BVI offshores find common thread with Progress Press relocation

Three businessmen – one of which is Joseph Muscat’s chief aide Keith Schembri – have converged in the unfolding saga on Panama offshore companies around the multi-million printing press built for Progress Press.

The €30 million state-of-the-art premises in Mriehel is owned by the Allied group of companies, which includes Allied Newspapers, the publishers of the Times.

The newspaper has already lost managing director Adrian Hillman, the former managing director who resigned his post when the Allied directors launched a board of inquiry to investigate allegations of bribery: made by Malta Independent columnist Daphne Caruana Galizia against him and Keith Schembri, the prime minister’s right-hand man who before 2013 provided newsprint to Progress Press from his company Kasco.

The allegations, made before the international leak of over 11.5 million documents form Panamanian law firm Mossack Fonseca, were denied both by Schembri and Hillman.

So far little has seen the light of day by way of evidence of bribery but Allied launched its own inquiry, headed by retired judge Giovanni Bonello, to investigate allegations that Hillman received some commission from Schembri. Hillman has yet to be summoned to the inquiry.

Since then, it has emerged that both Schembri and Hillman set up offshore companies in the British Virgin Islands, respectively in January and May 2011, both handled by the same middleman: the Californian Michael del Vecchio, who has an office both in Spain and in Malta, and whose job was to provide clients to Mossack Fonseca.

In January 2011, Del Vecchio set up a British Virgin Islands company for Schembri called Colson Services Ltd, as well as the offshore company Selson Holding Corporation for Malcolm Scerri, who runs Schembri’s Kasco group. 

Then in May, Allied Newspapers’ managing director Adrian Hillman also got a BVI company through Del Vecchio, Lestor Holdings Group Ltd.

Progress Press, whose Global Web Systems G-145 Printline was provided by the Kasco group after winning a tender, was finally inaugurated in July 2011 by then prime minister Lawrence Gonzi.

€900,000 for ‘negotiations with suppliers’

A third businessman, Pierre Sladden, is the owner of Redmap Construction, whose firm was involved in the redevelopment of the derelict factory acquired by the Allied group back in June 2009 to house the new printing press. Even he has been identified in the Panama Papers releases by the Australian press.

The adjudicating committee at Allied, headed by architect Paul Camilleri, chose the construction company Blokrete for the site’s redevelopment, which in turn contracted Redmap Construction. At the time, Hillman had said that the potential of seven sites had been examined before the contract for the land at Mriehel was signed.

Sladden’s name has cropped up in a concatenation of emails to Mossack Fonseca at the time when the audit firm Nexia BT started attracting the Panamanian law firm’s attention, in late 2013.

He also happens to have been in business with Schembri through film servicing company Cinebiss. 

Documentation among the Panama Papers, which the Miami Herald reported on, shows that Del Vecchio wrote to Mossack Fonseca in Panama about his competitors, complaining that they were taking his clients.

“Nexia BT is Pouching (sic) companies and clients away from Bald Eagle Services S.A. — one of your most loyal Professional Clients in order to easily build their clientele,” Del Vecchio wrote in an email on 20 April, 2013. “I have copied our Legal Council (sic) in Malta.”

Soon after in May 2013, Mossack Fonseca (Malta) Ltd was registered with the Malta Financial Services Authority, with all of its shares held in fiduciary trust by BT International Ltd. It set up in offices on the same office-building floor as those of Nexia BT.

It was in this same year, in November, that Nexia BT’s partner Karl Cini had set up a British Virgin Islands company called Blue Sky Portfolio for Sladden.

Documents seen by the Australian Financial Review show that in November 2013, Pierre Sladden’s company Redmap Constructions had a €900,000 debt constituted for a Cyprus company called A2Z Consulta – itself a company whose nominee directors appear as the firm Best Servus, of Cyprus.

The money was for A2Z Consulta to pay for the “provision of services consisting in quality checks and negotiation with suppliers”, which it sub-contracted to Blue Sea Portfolio – whose 50,000 shares Sladden himself owns.

But in comments to The Times, Sladden has denied the impression given by the Australian Financial Review.

“Redmap does not owe and has not paid or otherwise transferred any funds to A2Z Consulta. My company PS & Sons is 50% of Castille Investments, which acquired Canberra House” – a building once owned by Allied Newspapers on St Paul’s Street, whose expropriation in 1989 was fought against in court by Mario de Marco, the now Nationalist deputy leader, also a member of the Strickland Foundation, which owns Allied Newspapers.

It was a way of Sladden reminding The Times how deep his business association with the newspaper was.

The political heat from Panama Papers has clearly raised the temperature for Joseph Muscat: Keith Schembri created an offshore company in Panama at the same time as energy minister Kevin Mizzi, in 2015, again through Nexia BT and Mossack Fonseca. Both offshore companies, Hearnville (for Mizzi) and Tillgate (for Schembri), are owned by the trustees running both official’s New Zealand trusts, Rotoura and Haast.

Calls for the resignation of both Schembri and Mizzi have come from civil society activists, the Opposition, and even veteran Labour minister Evarist Bartolo and former prime minister Alfred Sant.

The Opposition has led two protests against what it says is corruption at the heart of the ‘Panamagate’ affair, and called for the investigation of all government contracts that Mizzi as minister has presided on.

Nexia, Schembri denials 

Brian Tonna, the managing partner of Nexia BT, has insisted that two offshore companies acquired for Konrad Mizzi and Keith Schembri were only transferred to his two clients in July 2015, and denied that either the energy minister or the Prime Minister’s chief of staff had any interest in the companies.

The reaction comes in the wake of reports in the Australian Financial Review claiming that Nexia BT, an agent of Mossack Fonseca, had requested the Panamanian law firm to set up the offshore companies that were only later formally registered in Mizzi’s and Schembri’s name, just days after the 2013 election. 

But Tonna disputes the claim that the two companies, Hearnville and Tillgate, were destined for Mizzi and Schembri. 

“As a service provider we had acquired the companies in order to be able to timely assist clients when and if requested. 

“It has been repeatedly confirmed that Tillgate and Hearnville were transferred to our clients Keith Schembri and Konrad Mizzi on 2 July 2015. Prior to said date the persons referred to had no interest, beneficial or otherwise, nor did they have any control over, the companies,” Tonna said. 

A third offshore company set up at Nexia BT’s behest, called Egrant, is still a shelf company, Tonna said. “Any other insinuation is baseless in fact… We are not at liberty to divulge any client details since we are bound by professional secrecy obligations.”

Keith Schembri, has also “categorically denied” exercising any control on his offshore company in Panama before July 2015.

Schembri said he acquired Tillgate Inc on 2 July solely for the purposes of its settlement into the New Zealand Trust, Haast Trust, and was intended solely for estate planning. “Beyond this, I have no knowledge of any prior company activities save the fact that the company has never traded to date,” he said. 

The OPM chief of staff said it was inconceivable that a newspaper would allow comments attempting to link unmentioned “business figures” to the government without any substantiation or the faint attempt to corroborate it in fact. “The tone, scope and elaborate insinuations coupled with the deceit with which facts are treated are intended solely to tarnish my reputation and attribute to me intentions or actions which are not based on the truth,” he said referring to coverage of the AFR’s report on the Panama Papers.

Timeline of events:

June 2009 Acquisition of Mriehel factory for new Progress Press premises
January 2011 Keith Schembri and Malcolm Scerri set up offshore firms in the BVI
May 2011 Allied Newspapers managing director Adrian Hillman sets up BVI firm
July 2011 Progress Press inaugurated
May 2013 Mossack Fonseca sets up Malta office through Nexia BT
November 2013 BVI firms set up for Pierre Sladden, of Redmap, for alleged US$1 million transfer
July 2015 Offshore firms set up in Panama by Mossack Fonseca for Keith Schembri and Konrad Mizzi, to be eventually owned by trustees running their New Zealand trusts