole range of other ‘facts’ that were not ‘known’ at all: thus creating a foundation of pseudo-credibility on which to erect the house of cards.

Lastly, there was also an entire army of willing recruits eager to dutifully play their own part in the operation: from the NET TV journalists who descended on Pilatus Bank (and, separately, Michelle Muscat) within minutes of the allegation; down to the aforementioned social media foot-soldiers, whose role was to repeat the allegation until it solidified into a ‘truth’.

Faced with a seemingly impregnable wall of ‘facts’ buttressing the argument, it is hard to really blame anyone for swallowing it hook, line and sinker... especially those who (incredibly, given how much they talk about the subject) don’t seem to know how the complex game of ‘dirty politics’ is actually played.

Well, this week we were given a graphic insight into the rules of that particular game. The Sunday papers were full of stories about the latest tax evasion/money laundering scandal to engulf Malta’s financial services sector: and once again, it was a US police investigation uncovering criminal activities in another country (Venezuela), and tracing part of the laundered money to an unnamed (at the time) ‘Maltese investment company’ which allegedly made 20 million in commission.

I suppose you can hardly blame the Egrant conspiracy theorists for getting all excited by news of another scandal to be spun out of control. Manuel Delia lost no time at all in writing a whole blog about precisely why there just had to be some form of connection with Keith Schembri (because... you know... there just HAS to be...)

After pointing out that “Venezuela was a favourite investment destination of Keith Schembri”, and that “through his company Colsons, Keith Schembri invested just under $20,000 in Venezuela state-issued bonds expecting a return of 12.75% and another $30,000 with a return of 9.25%”, Delia goes on list out all the ‘dots’ we are all expected to simply join without question.

“The Maltese connection to Venezuela had been in the news before when Ali Sadr Hasheminejad, owner of Malta bank Pilatus Bank, was indicted in the United States for laundering over a $100 million into Venezuela breaching US sanctions against Iran in the process.

“The recently concluded Egrant inquiry in Malta confirmed that Keith Schembri held a personal account at Pilatus Bank.”

Et voila: in a mere three or four sentences, the former Austin-Gatt-henchman-turned-investigative-reporter managed to concretise the illusion of a link between Keith Schembri, Pilatus Bank, and the laundering of hundreds of millions in embezzled Venezuela funds.

Small problem, however: there is nothing between those dots that can be used to actually join them. They are, in fact, a concatenation of entirely unrelated events.

Even before we get to the part where the ‘unnamed’ company and banks are revealed to be completely unconnected (as far as can be seen) to either Schembri or Pilatus, Delia’s reconstruction is already deeply flawed. Ali Sadr Hasheminejad is (or was) the owner of Malta bank Pilatus Bank; but his arrest for breaching US sanctions against Iran had nothing to do with Pilatus, nor had any visible connection with Malta at all. The financial institutions used for that operation were actually in Italy and Switzerland.

The only connection between Pilatus and those other banks is the involvement of Hasheminejad himself. On its own, however, it tells us nothing about the complicity of his Malta holdings in that one particular case. (And interestingly enough, the Egrant inquiry found nothing else with which to incriminate Pilatus, either. So much, I suppose, for the “Maltese connection to Venezuela”...)

Since then, however, the identity of Maltese investment firm (and bank) involved in the Venezuela scam has been revealed. It turns out to be Portmann Capital Management Limited, owned by two Swiss nationals, using the services of Sparkasse Bank: a subsidiary of the Austrian Savings Banks and Erste Bank Group of Austria.

Portmann was granted an MFSA licence in January 2011 – which also explains why Manuel Delia didn’t blog about it much at the time: he was far too busy being part of the government that tweaked Malta’s financial services legislation into what it is today: turning us in the process into a world hub for tax evasion and money-laundering.

But that’s just a minor aside, which I include only to illustrate my earlier point that both parties are equally ‘rotten to the core’. To me, the real issue is that Delia’s take on the Venezuelan story is indistinguishable from the strategy that went into the Egrant case. It could in fact almost be used as a recipe: you take a case where a few basic facts are known; you season it with a few other gratuitous facts that have no visible connection with the case at hand; you serve it up with a healthy side-order of political prejudice; then you expect everyone to dutifully swallow your concoction, and compliment the chef on its preparation (or be bullied out of the restaurant altogether).

Sorry, folks, but I’m not taking a single bite until I have a solid ‘DOC’ certification that every single last ingredient is genuine.  Heck, I’d do that even with a Michelin-star chef at the finest restaurant in the world... let alone with a steaming ‘balbuljata’ concocted out of stale leftovers by a bunch of online culinary amateurs.

But hey, don’t let me get in the way of a good pig-out. After all, it’s like choosing to eat at a restaurant even after it has been revealed to cook ‘cat’ instead of ‘rabbit’. Let’s face it: some people prefer cat, and don’t mind being told its ‘rabbit’. Who am I – or anyone else - to judge their preference?

No, no, let them eat cat all they like. I’ll be that avoiding that restaurant in future anyway, so it will never bother me...

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