Updated | Schembri reacts to Nexia emails on Panama company business interests

Emails published by the Australian Financial Review from the Panama Papers saga show that Keith Schembri’s auditors Nexia BT had indicated both Schembri and energy minister Konrad Mizzi’s two offshore companies as being designated for a waste recycling and remote gaming business.

Nexia partner Karl Cini’s email to Mossack Fonseca, the law firm that opened the offshore companies Tillgate for Schembri, and Hearnville for Mizzi, show that in October 2014, Cini said that Tillgate and Hearnville would have a “part stake” in recycling and remote gaming operations but gave no details as to who the partners would be in these ventures.

In a reaction, Schembri said that today’s publication in the AFR gave comfort to his version of events. “Mr Chenoweth is confusing facts, making false links between unrelated events and contriving a scenario to try to give colour to his mistaken claims. Mr Chenoweth has released excerpts of documentation he is basing his story upon. The documentation released, confirms beyond doubt that Mr Chenoweth is erroneously attributing communication between Nexia BT and Mossack Fonseca to Mr Schembri. Mr Neil Chenoweth seems to believe that Nexia BT only have two clients.”

On his part Konrad Mizzi said that the email communications have been "falsely attributed" to him when they concern other Nexia clients.

Karl Cini's email of October 17 2015, describing the activities planned for the two Panama companies as part sakes in Recycling and Remote gaming operations.

AFR report

In November 2014, Cini emailed Mossack Fonseca with information about Konrad Mizzi and mentioned details of the waste recycling operation, which included “main trading agreements with locally based ‎waste collectors, waste separating companies and processing companies, haulage companies, shipping companies, and waste buyers in India and China.”

Mossack Fonseca approached seven banks to open accounts for the two PEPs (politically exposed persons): Dubai, FPB Bank and BSI Bank in Panama, Bank of Saint Lucia International (BOSIL), Winterbotham Trust in the Bahamas, and the Miami branch of Brazil's Itaú Bank and Brickell Bank. They also talked to Cidel Financial Group.

After negotiating BSI’s opening deposit down from $1 million to $300,000, Cini instructed Mossack to open the accounts for both the Panama companies.

But the BSI Bank refused the account unless they applied for immigration visas to Panama.

“Even for just a quick pre-check with the two new banks, Schembri and Mizzi would have to provide detailed information about their Panamanian companies’ assets, earnings, major clients and suppliers and how the account would be used. No further emails could be located,” the AFR’s Neil Chenoweth reported.

Panama companies incorporated in 2013

The Mossack Fonseca documents obtained by the Financial Review are part of an international media collaboration led by the International Consortium of Investigative Journalists and have shown that Schembri and Mizzi owned Panama companies which were transferred into two foreign trusts in New Zealand in 2015.

Last week Schembri said that it was “absolutely baseless” to say that his auditors Nexia BT began the process of setting up Tillgate Inc and Hearnville Inc days after the Labour government won power in March 2013.

Both Schembri and Mizzi, as well Nexia partner Brian Tonna, have said that the offshore companies were acquired by Nexia in 2013 to have shelf companies at the ready for prospective clients.

Schembri said that Tillgate “was acquired by myself on the 2nd of July 2015… solely for the purposes of its settlement into the New Zealand Trust, Haast Trust, and is intended solely for estate planning. Beyond this, I have no knowledge of any prior company activities save the fact that the company has never traded to date.”

But the Mossack documents published by the AFR indicated that in a 25 March 2013 email, Karl Cini states that the Panama companies he is requesting were not for Nexia BT but for an ultimate beneficial owner which he did not identify in an email but would name in a Skype conversation. “We will prepare the requested information but the UBO [Ultimate Beneficial Owner] will not be Nexia BT. It will be an individual and I will speak to Luis [Quiel] on Skype to give him more details.”

There was no indication from the paperwork of the identity of the client Cini had written about and discussed on Skype.

In emails related to Schembri’s offshore company in the British Virgin Islands, Cini described the Prime Minister’s chief off staff, as “very close and trusted clients of Brian Tonna, our managing partner, and the same clients I have also known personally for many many years.”

Cini ordered the three offshore companies Tillgate, Hearnville and Egrant, from Mossack Fonseca on 8 August – their shares were held by Mossack’s own nominee company, ATC Administrators, also the same company that holds Schembri’s shares in his BVI company.

By December 2014, Mossack Fonseca’s office in New Zealand sent Karl Cini a detailed list of documents which he would have to obtain from his client to create an NZ offshore trust.

In June 2015, Konrad Mizzi in a signed statement said that the transaction was being funded by “personal assets and proceeds from business” and that Hearnville was “Still not trading. Eventually management consulting and brokerage.”