A breakdown of national trust

Ultimately, the Egrant inquiry should serve both as a cautionary tale against running wild with allegations before having all the facts at hand; but also as a wake-up call for the need to strengthen regulatory mechanisms and to nip problems in the bud

The publication of the full Egrant inquiry by the Opposition leader – nearly a year and a half after the PM published the main conclusions exonerating him and his wife from ownership of the offshore company – coincides with a general breakdown of trust in the institutions.

This erosion of trust originates in the institutional paralysis caused by the failure of the police to immediately investigate the Panama Papers when the scandal broke out three years ago: a failure which has come back to haunt Muscat after the arrest of Yorgen Fenech, whose proximity to Keith Schembri has led to the latter’s resignation.

But while this breakdown of trust is justifiable, the Egrant inquiry is based on a thorough forensic analysis and an in-depth examination of witnesses. As such, it must be respected in full. 

In this sense, the decision by the leader of the Opposition to publish it in full, after being granted access to it by the law courts, was a wise one. The publication of a redacted version would have only fuelled all kinds of conspiracy theories on why some names were deleted but not others.

The reality, however, is that there are two sides to the Egrant inquiry. On one hand, as expected the full report tallies with the conclusions published in July 2018: i.e., that no evidence was produced to prove that Michelle Muscat was the owner of Egrant; or that money was transferred to her Egrant account from Leyla Aliyeva.   

Apart from the lack of forensic evidence, the inquiry also found contradictions between the principal witnesses making these claims.

One cannot ignore the fact that it was the allegation that Egrant belonged to the Prime Minister’s wife which led Joseph Muscat to submit to a magisterial inquiry, and then call an election. 

Ironically, the Egrant accusation was so powerful that it even obscured more evidence-based allegations related to 17 Black and the owner of the LNG tanker, as well as other accusations made by Simon Busuttil with regards to Keith Schembri.  

On the other hand, while the inquiry indicates that Brian Tonna remained the Ultimate Beneficial Owner of Egrant, it does not exclude the possibility that he was holding the company for someone else. 

In fact, apart from referring to a folder called ‘Egrant’ on a missing external device, the forensic experts suggest that it made no sense for Nexia to hold on to the company, and pay fees for it for a two-year period; even preferring to set up a new company for a client, rather than offering the already-established Egrant instead. 

Moreover, the failure of the government to publish the full conclusions – including the recommendation to investigate Karl Cini of Nexia for perjury – further reinforces the impression of a lack of political will to investigate Nexia BT. 

Surely, Nexia BT should have been investigated three years ago, as soon as the Panama scandal broke out.

Even more importantly, the forensic review concludes that transactions at Pilatus Bank involving the daughters of Azerbaijan ruler Ilham Aliyev, and the sons of his Minister for Emergency Situations Kamaleddin Heydarov, raise “commonly accepted red flags for money laundering”. 

Moreover, the report states clearly that further investigations based on international cooperation are essential to determine whether Politically Exposed Persons (PEPs) from Malta are involved in “acts of corruption, money laundering or suspicious transactions” with PEPs from Azerbaijan; adding that “there was not enough evidence that transactions did not pass through hub accounts abroad.”  

While no evidence was ever found for transactions linking Leyla Aliyeva to Egrant, the inquiry report shows how the Aliyev sisters transferred €14.9 million from their Pilatus Bank account for Sahra FZCO, to Palma Management Consultancy: another Dubai company described as a “payment hub” in three separate transactions between September 2015 and March 2016.

One major stumbling block for the inquiry was the lack of cooperation from Dubai where the Azeri companies are based. This is something which Malta should have raised at EU level. 

Nor is it clear whether the international investigations, called for by the forensic experts, have ever been followed up. If not, this would be another major shortcoming on the part of our national institutions.

On its own, the Egrant inquiry suggests that Pilatus bank was specifically set up as a clearing house for the ruling family of Azerbaijan: a country linked to Malta through the Electrogas contract, which includes SOCAR, the energy company owned by the government of Azerbaijan as well as the Tumas Group. 

This, in itself, further exposes the weakness of regulatory mechanisms on banks operating from Malta. 

Ultimately, the Egrant inquiry should serve both as a cautionary tale against running wild with allegations before having all the facts at hand; but also as a wake-up call for the need to strengthen regulatory mechanisms and to nip problems in the bud. 

Instead, we are now facing a breakdown of trust which may well serve as a fertile ground for even wilder allegations than Egrant itself.