Through the revolving door: Fenech’s drift into corporate world reveals connections with former BOV officials

MPs' declaration of assets: Tonio Fenech is chairman of advisory firm wholly-owned by a British Virgin Islands company and acts as company secretary to trust specialist firm in Jersey, another tax haven

Former finance minister Tonio Fenech
Former finance minister Tonio Fenech

The revolving door has worked well for Nationalist MP Tonio Fenech, who drifted straight into the world of private investment funds and joined former Bank of Valletta executives within months of losing his hat as finance minister in 2013. He even became the chairman of an advisory firm whose registered owner is a British Virgin Islands company.

Fenech, who left PricewaterhouseCoopers in 2004 to take up the job of parliamentary secretary for finance under Lawrence Gonzi, has declared a long list of directorships in parliament this month, together with his assets.

Fenech, who spoke to MaltaToday yesterday, said that as an MP it was his right to have a separate profession. “I assure you that none of the companies involved in create a conflict of interest with my parliament duties,” Fenech said, and pointed out that Maltese laws do not give ministers transitional allowances to prevent so called ‘revolving doors’ conflicts: that is, when government officials drift into the private sector they previously regulated.

Three involvements in particular show the switch the ex-minister made to accept the corporate shilling from business groups also located in tax havens, even though there is nothing illegal about the services he renders.

They include his chairmanship of Abalone Asset Management, a wealth management set-up in July 2015. Abalone’s ownership is 100% held in the offshore firm Abalone Holding, registered in the British Virgin Islands by the offices of Morgan & Morgan.

But Fenech has also lent his skills to Marlin Property Holdings and Primero Holdings, set up in Malta in June 2013 and September 2014 respectively. He serves as only their company secretaries, but Marlin’s and Primero’s owners are none other than the First Names Group, a leading provider of trust services located in another tax haven: Jersey.

Jersey may be just a 45 square-mile island off the coast of France belonging to the British Crown, but the island allows the super rich to hide billions there. In fact, it was in Jersey that Spanish industry minister José Manuel Soria held the offshore company that led to his resignation last month, after the Panama Papers revealed that he held the company up until 2002.

As it happens, First Names is a member of Nexia International, a cousin of sorts to Brian Tonna’s Nexia BT, the audit firm that set up Konrad Mizzi’s and Keith Schembri’s offshore firms in Panama.

“None of the companies are in secretive non-cooperative jurisdictions barred by the FIAU,” Fenech told MaltaToday. “I carried out necessary know-your-clients checks to ensure these companies perform legitimate activities and have no politically exposed persons except myself and which is declared with regulatory authorities and financial institutions in Malta and abroad when required.”

Fenech also runs various Maltese businesses on behalf of their foreign shareholders who can benefit from Malta’s highly-rated services to claim up to 85% in rebates on tax incurred on dividends, a system jealously guarded by the financial services industry and the Maltese political establishment against EU incursions on tax laws. On this, Fenech also had something to say about MaltaToday’s journalism on the industry (see reply).

One of Fenech’s colleagues is Mario de Marco, the PN’s deputy leader, with whom he serves as a director on Twinkleday Limited, set up in June 2013 for Irish entrepreneur Finian Lyden. The company’s ownership is located in Cyprus, according to company registry records.

Fenech’s other clients include successful businessmen like Anthony James Denny, the founder of AAA Auto, the largest used car dealer in Central and Eastern Europe. Fenech runs Blue Point Limited for him, a firm set up in July 2014 with Denny as sole shareholder.

Bank of Valletta’s revolving door

Fenech also found himself in the private sector together with former state-appointed officials and top directors from Bank of Valletta, a partly government-owned bank not immune to political criticism since the minister appoints its chairman – the Nationalist opposition takes particular pleasure in dubbing BOV “a Labourite club”.

After leaving government, Fenech was appointed a director of Credorax where he joined Tonio Depasquale, the former Bank of Valletta chief executive. Credorax provides online payment processing and acquiring bank services to online merchants worldwide. 

Another former Bank of Valletta chairman – appointed by Fenech himself – with whom the former minister has partnered up, is Danny Publio Rosso, in the company Ananova Ltd. Both men are directors in the Swiss-owned private company.

Then Fenech finds himself again as director with Rosso, as well as former Bank of Valletta chief executive Charles Borg – appointed during Fenech’s time as finance minister – in Vallcara Limited, a company owned by Vallgesa Limited.

Fenech is also a director of the Finnish-owned bank Ferratum Bank plc and Ferratum (Malta) Holding. The bank was licensed in 2012 when he was finance minister.

As director of Falcon Funds Sicav, a pension investment scheme set up in November 2013, he earns – according to the Sicav’s prospectus – some €12,000 annually in fees.

He is a director of the Swiss-owned Private Value Asset Management, whose parent company is based in Lugano as a provider of private equity and investment banking.

He is also one of the directors of Legalzoom’s three Malta operations. Legalzoom is a renowned American online legal technology company that provides online legal documents like wills and living trusts, as well as incorporation, and trademark services. The Malta companies are held by shareholders Peter Oey, the chief financial officer of Legalzoom, and CEO John Suh.

Legalzoom was set up in Malta on 2 April, 2013, just days after the 2013 general elections.

Similarly Fenech serves as a director of the Portuguese engineering firm MSF, which set up subsidiaries in Malta in May 2013.

Tonio Fenech replies

“As you can see from my previous declarations I have been fully transparent with my involvements in my parliament declarations. As an MP it is my right to have a separate profession and I assure you that none of the companies I am involved with create a conflict of interest with my parliament duties.

“You will appreciate that I cannot comment on company information of the companies you refer to.

“Although I can state that: As my declaration showed in all the companies I mentioned in my declaration I act as an independent director and have no ownership in these companies.

“None of the companies are in secretive non co-operative jurisdictions barred by the FIAU.

“Before accepting the mandate I carried out the necessary ‘know your clients’ checks and on going reviews to ensure that these companies perform legitimate and bona fide activities.

“I assure you that all these companies perform legitimate business activities and have no politically exposed persons associated with them except myself and which is declared with regulatory authorities and financial institutions in Malta and abroad when required.

“Malta in an international financial center in the EU, on the white list of the OECD, with a tax system that is accepted and fully compliant with the EU. Malta is not a tax haven like Panama but a country in the EU, it is a pity that your paper is sending the message that Malta is being used as a tax haven.

“Abalone Asset Management Company is licensed by the MFSA with its owner fully PQed by the MFSA i.e. the Authority would have also carried out its due diligence. The British Virgin Islands is a British Overseas Territory. In the case of Marlin Property I act as a company secretary and not a director.

“I do not render a service to offshore firms. The companies you mentioned are onshore firms that pay tax in Malta. It is not clear to me whether you are implying that foreigners should not set up legitimate companies in Malta – if that is the case then Malta can close as a financial centre and stop talking about attracting FDI and lose a lot of jobs and revenues that go to the benefit of our social welfare system which is thus able not to place undue tax burden on the working population.

“I am a director in one company with Mr Depasquale and in another with Mr Rosso and Mr Borg, persons of repute and stature, your allegation is clearly unfair and unwarranted - my track record as Minister of Finance speaks for itself and never was there an allegation that I ever intervened or influenced any decisions of the Bank except the appointment of the Chair and two board members whom, as a shareholder, the government had a duty to appoint – names were approved by Cabinet and none of the three members mentioned were such appointees.

“That from the companies listed I am only in one common directorship with each individual is clearly coincidental.”