Panama Papers | Schembri, Mizzi deny joint business, ‘Reports burst PN bubble’

Schembri confirms his offshore ‘tax planning’ structure was for Kasco business group’s venture into remote gaming, denies joint business with minister

Energy Minister Konrad Mizzi [left] and OPM chief of staff Keith Schembri.
Energy Minister Konrad Mizzi [left] and OPM chief of staff Keith Schembri.

The Prime Minister’s chief of staff Keith Schembri has denied, categorically, that energy minister Konrad Mizzi was to have a part stake in a remote gaming business that his family business, Kasco group, was planning on developing.

The denial comes hours after revelations in the Australian Financial Review, which published extracts of emails from Nexia BT auditors in Malta to the Panamanian law firm Mossack Fonseca, which said that Schembri and Mizzi’s auditors sought to open a bank account for their offshore Panamanian firms, to channel the profits into their offshore trusts in New Zealand: a classic example of using offshore to minimise tax on profits.

Instead Schembri took heart in the revelations, saying allegations of illicit earnings from the Azerbaijani state, a favourite punching bag for the Opposition, had been confirmed as untrue.

READ MORE Keith Schembri and Konrad Mizzi implicated in seeking offshore structure for remote gaming business

“There’s no bribery or corruption. No Azerbaijan or other government contract. Simon Busuttil’s ‘millions’ don’t exist. Indeed that was the reason none of the foreign banks opened accounts [for Schembri],” a statement read.

But Joseph Muscat’s right-hand man took issue with the AFR’s report – which while confirming he intended expanding his Kasco group’s recycling business and seek new avenues in the remote gaming industry – saying journalist Neil Chenoweth’s report had generated “absurd allegations” because it was confusing various Nexia BT clients.

Schembri released AFR’s request for comment emailed to him on Tuesday, which he said was “confusing”.

“The effort at confusion and speculation is only informed by those who want to harm Keith Schembri and the government. It is impossible to ignore the fact that the ICIJ employs Matthew Caruana Galizia, the son of [Malta Independent journalist] Daphne Caruana Galizia… Schembri is being subject to a trial by media in a bid to attack his reputation,” a spokesperson for Schembri said.

The chief of staff also said he will take legal steps in the Australian courts to protect his reputation (see below)

Schembri still overseeing business expansion

Schembri, who resigned his directorships in the Kasco group upon his appointment as chief of staff in March 2013, said that as shareholder he still oversaw the expansion of his business group’s activities.

Schembri said that on 14 March, 2015, he instructed his auditors Nexia BT to create a trust that can consolidate his business group’s assets together with assets held in a local bank’s trust, for estate and succession planning.

“Schembri was advised to place his commercial interests in a company that would be settled in a trust. On 2 July, 2015 he acquired the [Panamanian] shelf company Tillgate Inc, which as Nexia BT has stated it already owned so as to service its clients efficiently; and on 22 July he created Haast Trust in New Zealand and transferred the company to the trust.

“Mossack Fonseca was engaged to open a bank account for this structure. The banks contacted demanded deposits of millions; today this company and trust are still without a bank account or any money. He has never excluded depositing cash and investments held in local banks, in his trust.”

Schembri said that he would pay any tax on his worldwide income.

But Schembri denied having opened his offshore Panama company before 2015 as alleged in the AFR reports.

“These reports are replete with inaccuracies and confusion, the most spurious being that the companies were opened five days after the general elections. It is untrue: Tillgate was registered by Mossack Fonseca on 15 July 2013 [four months after the elections], Nexia BT acquired the shelf company on 9 August 2013. Schembri had no knowledge of Tillgate before acquiring it on 21 July 2015.”

Schembri said he intended depositing his personal and commercial wealth in this company.

“It was why Nexia, rightly, informed banks that the source of wealth would be ‘waste recycling’ which are part of Kasco group’s commercial activities. The group will keep expanding into ‘remote gaming’ and ‘RFID technology’, even in other markets abroad as it already days in the UK, Greece, Spain and other countries,” Schembri’s statement read.

Konrad Mizzi statement

On his part, Mizzi said in a statement that his trust, Rotorua, had been intended as a family trust and that the prospective investments included the “leveraging of an existing property in London and future investments” for his family, which lives in China.

Mizzi, who previously denied having opened any bank accounts, today said that Nexia BT and Mossack Fonseca’s requests to seven different banks to seek accounts for his company Hearnville Inc, “were part of the service that was offered to me. Nevertheless, as a state of fact confirmed by the reports, a bank account was never opened. This confirms my version of events that there are no funds and bank accounts held by the trust and related company to date.”

Mizzi said he signed no bank opening forms and gave no power of attorney to the service provider to open an account. “The mandate was limited to making inquiries.”

Mizzi also said that he had not considered any joint investment with Schembri. “Today’s stories put to rest all false allegations of monies originating from Azerbaijan, and a myriad of other ridiculous speculations by Simon Busuttil and the Nationalist Party.”

Mizzi spent almost 12 days not tweeting anything throughout the Panamagate affair. Then on Tuesday he retweeted news of an Enemalta statement, and today informed Busuttil by tweet that he would sue him for libel. Busuttil tweeted back: 'The only file @KonradMizzi should sign is his resignation'.


AFR request

Schembri published the request for comment from the AFR, saying that it was evident that the article had confused Nexia clients and attributed all names to Schembri as if “he were the only client of Nexia BT”.

Text of request follows in full:

I am responding in the first instance to your letter to the paper of April 10. While you and Mr Konrad Mizzi state that you had no beneficial interest in Tillgate Inc and Hearville until July 2 2015, the emails from Mr Cini in March 2013 clearly state that he was seeking to set up a Panama company and a trust for a client, and he specifically said it was not a shelf company for Nexia BT. There is a continuity in the references to the Panama companies as linked to a trust, and references to clients. You'd be aware that Mossack Fonseca required extensive due diligence from yourself and Mr Mizzi for several months before you formally acquired the interest in Tillgate. 

You'll also note that in April 2013 you gave signed instructions to replace yourself as a director of your BVI company Colson Services with a Mossack Fonseca employee, and for your sharehelding to be moved to a nominee company in Panama. The same MF employee incorporated Tillgate and the Tillgate share was held by the same MF nominee company in Panama as held your Colson share. 

In reference to your statement in the email that you set up the structure for estate planning, I note that Mr Cini as your agent informed Mossack Fonsec that it was for the purpose of holding minority investments in recycling in Dubai and India, and in remote gaming, and that these were market sensitive if your shareholding became known.

I note that Mr Ivan Camilleri was seeking documentation for his BVI company Berdil Limited. In other contemporaneous emails Ms Nilay Camilleri refered to holding an interest in a gaming licence in Curacao. Were these your prospective investors?

For clarity I note that in addition to attempting to open a bank account for the two Panamanian companies in Dubai, Mossack Fonseca also contacted FPB Bank, Bank of Saint Lucia International, Winterbotham, Itaú (Miami), BSI (Panamá), and Brickell Bank (Miami), a total of seven banks, in an attempt to open an account. Mr Cini informed Mossack Fonseca that the proposed bank account would be the operating accounts of the panama companies. Estimated deposits over one year were to be around Eur350k, and that eventually on Decemebr 2 via Mr Cini you gave instructions to open an account at BSI: "Go ahead to start the opening of the accounts for those 2 panama companies."

This appears to be in conflict with the account of this investment which you have provided, Could you clarify this?

Yours Faithfully,

Neil Chenoweth


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