Panama Papers | Konrad Mizzi, Keith Schembri wanted to open Dubai bank account

Reports emerging from the global coverage of the Panama Papers, one of the largest leaks ever of financial data from law firm Mossack Fonseca, have uncovered the interests of energy minister Konrad Mizzi, but also that of Prime Minister Joseph Muscat’s chief of staff Keith Schembri and the former managing director of Allied Publications, Adrian Hillman.

The revelations were carried in the Australian paper The Financial Review, which has revealed that both Mizzi and Schembri set up two offshore trusts in New Zealand in 2015, which allegedly “were to be linked to a secret Dubai bank account and to two Panama companies that Schembri and Mizzi” set up through Mossack Fonseca.

According to the Mossack Fonseca documents, Keith Schembri had already back in January 2011 used a Spanish adviser to set up a British Virgin Islands company, Colson Services Ltd, for him; and on the same day, a second BVI company, Selson Holding Corporation was set up for Malcolm Scerri, the managing director of Schembri’s company, Kasco Limited.

Then four months later on 10 May, 2011, Adrian Hillman, the managing director of Allied Publications, set up a his own BVI company, Lester Holdings Group Limited, through the same Spanish intermediary.

Hillman has resigned since Malta Independent columnist Daphne Caruana Galizia alleged in February that he received payments from Schembri as an inducement for the purchase of newsprint from Kasco.

Both men deny the allegations.

In the more recent revelations of the Mossack Fonseca papers, it is revealed that in June 2015, both Mizzi and Schembri purchased two Panama companies from the Mossack Fonseca related firm ATC Administrators Inc, respectively Hearnville Inc and Tillgate Inc.

The companies were originally set up in June 2013, on two separate days, for two Mossack Fonseca related companies, Dubro SA and Aliator SA, which have ownership in various other companies.

In 2015, the companies were acquired for the benefit of Mizzi and Schembri, and their ownership was transferred to the trustees controlling Mizzi’s offshore trust in New Zealand – Rotorua – and to Schembri’s offshore trust – Haast. Both trusts are run by Orion Trust (New Zealand): and under New Zealand law they pay no tax on foreign earnings; New Zealand regulators may demand this information, but it is not disclosed to foreign governments.

In August 2015, Nexia BT – which is the Mossack Fonseca franchise in Malta – informed in writing to Mossack Fonseca in Panama: “We are in the process of opening a bank account in Dubai for two of our Panama companies.”

But Mossack Fonseca became concerned that both Schembri and Mizzi were ‘Politically Exposed Persons’ (PEPs).

“As both settlors [the parties that set up the trust] are PEP, our NZ colleagues need to be comfortable that sufficient due diligence has been carried out to ascertain that funds being settled are not subject to any corruption risk, and ideally that they come from income generated prior to the settlors' political appointment,” a Mossack Fonseca operative in Panama wrote.

“With respect to Haast Trust, it would appear that there was some negative coverage regarding the tender process for supply of paper to the government shortly after the settlor’s appointment as Chief of Staff, so if you could also include a detailed information about this, that will be a very important information for us as well.”

A follow-up email noted that “there is also some negative publicity regarding the amount of remuneration for KM’s [energy minister Konrad Mizzi’s] wife”.

No further reference was made to the Dubai account, but meanwhile FPB Bank in Panama had refused to open an account for Hearnville and Tillgate after learning the identity of the ultimate beneficial owners of the companies – Mizzi and Schembri.

The bank’s main reason was that they were PEPs, a Mossack Fonseca executive wrote.

A full list of companies who employed the services of Panamanian law firm Mossack Fonseca to set up offshore companies in the secretive tax jurisdiction, will be released in May, the International Consortium of Investigative Journalists (ICIJ) has announced.

Maltese-linked companies total 676, with 42 clients and 59 beneficiaries – names that should reveal the extent to which the rich and elite will go to park their assets offshore so to as avoid tax scrutiny or to keep creditors away from their assets.