Endgame on Panama? The week Muscat went all in on a high stakes poker game

The glut of information, daily statements from parties, and a vibrant social media will do much to sway emotions. But facts, surely, are still sacred in this political drama and crisis that has taken over Malta

Joseph Muscat and his main detractor, the Malta Independent columnist Daphne Caruana Galizia. PN leader Simon Busuttil has called for Muscat to resign based on allegations Caruana Galizia has published
Joseph Muscat and his main detractor, the Malta Independent columnist Daphne Caruana Galizia. PN leader Simon Busuttil has called for Muscat to resign based on allegations Caruana Galizia has published

Malta is caught up in an unfolding drama over the identity of the ultimate beneficial owner of a secret Panama offshore company whose name first broke during the Panama Papers revelations of April 2016: Egrant.

For months thereafter, Egrant was seen as the third, mysterious company formed alongside Konrad Mizzi’s Hearnville Inc. and Keith Schembri’s Tillgate; and Prime Minister Joseph Muscat’s decision not to sack his energy minister and chief of staff, let alone the lack of a police investigation into the Panama Papers affair, turned him into the convenient suspect.

The prime minister has always brushed aside the allegations, but matters came to a head last week when Daphne Caruana Galizia, the Malta Independent columnist, published one allegation after the other detailing money transfers from the Azerbaijani first family to an account supposedly held in the name of Michelle Muscat – whom she claimed is the beneficial owner of Egrant.

The proof, she claims, was a declaration of trust – a document provided by auditors Nexia BT to Pilatus Bank showing Muscat as the UBO of Egrant – that was removed from a safe inside the Whitehall Mansions offices of the bank in March 2016. The information has trickled out in bits and pieces, the narrative beefed up as events unfolded. But what she says suggests that a clean-out of incriminating evidence took place after she broke news of the secret offshore companies belonging to Mizzi and Schembri that year.

She says the document has been “scanned and uploaded to the cloud” but she has only reproduced the text of the alleged document and yesterday refused to testify in the magisterial inquiry investigating the allegations.

Those who accuse PN leader Simon Busuttil of being joined at the hip to Caruana Galizia, saw him evading a clear answer to Muscat’s question on Xarabank whether he endorsed the text she has reproduced. Muscat insists it is fabricated; Busuttil prefers focusing on the institutional crisis Muscat presides over, comically illustrated by the inept Commissioner of Police on his way to eat rabbit at a restaurant instead of swooping on the Pilatus offices.

Today, the Nationalist Party will lead a national demonstration calling for the Prime Minister to resign. But a press conference given by Busuttil yesterday indicated he was unsure about giving any additional weight to the alleged document Caruana Galizia says exists. His performance on Xarabank on Friday suggests that only Caruana Galizia has seen the incriminating document.

The magisterial inquiry, requested by the Prime Minister, is mandated under the Criminal Code, granting the magistrate the power to investigate to the fullest of powers. So yesterday’s announcement by Daphne Caruana Galizia that she would not testify, insisting that the onus was not on her to provide the proof of what she alleged, opened a scenario in which she could ultimately be forced to testify under arrest – if the magistrate so willed.

Caruana Galizia says that journalists should not be forced to speak to an inquiring magistrate or the police, given that they depend on the full trust of their sources “by doing nothing that might make them fear they are breaching confidentiality and putting them at risk, even just the appearance of it”.

In the past this newspaper gave evidence to the police on various cases it had reported, including the Enemalta oil scandal, the FTS inquiry in 2004, the Sheehan inquiry that led to the sacking of the home affairs minister, and recently the CapitalOne and Bogdanovic inquiries.

Busuttil was not forthcoming yesterday when asked whether Caruana Galizia should testify, especially due to the impression that she has seen the incontrovertible proof of the Muscats’ culpability. “That’s not for me to answer, ask her…”.

Busuttil’s slamming of the magisterial inquiry was marked by his declaration yesterday that the prime minister now had a conflict, for it was he who was “under investigation” by the inquiry he had himself requested; and that crucial evidence could have been removed from the premises of Pilatus Bank on the night the allegation was published (even though, Caruana Galizia yesterday herself claimed that the document in question was removed from the Pilatus safe, unceremoniously kept inside the kitchen at the time, back in 2016).

Busuttil now calls the magisterial inquiry a “colossal cover-up” but told journalists yesterday he has trust in Magistrate Aaron Bugeja, yet insists any evidence at Pilatus was removed in the hours before Muscat requested a magisterial inquiry; the image conjured being that of Pilatus chairman Seyed Ali Sadr Hasheminejad, emerging at night from the bank’s back-door exit with two suitcases. Syed claims he had landed in Malta from a flight and headed straight to the bank.

Yesterday’s press conference by both leaders drew new battle lines: Muscat insists the text reproduced from the alleged declaration of trust is a fabrication, containing errors of Egrant’s address – Panama not Nexia’s San Gwann address – and his wife’s birthplace.

But critics believe this is just pedantry. His detractors feel that his impassioned defence, libel suits, and request for the magisterial inquiry that should have kicked off back in 2016, is over-compensation for guilt.

But the prime minister would have been damned anyway if he let the bold assertion that his wife had received $1 million from the Aliyev family, ostensibly through Egrant and a foreign bank account, pass.

If the investigative magistrate is after an elusive document in which Nexia’s Brian Tonna would have told Pilatus Bank that the ultimate beneficiary is Michelle Muscat, would that evidence only be in the ‘cloud’ Caruana Galizia said this document had been uploaded to?

Or would it be in the transactions she alleged had taken place between Azerbaijan and Malta, facilitated by Pilatus, which Muscat insists would be recorded by correspondent banks who processed the international payments?

A battle of perceptions is being fought out here, between a prime minister whose administration will forever be tarnished by the Panama Papers and a crisis of governance, and the bold allegations of a blogger and a political party insisting that Muscat is truly the owner of Egrant.

As for the battle for truth: it is the magisterial inquiry that will establish whether the circumstantial or full evidence exists of Azerbaijani money and secret companies.

The glut of information, daily statements from parties, and a vibrant social media will do much to sway emotions and gut feelings.

But facts, surely, are still sacred.

THE ALLEGATIONS

Saturday, 15 April 2017 at 11:36am 

Daphne Caruana Galizia says she has discovered who owns Egrant, which was put into dissolution a few days earlier. She says she has info on several movements of very large sums of money from the bank account of a company owned by PEPs in Azerbaijan to bank accounts held by Egrant, Hearnville and Tillgate. The blogger said that a Maltese bank, set up after 2013, was used to move the money.

Wednesday, 19 April 2017 at 7:00pm 

Caruana Galizia says a company owned by Leyla Aliyeva, one of the two daughters of Ilham Aliyev, ruler of Azerbaijan, transferred “loan payments”, to Hearnville Inc, Tillgate Inc and Egrant Inc last year. She said the company – Al Sahra FZCO – is incorporated in Dubai’s free zone, with Aliyeva as the ultimate beneficial owner. The payments were made through Al Sahra FZCO’s account at Pilatus Bank.

Thursday 20 April 2017 at 4:41pm 

Caruana Galizia says that in March 2016, Al Sahra FZCO paid US$1.017 million to Egrant in the form of a “loan payment” from Al Sahra’s account at Pilatus Bank in Malta, to an account Egrant Inc holds with a bank in Dubai. 

She said the transaction was so large that Pilatus Bank’s US correspondent bank stopped it and that it only went through after several days of negotiations.

Other “loan payments” of around US$100,000 each were made twice a week over several weeks in January, February and March 2016, and that the bank account opening form for Al Sahra at Pilatus Bank identified Leyla Aliyeva as the ultimate beneficial owner of the company. Payment instructions for Al Sahra were given by Farnoush Farsian, she said.

Thursday, 20 April 2017 at 7:59pm 

Caruana Galizia says documents in the possession of Pilatus Bank include declarations of trust showing shares in Egrant Inc are held by Mossack Fonseca nominees for “Mrs Michelle Muscat”.

She says the declarations were provided to the bank by Brian Tonna (of Nexia BT), as a prerequisite for opening an account for Egrant, for which the identity of the ultimate beneficial owner is required. “Mrs Muscat’s name is also given on another document held in the bank’s safe: the account opening form for Egrant Inc.,” he said.

She says all the documents had been scanned and uploaded to the cloud, for security purposes, by third parties so that they could not be destroyed by the bank. 

She also says that Pilatus Bank had moved a safe, full of top-secret documents, from the CEO’s office to the kitchen, allegedly containing documents of PEPs such as John Dalli and Keith Schembri.

Friday, 21 April 2017 at 12:04am

Caruana Galizia reproduces the text of the alleged declaration of trust that shows Michelle Muscat described as the beneficial owner of Egrant; she also says that Negarin Sadr Hasheminejad – sister of the Pilatus chairman Seyed Ali Sadr Hasheminejad – received a US$1 million loan from the bank in March 2015. Of that loan $400,000 wen to a bank account held by “a Maltese woman who lives in New York and has a jewellery business called Buttardi” – the costume jewellery business set up by Michelle Buttigieg in partnership with Michelle Muscat in 2003.

Buttigieg was controversially appointed “Malta’s tourism representative” in the United States in 2013.