How Farrugia used Swiss account to divert commissions from Aikon Ltd

Using false address and telephone numbers, Farrugia diverted commissions to Aikon Ltd into his private Swiss bank account, unbeknown to nominee company.

George Farrugia used Intershore to hide his beneficial interest in Aikon Ltd, but he siphoned the bulk of oil profits from family business Powerplan into a Swiss bank account, not Aikon Ltd's BOV account.
George Farrugia used Intershore to hide his beneficial interest in Aikon Ltd, but he siphoned the bulk of oil profits from family business Powerplan into a Swiss bank account, not Aikon Ltd's BOV account.

Oil trader George Farrugia employed a system of diverting commissions from commodities giants Trafigura and Total to a Swiss bank account that was not under the control of Aikon Ltd's nominee directors, MaltaToday has established.

An analysis carried out by this newspaper of the invoices submitted in court in a lawsuit instituted against Farrugia by his brothers back in 2010, has found that Farrugia used two identical types of invoices to disguise significant amounts of money - possibly the bulk of the €6 million he was accused by his brothers of siphoning away - into his Swiss bank account.

Farrugia employed Intershore Fiduciary Services in 2002 as a nominee company to appear as the director of his company Aikon Limited (Ltd) and submit the company's annual reports on his behalf.

But Intershore's own declaration on Friday evening that only the sum total of €333,726 in revenue was declared in Aikon Ltd's audited accounts between 2003 and 2008, fails to reconcile claims by company Powerplan that some €6 million were siphoned from its company into Aikon Ltd by George Farrugia.

MaltaToday's analysis has confirmed that Farrugia employed two types of invoices to transfer a small amount of money into Aikon Ltd's Bank of Valletta account, which was accessible by Intershore Fiduciary Services; while the bulk of his monies were paid into his account at Geneva's Banque Privée Edmond de Rotschild.

While both types of invoices are headlined by the company name Aikon Ltd, the devil lies in the detail: the bulk of payments were made not to the BOV account, managed by Intershore Fiduciary Services, but to the 'Aikon' account which were first paid into Wachovia Bank of New York and then deposited in the Rotschild account.

Specifically, the account is credited to Aikon Ltd with its limited liability denomination, but to 'Aikon' - possibly used as a simple trading name.

The analysis suggests Aikon Ltd was used legitimate front by George Farrugia to sanction his activities as oil trader. But the bulk of the monies Trafigura and Total were paying him did not go into Aikon Ltd's BOV account, but to his private Swiss account.

Additionally, all invoices carried the wrong address for Intershore Fiduciary Services, addressed for Apartment 1, Maria Dolores, Triq Mensija, San Gwann instead of Apartment 2; and both telephone and fax numbers had two digits missing: making either Aikon Ltd or Intershore office unreachable, except for Farrugia's personal contacts with the oil suppliers.

Farrugia and Inteshore

George Farrguia registered Aikon Ltd with Intershore Fiduciary Services in 2002, that first came with a guarantee from his auditor Ray Stafrace that he was a bona fide client, as demanded under MFSA regulations.

Police sources have confirmed they also asked Intershore directors to come in for questioning, where they explained the role of their fiduciary services company to Aikon Ltd.

The same sources confirmed that the fiduciary company - which finance minister Tonio Fenech alleges to be responsible for any illegal activity by Aikon Ltd - only had access to the BOV account, as claimed by directors Martin Fenech, Charles Scerri and Joe Cordina in a public statement.

"The alleged commissions and these enormous amounts were never declared by the auditors, or to the fiduciary company. George Farrugia signed the company accounts from 2009 onwards and presented them to the MFSA and the internal revenue department," Intershore has declared.

Tonio Fenech, asked about the existence of these two different invoices yesterday, had little to say about his claims that Intershore was privy to any illegality: whether it was the siphoning of Powerplan revenues into Aikon Ltd, and whether these were credited to Farrugia's secret bank account and not Aikon Ltd's BOV account.

"I'm neither the investigator not the police. A report submitted in court [Powerplan's management audit of Aikon Ltd] clearly states that Intershore was an accomplice to Aikon Ltd's fraudulent activity. These documents are public and one can investigate. I have no time to investigate and it's not my role. You should ask [Intershore director] Joe Cordina."

So when MaltaToday asked Cordina, the Intershore director said:

"Farrugia approached us through his auditor Ray Stafrace for the service of a nominee company because he wanted to carry out business separately from his brothers, and as he told us, 'not to show his wife what he was doing'.

"In 2002 we carried out a due diligence of George Farrugia and Aikon Ltd as required by law and we found nothing improper. The company deposited relatively small sums of money in a Bank of Valletta account. Tonio Fenech knows we are licensed by the MFSA to act as fiduciaries and that we work within the parameters of the law. We feel he has sent shockwaves to the financial services sector with his statement."

Cordina, who has tendered his resignation as the Labour Party's financial controller and withdrawn his electoral candidature after Fenech accused him of having known of Aikon Ltd's irregular activity, said Intershore Fiduciary Services "was unaware that George Farrugia had made use of 'Aikon' as a trade name."

Cordina said Intershore terminated its relationship with Farrugia on 1 November 2010 after it was informed by Powerplan's legal counsel Manuel Mallia on 28 September that Aikon Ltd was suspected of criminal activity.

"Fenech was very irresponsible to drag us into this political quagmire. He knows how fiduciaries work but he is leading people to believe that we were conniving with George Farrugia and aware of kickbacks on oil consignments. This is untrue."

Fenech accuses Muscat

Another development which went unanswered by Tonio Fenech yesterday was the fact that Powerplan's management audit - which accused Intershore of complicity in Aikon Ltd's criminal activity - was carried out by FST Consulting Ltd.

When faced with the fact that FST's shareholders include David Gatt, a lawyer charged in court with masterminding the heist on the HSBC corporate headquarters in 2010, Fenech had little comment to make. When asked whether FST's report was still a credible source of information, Fenech was terse in his comment: "I would ask Joseph Muscat to comment on that... I know Gatt was welcomed with applause," he said, but did not elaborate on this comment.

Fenech yesterday held a press conference in which he raised a series of questions about Muscat's relationship to Joe Cordina, the financial controller of the Labour Party. "Muscat has a lot to answer for Cordina," Fenech said.

"Why did he appoint him as finance administrator? Did he know him before? Did he ever conduct any business or share an office with him? Did he ever give him any advice on investing any money abroad?"

Fenech however could not answer to a question from the press of what wrongdoing was Muscat suspected of having done through his association with Cordina.

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Imma dan Tonio Fenech donnu spizjar itiek milli jkollu. Ma tisthiex.
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I hope a copy of this analysis is handed over to Clyde Puli, as he seems very bright to explain it again on TVAM, with the same manner.
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Malta Today should be given a star award for explaining details of this case in a way the man in the street can understand. This is in contrast with what other media, T Fenech and Aust/AG/the Minister have been doing. The ministers together with GonziPN/Angelic Busuttil have been just firing crafty/ridiculous/untrue accusations in their quest to deviate and obfuscate the whole oilgate affair in a bid to throw the searchlight away from those really responsible for this whole mess. Again, well done!