Muscat admits knowing that 17 Black was Schembri’s and Fenech’s ‘business matter’

Keith Schembri had told Joseph Muscat that 17 Black was a business matter between him and Tumas magnate Yorgen Fenech

Labour alliance: Joseph Muscat and Keith Schembri
Labour alliance: Joseph Muscat and Keith Schembri

Former prime minister Joseph Muscat has confirmed he knew that a mysterious Dubai company held interests for both his chief of staff, and the Tumas magnate Yorgen Fenech.

Muscat, who resigned in 2019 after the arrest of Fenech and the resignation of his right-hand man Keith Schembri, told the inquiry Schembri had told him about 17 Black, although he did not specify the time he got to know about it.

The company, first mentioned in a cryptic post by the slain journalist Daphne Caruana Galizia in early 2017, and later reported about by The Malta Independent, was revealed in April 2018 by the Daphne Project consortium to have had a total $1.6 million (€1.3 million) transferred to it.

Muscat was appearing in the Caruana Galizia public inquiry, which he criticised sternly before sitting for the questions of the panel.

The former PM claimed he had never spoken to Yorgen Fenech about the Electrogas project, in which he owned a shareholding. But he admitted that Schembri had told him the 17 Black company was a common business holding.

“When I asked Keith Schembri, he told me 17 Black was a business matter between the two of them and had nothing to do with Electrogas,” Muscat told the inquiry.

“The only step I could take was to keep him or fire him. I opted to keep him.”

“I asked Keith Schembri for his position [on 17 Black] and he told me it was tied to his business... the overriding point was that I was accused of taking money too.”

Muscat said he told Schembri to tell all he knows to the authorities. “I have no need to defend anyone. It didn’t look good. The irony is that the moment the name of the owner of 17 Black came out the pressure decreased not increased.”

The ownership of 17 Black remained a mystery all throughout 2017, but in early 2018, the Daphne Project linked the Dubai firm to the Panama Papers.

Emails showed that financial advisors Nexia BT had referred to the Dubai company 17 Black as a “target client” of the Panama companies set up for Keith Schembri and Konrad Mizzi. Investigators from Malta’s anti-money laundering agency (FIAU) had traced two payments totalling $1.4 million (€1.1 million) paid into 17 Black, from a company in the Seychelles called Mayor Trans, which is owned by an Azerbaijani national.

The $1.4 million was wired in November 2015, via ABLV, a Latvian bank recently closed down due to money laundering violations.

It was US anti-money laundering authorities who identified transactions concerning 17 Black as possible “shell company activity, suspicious wire transfers and money laundering.”

At the time of the transactions, financial advisors Nexia BT was opening the secret Panama companies for Schembri, the prime minister’s chief of staff, and then energy minister Konrad Mizzi.

The emails state that Schembri and Mizzi were set to receive “Eur 150,000” monthly through their Panama companies, via 17 Black and another offshore company Macbridge.

It was at this point that Keith Schembri finally acknowledged 17 Black. “17 Black and Macbridge were included in draft business plans for my business group as potential clients. My companies make dozens of business plans such as these. However, it is a fact that neither 17 Black nor Macbridge ever became clients of my business group, and no transactions were ever recorded with these companies, or with me personally. I have no knowledge of the transfers referred to, nor any knowledge of the alleged payment.”

Then in November 2018 came another bombshell: the owner of 17 Black was revealed as Yorgen Fenech, and the company had a bank account at Noor Bank in the UAE. It had received a $1.4 million transfer from ABLV through Mayor-Trans, and $200,000 from Mario Pullicino of Orion Engineering Group, the local agent for the LNG tanker fuelling the power station.

At the time Fenech told The Times: “We have always and consistently run our operations in compliant, transparent and above-board fashion and it is very troubling, not to say offensive, to read certain questions which imply my involvement in such outrageous activities.”

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