Explainer | The CapitalOne investigation and Beppe Fenech Adami

What is the story about in a nutshell?

A police investigation might have been not enthusiastically pursued when on 13 January 2013, as Malta entered a general election, police realised a fiduciary services company that owned, as a nominee, a company under investigation on suspected money laundering, had a PEP as its director: none other than parliamentary assistant for home affairs, Beppe Fenech Adami.

Why was the investigation not pursued?

We don’t know: between 13 January and 31 January 2013 many things happened, chiefly the Enemalta oil scandal. Whatever happened, it was enough for police top brass to note down the file’s priority as ‘BU – three months’ – bring up in three months, which coincidentally meant it would be dealt with after the election, when a new police chief would take over. Former assistant commissioner Michael Cassar insists that the case might not have been postponed, but that police needed more time to investigate.

Did Beppe Fenech Adami know of the investigation?

Both Beppe Fenech Adami and Richard Abdilla Castillo, the directors of Baltimore Fiduciary Services, say the entire case is news to them.

Curiously, they insist that an asset freeze on their client’s accounts, CapitalOne Investment Group, is also news to them.

Who are CapitalOne Investment Group?

A company whose shares were nominally held by Baltimore to hide their beneficial owner, which included various Cypriot companies belonging to Dutchman Robert Soogea, whose four properties were raided in November 2012 where a quantity of drugs (up to 1.1kg), almost €100,000 in cash, and papers proving his ultimate beneficial ownership of these companies, were found by Dutch police. He was also tapped by police telling a woman to hide these papers. The public prosecutor in The Hague requested the Maltese to freeze their assets, because they suspected Soogea was involved in illegal activity with respect to consignments from Brazil to Rotterdam.

What did Baltimore do for CapitalOne?

Simply put, it managed CapitalOne on behalf of its real owners. It would deposit payments from Greek companies into a BOV account, deposit it them into a Valletta Fund Management account, and then use it to buy other Greek companies, property, and pay off Robert Soogea’s VISA gold card expenses – because Soogea was a high-roller poker player. Today Baltimore no longer owns CapitalOne group, and Beppe Fenech Adami resigned his directorship in January 2014.

Is Beppe Fenech Adami responsible for anything?

As a director he does retain some form of legal responsibility for the actions of the fiduciary, but it is not Beppe Fenech Adami who is under invesigation per se: It is the people behind CapitalOne, who are clients of Baltimore. Indeed MaltaToday points out in its story that it was Abdilla Castillo who executed all CapitalOne decisions, not Fenech Adami. What is at stake in the entire saga is whether there was no enthusiasm to pursue the investigation when Fenech Adami's name cropped up.

Was an asset freeze carried out?

The police managed to get all financial information from the bank, and an asset freeze to that extent was communicated by the Maltese police to the Dutch counterparts.

What has happened since the story broke?

The Prime Minister was swift to order an inquiry into the investigation. The speed is uncharacteristic of other situations that were less politically favourable for Joseph Muscat: in the past he has held inquiries that felled ministers like Manuel Mallia and stood by NAO inquiry conclusions, but he has been less enthusiastic about an inquiry into Panama Papers and the accounts opened by his minister and chief of staff.