Updated | FIAU said Nexia BT withheld information about Schembri and Mizzi offshore companies

According to the leaked report, Nexia BT 'withheld' emails and information from Malta's anti-money laundering during their investigation in 2016

A leaked report claims financial advisors Nexia BT “withheld” information from the Financial Intelligence Analysis Unit when it started investigating minister Konrad Mizzi and the Prime Minister’s chief of staff Keith Schembri back in 2016.

The Times of Malta said the FIAU was investigating Mizzi and Schembri shortly after journalist Daphne Caruana Galizia lifted the veil on their secret company structures in Panama, which were sheltered by trusts in New Zealand.

In March 2016, the agency demanded copies of all correspondence between Nexia BT and the Panama law firm Mossack Fonseca, as well as correspondence between Nexia BT and Mizzi and Schembri. The anti-money laundering agency has the authority to demand information during its investigations.

READ MORE: What we know so far from The Daphne Project

According to the leaked report, Nexia BT told investigators that “all instructions and discussions with the clients” were verbal. However, the FIAU deemed this to be “suspicious”, arguing that Nexia BT, Schembri and Mizzi would likely resort to e-mails, at least in parts of the process.

The FIAU found it suspicious that Nexia BT partner Karl Cini “withheld” an email from the agency showing his clients’ reluctance to inform local banks about their offshore structures.

According to the Times, the report states that the FIAU only learnt about the email when the newspaper published it, which, as a partner in the International Consortium of Investigative Journalists, had full access to the leaked correspondence through the Panama Papers.

The leaked report reveals that investigators were interested in an email in which Nexia BT raised the need for Schembri and Mizzi’s ownership of the companies to be hidden from public view. Here the FIAU questioned why there was such a need for secrecy when the company had acknowledged that politicians in Malta were openly allowed shareholdings in companies.

The FIAU were also curious as the why the two had set up identical structures simultaneously, as such structures were usually tailored to an individual’s needs.

The FIAU report also referred to a trip Mizzi made to Dubai in August 2015 which had not been officially announced. This trip coincided with emails sent by Cini to Mossack Fonseca which stated that Mizzi needed to provide original documents about his Panama company to set up a Dubai account. According to the report, Nexia BT would later say in an email that the shell company 17 Black would pay money to Mizzi and Schembri’s Panama companies.

READ MORE: Dubai company 17 Black was ‘target client’ of Schembri’s and Mizzi’s Panama set-ups

Nexia BT’s attempts to open various bank accounts indicated that the companies planned to have more accounts, with attempts made to open accounts in more than eight banks in Panama, Miami, US, and other jurisdictions.

An e-mail sent by Nexia BT on 17 December 2015 said that the two Panama companies would generate $2 million within a year, with monthly transactions of €150,000. However, the FIAU stated that such a large income did not correspond to Mizzi’s statement that the Panama company was set up to preserve family assets and income derived from rent from his UK property.

The report said detailed analysis into Mizzi’s assets revealed that the potential rental value of the UK property at £20,000 (€23,000) each year.

Bank deposits of just over €92,000 in a joint account were also found, which was below the €389,440 in deposits declared to Parliament by Mizzi in 2015.

 “The apparent lack of these bank deposits, which would be one of the most significant assets Mizzi holds, further begs the question as to why such a structure was required, given that the costs of setting up and maintaining such a structure would outweigh any financial benefit derived solely from the property in the UK [owned by the minister],” the FIAU said in its report.

Brian Tonna statement

In a statement issued in reference to the Times of Malta article, Brian Tonna denied Nexia BT had ever withheld information, maintaining it always cooperated to the full

"We deny having withheld any information from the authorities. On the contrary, and as we have stated consistently, we have cooperated fully with them, and will continue to do so. In so far as concerns the remainder of your article, we are precluded from fully addressing the allegations due to client confidentiality and professional secrecy obligations at law, as well as in light of the ongoing magisterial inquiries," the statement said.

"Nonetheless, we continue to categorically deny any wrongdoing, both from a legal and also from a conduct perspective," it said.

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