Panama Papers | The intermediaries: the people who make offshore possible

In the end, Nexia BT – the much-maligned, mid-tier audit firm that facilitated the controversial offshore set-ups for Konrad Mizzi and Keith Schembri – brokered similar deals for 17 clients. At least that’s what the Panama Papers, a leak of 11.5 million files from one of Panama’s main legal firms Mossack Fonseca, tell us so far.

The bulk of the administrative work to create offshore companies from Malta seems to have gone to Bald Eagle SA, the firm run by Michael Alfred Del Vecchio, once a decorated officer and missile defence system expert, now a middleman specialising in referring rich people to Mossack Fonseca, in Panama.

Indeed, he was the man who first helped Keith Schembri – before he became the Prime Minister’s chief of staff – set up his British Virgin Islands company, together with another director in Schembri’s business group. Other people he helped included Adrian Hillman, also outed as the owner of a BVI company. Because Schembri’s, Malcolm Scerri’s, and Hillman’s BVI companies were created within months of each other in 2011, and because Schembri’s Kasco group supplied newsprint to Allied Newspapers, of which Hillman became its managing director, the stage was set for allegations that bribes had passed on from Schembri to Hillman.

Those allegations were made by Daphne Caruana Galizia, the Malta Independent columnist whose son Matthew was one of the data journalists who worked with the International Consortium of Investigative Journalists: a month before the formidable Panama Papers leak, she outed energy minister Konrad Mizzi and Keith Schembri as the owners of two Panama offshore companies and New Zealand trusts, as well as Schembri’s and Hillman’s alleged ‘BVI connection’. Hillman’s employers, Allied Newspapers, set up a board of internal inquiry instead of reporting the bribery allegations to the police.

Antonio Depasquale (left) and Michael Del Vecchio

Del Vecchio shows up in the Mossack Fonseca leak as keeping an office in Malta. That office is City Advisory, a company that is actually registered in the British Virgin Islands, as one of its shareholders and possibly beneficiaries, Antonio Depasquale told MaltaToday.

Depasquale, a lawyer who once held the position of president of the PN’s youth organ MZPN (Moviment Zghazagh Partit Nazzjonalista) told MaltaToday that he had known Del Vecchio for years, and that it was his idea to promote Malta as a jurisdiction for foreign shareholders to open subsidiaries here.

But they registered City Advisory in the British Virgin Islands in 2012. On his part, Depasquale runs the City Legal office in Valletta. He has confirmed that he is a shareholder and when asked, did not deny being a beneficiary of the BVI firm.

“When we came to incorporate the company, we saw that the opportunity for profit was low and we felt we didn’t need to incorporate it in Malta. It was [Del Vecchio’s] wish. Malta offers the same services as the BVI but he would have had to pay more in administration fees.”

Depasquale did not deny that the BVI company allowed City Advisory to pay less taxes on their profits.

Del Vecchio had warned Mossack Fonseca that Nexia BT was poaching his clients, in an email revealed by the Australian Financial Review, but in the end Keith Schembri used his business group’s auditors in 2015 to open a new offshore company in Panama for his Haast Trust. Likewise, Konrad Mizzi. Nexia BT spent months searching for an international bank that would accept the two PEPs. In the end they were to settle for a Panamanian bank that demanded at least $800,000 in annual deposits for Schembri’s and Mizzi’s alleged business activities: the previous for remote gaming and waste recycling business, the latter for brokerage fees. Despite the national outrage, they are still chief of staff and minister without portfolio respectively at the Office of the Prime Minister.

While Bald Eagle SA, which is Del Vecchio’s alone, is ‘linked’ to Malta in the ICIJ database with 189 entities it registered in tax havens through Mossack Fonseca, in Malta it is EMD Advisory Services that made most use of the Panama firm with 72-registered companies.

EMD’s claim to fame in all this would be the fact that former EU ambassador and Nationalist government’s enforcer, Richard Cachia Caruana, is a consultant at the firm, where his sister Louise Ellul Cachia Caruana is a senior partner. The firm said he holds no shares or directorships.

Richard Cachia Caruana: Labour sought to implicate the former EU ambassador in the Panama Papers revelations but although he is a consultant at EMD, he has denied setting up any offshore firms.

Of course, it sought to clarify where it positions itself in the constellation of facilitators for offshore tax ‘planners’. “Together with other reputable firms and companies in Malta, EMD provides corporate services in the financial services sector. It is firms like this that over the past 16 years have helped Malta become the successful financial services centre that it is today.”

EMD said it never assisted any politically exposed persons from any jurisdiction, including Malta, to set up any entity in the BVI, Panama or similar jurisdiction.

Cachia Caruana’s name featured prominently with Labour spin doctors eager to include his name as part of the army of intermediaries who make offshore possible. He declared that he held “no shares in companies in Panama, the British Virgin Islands or any other tax haven and has never held any.” 

Cachia Caruana also said that he had provided no advice about the opening or otherwise of companies in Panama, the British Virgin Islands or any other tax haven at any stage of his professional career. 

“I have no conflicts of interest between my personal holdings and any State interests and have never had any. My relationship with EMD is solely to provide this firm and its clients with advice on EU-related matters and I have never had any shareholding or other financial interest in the firm nor have I ever held any directorships or management positions with the firm.

“The current attempts by members of the Prime Minister’s staff to imply any connection between me and the Panama Papers are totally deceitful.”

Nationalist MP Francis Zammit Dimech, also rushed to disassociate himself from the fact that FZD Trustees was named in the Panama Papers.

Nationalist MP Francis Zammit Dimech, also rushed to disassociate himself from the fact that FZD Trustees, now renamed Valletta Trustees, is mentioned in the Panama Papers. Valletta Trustees is run by lawyer Reuben Balzan, president of the Chamber of Advocates. Zammit Dimech said that after the 2013 elections, his legal office set up the BVI company International Goods and Services Limited. Zammit Dimech resigned from the trust services company in August 2014.

“You cannot conflate the case of Mizzi and Schembri and their search for an international bank account, with the role of any lawyer and accountant who offers these services,” he said in a statement in reaction to reports in the Labour press of his ‘Panama connection’. “Put simply, we’re like lawyers defending the accused in a criminal case. We’re not the ones facing the criminal charge!”