Casino bid whistleblower on why he disclosed the Rita Schembri emails

Philip Rizzo, a veteran auditor and disability rights campaigner, can now be identified as the man behind the disclosures that showed one of the Prime Minister's highest functionaries, the chief of the Internal Audit and Investigations Departments, was conducting undeclared private business from her government office.

MaltaToday now publishes further details of the business deal that Rita Schembri was acting as a business advisor on a three-year business deal that was attempting to buy out one of the partners in the Casinò di Venezia, in Birgu.

The correspondence also reveals a link between Schembri and lawyer Pio Valletta, a non-executive director of Gap Developments plc, the developers of the Fort Cambridge complex in Tigné owned by George Muscat and tuna-ranching magnate Charles Azzopardi.

 "I was intrigued to read that ex-EU Commissioner John Dalli had been considered guilty of conflict of interest by Europe's anti-fraud office, OLAF, on the basis of 'unambiguous circumstantial evidence'," Rizzo - who is now reading for a law degree - said.

"I was challenged by this circumstantial evidence as it clashed with the required degrees of proof of guilt by analogy to a 'Mr Possible being not guilty'; being 'perhaps guilty only of a civil wrong'; and a 'Mr Beyond Reasonable Doubt deserving of incrimination' if a prosecutor shows with certainty that no doubt at all remains of the accused's guilt."

Rizzo says he was surprised to learn that IAID head and permanent secretary Rita Schembri, was herself a member of the OLAF supervisory board, which oversees that OLAF investigations are carried out according to European law and rules.

Back in March 2012, Rizzo was asked to join a business initiative by Far East Entertainment Group plc's chairman Colin Perkins, to acquire a 60% stake in the Casinò di Venezia. "I was told that I should meet Rita Schembri, his trusted colleague, to explain some of the background work on this financial bid for the purchase of a stake in the casino. But I was surprised upon arriving at the address she gave me that this was a government office. As I stepped into Valletta Buildings I realised that I was at the IAID's premises, and not knowing whether I had the right place, I meekly asked the receptionists whether 'a Ms Rita Schembri works here'. She turned out to be the director of the IAID."

Rizzo held a 70-minute meeting with Schembri on the FEE bid for the Casino di Venezia in March, but following the Dalli resignation and having learnt of the IAID's assistance in the 'snus' investigation, realised he had stumbled on a potential breach of ethics.

"She described Pio Valletta as her 'representative', and that he was involved in this investment proposal.

"My own experience with Ms Schembri left me with an image of her as a 'Ms absolutely, certainly guilty' of manifestly entertaining conflicts of interest in her public office.

"I could not possibly sit passively to evidence such a high-profile unfair application of contrasting weights and measures, and I eventually decided that, despite certain unwelcome attention that would ensue on myself and my already-challenged family, I had stumbled upon an obligation to perform a civic duty."

Rizzo was in possession of conclusive documentary evidence that he felt showed a "serious conflict of interest in the highest of public spheres", and decided to divulge the evidence to MaltaToday, which has been covering the Dalli case closely.

Rita Schembri has denied to the head of civil service, principal permanent secretary Godwin Grima, of having carried out any business advisory services to private firms and has asked Grima to refer the reports in MaltaToday to the IAIB - the board that regulates the IAID, which includes Grima as chair. Schembri is also a member of the IAIB.

"I am prepared to hand to an appropriate judicial or police authority the conclusive documentary evidence in my possession, as well as to testify as to my 70-minute meeting on 15 March, 2012 at what to my surprise turned out to be official government offices with Ms Rita Schembri, who was until that date wholly unknown to me," Rizzo said.

"I remain prepared to perform such civic duty to the appropriate authority as determined by government."

Rizzo has described himself as "merely a witness to Schembri's lack of professional ethics in the public sphere".

"I am neither an investigator nor a prosecutor and permit me to say, before anybody starts shooting at me instead, much less an accused," he said when asked what the civil service head should do about the case. "I will do nothing more than feel that this society has been corrupted by vested interests if this matter is swept under the proverbial carpet."

Email correspondence

The detailed trail of correspondence handed to this newspaper by Rizzo has confirmed that Schembri used her government office at Valletta Buildings, in South Street in Valletta, to discuss the investment proposal by Far East Entertainment Group plc to acquire a 60% stake in the Casinò di Venezia, of Birgu.

Apart from using the IAID offices for a private business affair, Schembri's relations with the FEE Group and their interest in the Birgu casino did not have the official approval of principal permanent secretary Godwin Grima.

Both instances could suggest a serious breach of the estacode's code of ethics: using official IAID facilities for private purposes; and failing to declare a possible financial or other interest in FEE's casino bid.

On his part, Prime Minister Lawrence Gonzi said the matter is up to Godwin Grima to decide.

On 15 February 2012, Pio Valletta - who in the Casino di Venezia bid is listed as a possible shareholder - informed Rita Schembri (using her official gov.mt email) and Colin Perkins that Vittoriosa Gaming's chief executive Ferdinando Orlandi was interested in selling his interest in the casino.

In an email addressed 'Dear Colin and Rita...', Valletta asks for guidance as to whether to proceed for an outright sale, or lease of the casino from Orlandi - CEO of Vittoriosa Gaming Ltd, the operators of the casino, which is owned by Bet Live (60%) and the Venice municipality (40%).

"I have no problem easing my way into it and paying the sum he talks of," Perkins tells Valletta, disputing the option to buy out Vittoriosa Gaming: "Rita has kindly and sensibly pointed out a lot of pitfalls. Trust me, there are very few casino operators who would take this over from him, at the price he asks and with so many question marks."

Valletta is described by Perkins as the "introducer" to the deal for Perkins to Orlandi, and according to the FEE chairman Valletta's reward would come in the form of a "little share, which has been agreed [as] it was him that brought the deal to me... I am not sure Pio would like us to divulge his interest in the project, but suffice to say he is happy."

On 22 February, Perkins shifted the gear up in the casino proposal by introducing Philip Rizzo to hammer out the financials of the casino bid, asking him to set up a meeting with Rita Schembri. "I have sent Rita Schembri your number... and asked her to contact you after my call to her on Friday," Perkins says. "I should like to confirm to you our desire for you to join us... I look forward to meeting you in Malta, when we can spend more time outlining our strategy for an eventual purchase."

On 25 February, Colin Perkins informed Rizzo that Rita Schembri was awaiting is call, and supplied him with her mobile phone number. That same day, Rita Schembri set up a meeting at the IAID office with Rizzo: 'Thank you for your kind contact. Can we meet Monday at 2 00 at my office pls. It is in Valletta Buildings, South Street, Lower Level [ you go down one flight of stairs at end of corridor ]  with thanks, Rita'.

At that point she was intimate with details of the lease-and-buy option for the casino and the multi-million refurbishment programme, an email on 26 February shows. Schembri features in an email from Colin Perkins that is sent to FEE chief executive Nigel Songhurst and another legal advisor Richard Bagehot.

The 27 February meeting was cancelled at 12:33pm that same day, after Schembri's daughter was taken ill. But Colin Perkins kept Schembri in the loop of ongoing developments: 'Dear Rita, I am delighted to hear that your daughter's health is improving... I have not copied you in all the mails, as I believed you had enough on your plate without having to watch out for us. Things are progressing well and when you feel up to it, meet with [redacted] and he will keep you in the loop.'

On 14 March, she replied to Perkins and FEE chief executive Nigel Songhurst: "Dear Colin and Nigel, I thank you both for your moral support during the past weeks... I know my timing sucked but these things happen in life... and I am back working full-time the office. I will be in touch with Philip soonest. Could you guide me re my role, if any at this point in time, as things must have evolved somewhat - I hope at least for your sake."

Schembri also set up a meeting that same day for the 15 March at her IAID office once again, where she held a 70-minute meeting at 9am to discuss the ramifications of the casino investment proposal.

OPM unaware of Schembri's private dealings

The Office of the Prime Minister is unaware of Rita Schembri's business interests, and had told MaltaToday that Schembri had "denied" to Godwin Grima of having given any consultancy or advisory services to any private company.

The OPM was also unaware of Schembri's non-executive directorship with the South African private investment holding company Brait SE, which is based in Luxembourg, but for which she was given official approval by Grima on 14 April, 2012.

Although her official remuneration is not known, fellow directors attending the quarterly meetings earn between €70,000 to €200,000. The OPM is not aware of her remuneration and has washed its hands of whether a handsomely-paid company director should be allowed to retain such a high position in the civil service:

"Questions regarding the related fees and conditions should be addressed to the individual concerned... The Prime Minister expects that public officers are not engaged in activities that bring them into conflict, real or perceived, with their duties; the Prime Minister instructed the Principal Permanent Secretary to make sure that this applies to this case."

It is understood that Schembri's role in FEE's bid for the Casinò di Venezia is not part of her directorship in Breit SE.