[WATCH] Keith Schembri on Panama: Mizzi thought I had the Midas touch, PAC is told

The eminence grise to the Muscat administration, former chief of staff Keith Schembri, made a rare public appearance today at the parliamentary Public Accounts Committee, where he testified on the €200 million contract to the Electrogas consortium, on request of the Opposition, which chairs the PAC.

The man who stood by the side of Joseph Muscat in 2013 to clinch Labour’s election appeared burdened by his admissions of ill-health, the lack of vitality maybe apparent in the tone of his voice. But the wan Keith Schembri was combative on most of the question asked by the Nationalist MPs.

Nowhere was it more apparent in the way he brushed off the questions on ethicality about his now infamous Panama offshore companies. It was, he insisted, the only way he could evade a repeat of a leak on his Bank of Valletta trust to the Opposition. The only solution, he insisted, had been a New Zealand trust, which owned a Panama company.

Keith Schembri releases no comment to press as he enters House of Representatives

But it was a coincidence, he insisted, that energy minister Konrad Mizzi had opened the exact same company structure at the same time. It was a coincidence, he added, that he had chosen his private auditors Nexia BT. “Mizzi claimed everything I touched turned to gold,” Schembri told PAC chairman Darren Carabott

And it was also a coincidence that Nexia BT’s men – Brian Tonna and Karl Cini – had been handpicked to be in the Delimara gas plant evaluation committee that eventually selected Electrogas, the company whose shareholders included the Tumas Group and Yorgen Fenech, the owner of 17 Black, a secret Dubai offshore company Schembri said he planned to do business with after his exit from politics.

In fact, Schembri told the PAC he had informed Joseph Muscat about what was 17 Black, the secret that dogged Maltese politics from the moment Daphne Caruana Galizia posted the quizzical graphic on her website. But neither Muscat nor Schembri ever owned up to the facts until their exposé by the Daphne Project in 2018.

“It was run of the mill,” Schembri said of his offshore companies. “It made no difference to me. I started opening offshore companies when my BOV trust was leaked to the Nationalist Party. BOV chairman John Cassar White then told me that he could not guarantee that the information was not leaked from the bank. I reported as much to the prime minister. And that is why I opened a trust in New Zealand.”

Schembri now complained that his departure from politics has overshadowed his business fortunes. “It is ok to be a Nationalist... you can do business,”he quipped at the MPs.

But, typically for Schembri, he saw no conflict of interest in knowing that his own auditors Nexia BT were such a central part of decision-making matters on major government projects such as the Delimara gas plant. “I only got to know after that they were in the evaluation committee... next time we should have appointed PricewaterhouseCoopers... I had no conflict.”

And did he know then who the owner of that mysterious, third Panama offshore company created by Nexia BT – Egrant – was? No, Schembri replied.

Schembri denies all

Keith Schembri introduced himself to the PAC as one of the men who told Joseph Muscat to run for Labour leader, helping him get elected in 2013. “And the rest is history,” he added.

Schembri defended Labour’s key policy plank to reduce energy bills by 25%, saying the party’s election strategy was based on surveys showing the top concerns of voters.

He said he had not been lobbied by the Tumas Group or other private companies on the gas plant, and that an energy working committee he chaired for the party in 2008 had only met twice.

The Nationalist MPs wanted to learn how deep Schembri’s relationship to Yorgen Fenech, the alleged mastermind in the Caruana Galizia assassination was.

Schembri insists he had resumed his friendship with Fenech, whom he had known since the age of 9, only after tendering on the gas plant had started.

Before 2013, he denied that Labour had been lobbied on a gas plant or the switchover from heavy fuel oil to gas; denied knowing of a confidential agreement with Energy World in 2011 to advise the prospected Labour administration on energy; and defended himself from reports on Labour talks with a foreign company by saying that the third parties had been eliminated from the tendering process.

Schembri also insisted he was not involved in any decisions pertaining to the Electrogas tender, meeting only once Enemalta representatives when both energy minister Konrad Mizzi and the permanent secretary were unavailable, some time after the tender could have been awarded. Electrogas shareholders Yorgen Fenech was in attendance.

He said he was no troubleshooter. “Electrogas was well served (‘moqdijin’) by minister Konrad Mizzi. Everybody knows it was a difficult job to do.”

He denied having had in his possession any information related to the tender, and pushed back against the judgement of the Caruana Galizia public inquiry that made him out to have a free hand in decision-making. “I disagree,” he said, protesting his treatment at the hands of the press as the power behind the throne.

Schembri insisted he was unaware of the Delimara gas plant winners before their announcement, and revealed he had been unofficially lobbied by a German ambassador at the United Nations about Siemens angling for the contract. He said he had been requested to treat the company with fairness. Schembri added that it was normal for foreign representatives to lobby on behalf of their co-national companies. “Let me give you an example: the Maltese government lobbies on behalf of its companies with foreign ministers.”

Schembri insists that the Fenech family (Tumas) never mentioned any interest in a power plant before 2013 with him. “My personal opinion was that the late George Fenech would not have even ventured into it.”

15:57 PAC is adjourned to next week, 2pm, Tuesday 4 April. Matthew Vella

15:56 Last question from PAC chairman Darren cCarbott: “Who is the owner of the Egrant?”
KS: “I don’t know.”
David Agius: “And did you inform Joseph Muscat about what was 17 Black?”
KS: “I told Muscat that this was part of my business... It was not politics.”
Carabott: “And did you ever suggest the business of offshore to other people? Or was it Konrad Mizzi only?”
KS: “Mizzi only...” Matthew Vella

15:54 Some procedural swashbuckling between MPs... Matthew Vella

15:48 Ah well then... Keith Schembri was well aware that 17 Black was the company of Yorgen Fenech way back in 2016 (or before), yet the Labour administration was intent on keeping this matter a secret. Matthew Vella

15:47 Schembri has denied that 17 Black had to pass on payments to his Panama companies on business projects. “The business was meant to start after my exit from politics. I knew it was Yorgen Fenech’s company.” Matthew Vella

15:46 Schembri has denied any links between Electrogas, Yorgen Fenech’s 17 Black, Schembri’s Tillgate in Panama and Mizzi’s Hearnville in Panama. Matthew Vella

15:46 Didn’t Keith Schembri see a conflict of interest in having Nexia BT involved in governmental processes of decision-making (namely, the Electrogas evaluation committee) when they were his auditors on his business and offshore companies? “I only got to know after... next time we should have appointed PricewaterhouseCoopers... I had no conflict.” Matthew Vella

15:44 Schembri says he opened his offshore company (the Panama one) after the BOV trust leak. He says he closed his family trust. “I have a letter from Cassar White saying he cannot exclude the leak came from the bank... I went to New Zealand, because it was a Commonwealth country. There was no other Maltese bank or European country I could go to.” Matthew Vella

15:42 Schembri says Mizzi told him: “I want to do as you do, because everything you do turns to gold.”

So I told him: “Speak to Nexia BT.” Matthew Vella

15:40 Author’s note: Let’s call this the unbearable lightness of Panama offshore companies... Matthew Vella

15:39 Schembri claims his departure from politics has overshadowed his business fortunes. “It is ok to be a Nationalist... you can do business.” PAC chairman Darren Carabott tries to steer the conversation back to the Panama companies. Schembri claims Konrad Mizzi informed him that he was opening an offshore company just like him “because he thought what I touched turned to gold.” Matthew Vella

15:37 Schembri insists it was a “coincidence” that both his and Konrad Mizzi’s offshore companies (which coincidentally came with a trust in New Zealand as well) were opened at the same time. Coincidentally by Nexia BT. Coincidentally Nexia BT partners were consultants on the Electrogas gas plant tender selection. Matthew Vella

15:36 Schembri on offshore: “It was run of the mill. It made no difference to me. I started opening offshore companies when my BOV trust was leaked to the Nationalist Party. John Cassar White then told me that he could not guarantee that the information was not leaked from the bank. I reported as much to the prime minister. And that is why I opened a trust in New Zealand (which held the company in Panama).” Matthew Vella

15:36 Schembri says he was invited to an Electrogas party, allegedly to celebrate its financing achievement (on the back of a government guarantee), but he did not attend the party. “Don’t you attend parties?” he is asked. “No... will you invite me?” he addresses Bencini. “I don’t think so,” the MP replies. Schembri says, “I wouldn’t come anyway.” Couple of laughs all round... Matthew Vella

15:18 Rejoinder to the former meeting Schembri had on the LNG plant at Enemalta: there was Yorgen Fenech present at this meeting. “Electrogas was well served (‘moqdijin’) by minister Konrad Mizzi. Everybody knows it was a difficult job to do.” Schembri says he was not a trouble-shooter on the Electrogas contract. Matthew Vella

15:14 Schembri tries to clarify the degree of his conversations with members of the Fenech family: “I knew these people… I knew them in business… the conversations would be about everything… utility bills… but we did not discuss the gas plant.” Matthew Vella

15:10 Schembri insists that the Fenech family (Tumas) never mentioned any interest in a power plant before 2013 with him. “My personal opinion was that the late George Fenech would not have even ventured into it.” Matthew Vella

15:07 “This will make you smile: Paul Apap Bologna came to me to propose that we make government administration paperless…” – the quip is addressed to Nationalist MP Graham Bencini… (note: it’s gone over my head). Matthew Vella

15:06 Schembri denies having been spoken to by UBOs from Electrogas during the tendering process – that includes SOCAR, Siemens, Gasol, and Mark Gasan, Paul Apap Bologna, Yorgen Fenech and Ray Fenech. “I knew Yorgen from the age of 9, but I only resumed contact with him after the Electrogas tender. During the tendering process, none of them spoke to me. Never.” Matthew Vella

15:04 Schembri says it is normal for foreign representatives to lobby on behalf of their co-national companies. “Let me give you an example: the Maltese government lobbies on behalf of its companies with foreign ministers.” Matthew Vella

15:03 Schembri says he was unaware of who the winning bidders were before their announcement. He says that in 2013, a German ambassador made representations with him at the United Nations, in which he cautioned fairness in the tender since Siemens, a German fair, was tendering for the gas contract. Matthew Vella

14:59 Schembri says he has known Nexia BT partners Brian Tonna and Karl Cini, his auditors, since the age of 17. Matthew Vella

14:56 Schembri is protesting his treatment at the PAC, saying his business is scrutinised in the press, that his affairs are publicised widely when he tenders for government contracts, and that he is regularly attacked by The Times. Matthew Vella

14:53 Schembri interrupts: “I disagree”. Matthew Vella

14:52 Carabott puts the following to Schembri: The public inquiry described Schembri as having “a free hand” in taking certain decisions on government affairs, which “concentration of power in the hands of the few on major economic decisions… was determined from the very start, pretty much from before 2013.” Matthew Vella

14:50 Schembri says Cabinet was informed, every Tuesday, on developments in the LNG tender, but not on the technical details pertaining to the tendering. He denies having had in his possession any information related to the tender. He says he is unaware if this was in the hands of the energy minister, and denies having had any influence into the selection of the winning tenderer. Matthew Vella

14:44 Schembri says he attended one meeting with Enemalta representatives, in the stead of the minister and permanent secretary, on the gas plant project; apart from four Cabinet meetings. Schembri says he was there only to listen to proceedings. He says he feels he can exclude the prospect that he was present from other non-Cabinet meetings on the LNG plant. Matthew Vella

14:42 The NAO said in its report that the managing director of Energy World had affirmed that in 2011 a confidential agreement was entered into with the Labour opposition, “to assist in a non-public capacity with the proposal to develop a plan to operate an LNG plant”. Matthew Vella

14:37 Schembri plays down suggestions that Energy World’s involvement in talks on the gas plant, as reported during December 2018, were necessarily known to him. He says he does not know anything about the involvement of a foreign entity, and that this had a prior understanding with Labour before 2013. “I see nothing wrong here… because it never happened.” The Times article in question reported that Labour had a pre-electoral agreement with a bidder who had been eliminated in the successive Electrogas tender. Matthew Vella

14:33 Schembri says he has suffered health problems since his deposition to the Caruana Galizia public inquiry. Matthew Vella

14:32 Questions from the Opposition focus on the genesis of Labour’s decision to go for gas, before January 2013. “There were many people…” Schembri replies to Carabott. “So much time has passed…” Schembri says he cannot remember if a foreign member, from Energy World, was involved in talks, allegedly bound by a confidentiality agreement, was involved I the talks. Matthew Vella

14:28 On the first day of the Labour election campaign in January 2013, the LNG power plant was presented to the press. “The only choice to switch over from HFO was either LNG or nuclear… everybody that tendered for the Delimara plant was gas. We met – Konrad Mizzi, Louis Grech, and David Galea – to discuss this option before the election.”

There is a bit of a misunderstanding on the question here… Darren Carabott is asking him how the decision for Labour to go for the gas plant was conceived before the manifesto was published. Matthew Vella

14:25 Schembri was in 2008 the chair of Labour’s energy working group. It met twice. “We were more focused on small things that could reduce energy bills. We had just lost the election then. We never had any presentations on energy proposals then.” Matthew Vella

14:24 Konrad Mizzi, former energy minister, was not part of the Labour manifesto process that put gas as the party’s policy plank. “We worked backwards – we asked ‘what do the people want?’ – and our number one commitment was reducing energy bills.” Matthew Vella

14:22 Schembri says Labour’s strategy to victory in 2013 was based on the country’s top concerns as they were polled over the years. He said Labour’s strategy team that suggested gas should be a key policy plank for Labour’s energy policy. Matthew Vella

14:21 Schembri says it was his aim to implement Labour policy to reduce energy bills by 25%, which is why the LNG power plant deal was instrumental to the new Labour administration.

Konrad Mizzi, who had led the campaign of the party on energy, was “rightfully selected” by Muscat’s inner circle of some five or six people, to be Cabinet minister.

Schembri says the LNG plant was part of the Labour manifesto, crafted by around five or six core members. He said energy prices were a top concern polled in Labour surveys. “It was so easy, it could have been done by anyone,” he said of the Labour policy to switch-over from heavy fuel oil (HFO) to gas. Matthew Vella

14:20 Keith Schembri introduced himself as one of the men who told Joseph Muscat to run for Labour leader, helping him get elected in 2013, and then staying on as his chief of staff… “And the rest is history”, he says. Matthew Vella

14:18 Keith Schembri introduced himself as one of the men who told Joseph Muscat to run for Labour leader, helping him get elected in 2013, and then staying on as his chief of staff… “And the rest is history”, he says. Matthew Vella

14:16 Keith Schembri is assisted by both Edward Gatt and Mark Vassallo as lawyers. Matthew Vella

14:15 PAC chairman Darren Carabott is going through the agenda and correspondence before moving on to the testimony of Schembri. Matthew Vella

14:12 The PAC is now in session. Matthew Vella

14:04 Keith Schembri was regarded as the architect of the Labour victory in 2013, together with then Labour leader Joseph Muscat. His fall grace was in 2019, upon the arrest of business magnate Yorgen Fenech, on charges of having masterminded the assassination of journalist Daphne Caruana Galizia. But he was immediately implicated in scandal in 2016, with the Panama Papers, and in 2018, it emerged that Fenech was the owner of 17 Black, a secret Dubai company connected to the Panama companies owned by Schembri and former Labour minister Konrad Mizzi, who as energy minister presided over the €200 million Electrogas tender for a gas plant at Delimara. Matthew Vella

14:01 Keith Schembri arrived minutes ago at the House of Representatives, where he released no comment to the journalists waiting outside as he made his way, accompanied by a bodyguard, as well as his two lawyers, Edward Gatt, and Mark Vassallo. Matthew Vella

13:59 Good afternoon. The PAC will be in session at 2pm, where former chief of staff in the Muscat administration, Keith Schembri, will be questioned over the Electrogas tender that is currently under scrutiny by the Public Accounts Committee. Matthew Vella

Summoned to the PAC

Keith Schembri will be returning to the PAC on Tuesday 4 April, at 2pm.

Government MPs did not oppose the request originally to have him attend the PAC, with Schembri and his secret relationship to Electrogas shareholder Yorgen Fenech, having been at the heart of the scandals that rocked the Muscat administration: from offshore Panama companies, the 17 Black company in Dubai, as well as the messages exchanged between the two during the investigation of the Caruana Galizia assassination.

Schembri is facing ongoing criminal proceedings over charges of money laundering unrelated to the Electrogas tender. He has pled not guilty.

Chaired by Nationalist MP Darren Carabott, the PAC is probing the findings of the National Audit Office’s investigation on the Electrogas contract, concluded in 2018.