Dalligate • How the story unfolded

The owner of an al fresco pizzeria in Sliema, Silvio Zammit's name is synonymous with Sliema locals. In his political role, the lifelong Nationalist activist was a canvasser for Nationalist ministers like Michael Refalo and Michael Frendo, before being asked by the PN to canvass for John Dalli in 2008.

Zammit was introduced to the world of snus, the Swedish tobacco pouches, when he accompanied Thomas Hammargren to meet John Dalli at the Kempinski Hotel in Gozo, to present him with some documentation on 20 August, 2010.

Hammargren had been Swedish Match's vice-president for global corporate affairs until 2007, but at the time of this meeting with Dalli he had been brought to Malta by British American Tobacco - which has a Maltese office together with Central Cigarettes - where he was head of harm reduction and smokeless tobacco like snus.

Clint Bajada, from BAT Malta, had called Zammit to have Dalli meet Hammargen, then also the president of ESTOC, the snus lobby. "I explained this to John and he told me that this is a hot issue because the Commission and, as far as I know, also Mr Dalli personally was against the tobacco in general. Until that moment I did not know anything about snus, this was a completely new issue for me," Zammit told OLAF during his first interview of 4 July 2012.

"The meeting was rather short, it lasted about 15 minutes," Dalli told OLAF. "[Hammargren] passed on to me some Pricewaterhouse reports on the issue of illegal trade of tobacco. We did not do any negotiation or discussion. The meeting was just between me and him. The role of Silvio was just to ask me in advance to meet this person. I am as accessible as possible to people."

On their way back from Gozo, Hammargren thanked Zammit - from then onwards, the snus network would widen.

Dreaming of becoming a millionaire

In October 2011, over a year after the Gozo meeting, Zammit emailed Hammargen on his ESTOC address to tell him that he would be coming up to Sweden with a friend of his, Mario Mercieca. Instead, he received a phone call from ESTOC secretary-general Inge Delfosse suggesting that they meet. "I did not know her until then, she was told by Mr Hammargren to meet me," Zammit said.

So Zammit was met for lunch by Inge Delfosse, and Swedish Match's spokesperson Rupini Bergstrom on 21 October 2011. At lunch in Stockholm, the three talked about snus and of course, about Zammit's connection with Dalli, which Hammargren must have surely mentioned to Delfosse.

"She mentioned Johan Gabrielsson and a lawyer in Malta who I knew worked at the Maltese gaming authority, Dr Gayle Kimberley," Zammit said. It seemed fortuitous: Zammit was a close friend of Iosif Galea, the gaming authority's compliance manager, with whom Kimberley was having an affair (as Galea himself would later tell Maltese police investigators).

And here, the destinies of Zammit the businessman, and Gayle Kimberley collide.

During this lunch, Zammit calls Iosif Galea, telling him that Kimberley had been mentioned during his meeting with Delfosse and Rupini. Galea is at the LGA offices when he receives that call, because he tells co-worker Kimberley there and then.

Informed of the lunch, Swedish Match public affairs director Johann Gabrielsson got in touch with Kimberley. He had known her since 2005, when Kimberley worked with his wife at the legal services of the EU Council. In 2009, Kimberley left Brussels to take maternal leave and take up a job as a lawyer for the Lotteries and Gaming Authority in Malta.

As Gabrielsson described it to OLAF: "Knowing that she was working in Malta I thought it was a good opportunity to contact her... to find ways to reach Dalli and send him information relevant for the snus issue. I called her... and she was surprised by my call. She did not make a link with the telephone conversation she had had with Zammit in the presence of Delfosse" - a reference to the call Zammit must have made to Iosif Galea during the lunch meeting.

The two friends discussed the ban on snus, which is only retailed in Sweden under derogation from an EU-wide ban. Swedish Match wanted the ban to be lifted, and John Dalli - commissioner for health and consumer affairs - was pursuing a revision of the Tobacco Products Directive, and was apparently intent on keeping the snus ban. Not only Swedish Match wanted the ban lifted. Its American partners Philip Morris, who sell snus in the USA and the rest of the world, were also at loggerheads with Dalli over the EU's intention to increase the size of health warnings on cigarette packets.

Kimberley mentioned that she knew Dalli, who happened to be an acquaintance of her mother's partner, and that she was also aware of who Silvio Zammit was.

In the meantime, Zammit had returned to Malta from Sweden dreaming that he "could become a millionaire" if he could help the company get the ban lifted. As a photo of the Swedish threesome shows, included in the OLAF report, Delfosse and Bergstrom gifted Zammit with a few boxes of snus. In Malta, Zammit started with his online purchases of snus, which he then sold to the community of Scandinavians employed in the e-gaming businesses headquartered in Sliema.

Soon enough, Zammit spoke to Delfosse on the phone, putting himself at her service. "I did not mention the price, just said there will be six zeroes. I was ready to work hard but then I did not know exactly what they wanted...

"When I spoke with Gayle Kimberley to help me out with this I was a little bit confused. I did not know whether ESTOC and Swedish Match were linked. So we decided that Gayle was going to represent Swedish Match, and Inge Delfosse... was to continue speaking with me."

On 17 November 2011, Kimberley emailed Gabrielsson a proposal: €5,000 for services provided by You Rock Ltd, Matthew Kimberley's consultancy firm, namely to draw up a presentation that would be given to Dalli in a meeting.

The pair met in Malta on 11 December. "It was understood by both Gayle and myself that Silvio Zammit was one of the options to arrive to the Commissioner, because he was a person which had shown personal interest in the matter as a business opportunity for him," Gabrielsson said.

The 'Meeting with Commissioner' note

On familiar terms with Dalli, Zammit organised the meeting by calling him up on his mobile phone. Kimberley met Dalli, with Silvio Zammit, on 6 January 2012, at Dalli's Portomaso office in St Julian's.

"Silvio just sat there and listened. He was a pure spectator. I don't think he is an expert on the subject," Dalli said of the 20-minute meeting with Kimberley.

"I repeated the present Commission position on the ban of snus which is not in favour of lifting the ban because there is a decision of the Court of Justice which we do not intend to reverse... she did not react to my statements."

Later that day, Kimberley sent a positive report to Gabrielsson. "You will be glad to hear he has an open mind and is no way pre-conditioned... He did agree to look at the info he was given; he did not say he would reverse the situation or do a U-turn [...]

"I think if any Commissioner has what it takes to lift the ban it's this one. He did cite his decision on GMOs to demonstrate how ready he is to take unpopular but science-based and founded decisions...

"I liked his directness and his to-the-point manner. He has no moral, personal or strong opinions on the subject. I believe he is ready to take any decision so long as he has the backing for it. What the final carrot to tip the balance one way will be is too soon to say but so far so good. I think we should work towards the February meeting and ensuring SM participate in the meeting not other snus producers...

"... by no means did he give me any assurance of lifting the ban but his openness to listen and willingness to take any decision he deems necessary based on facts is very welcome."

A second meeting for 4 February was postponed, while Kimberley could not attend a second meeting on 10 February. Instead she prepared a note for Zammit with points he should ask Dalli: in the 'Meeting with Commissioner' note, which Kimberley gave to Zammit, the following notes were typed out -

-              'Give him very short bedside reading (3 documents);

-              'Ask him to nominate someone in his Cabinet who should contact Gayle directly for anything he/she or the Commissioner needs which is snus-related (information, documentation, argument etc) and how Gayle could have direct access to (to feed information etc)

-              'Who are Dalli's "friends" in the Commission (which other Commissioners); who is he relying on, and in general what countries does he have a good relation with?

-              'SM = €500 mio, 50% of which is annual profit

-              'How does he intend to proceed re the snus ban and what does he need?'

Kimberley claimed that Zammit returned with the answers hand-written on the same paper she gave him, probably jotted down by Silvio. On the third point, there was written 'France ??', an 'S' or '5' next to the fourth point, and finally 'suggest to NO BAN. Ready to Meet Chief Executive' below the fifth.

10 February meeting

In the meantime, Kimberley gave Gabrielsson the impression that she had met Dalli again that same day on 10 February. "She sounded a little agitated and upset. She told me that we should meet. I asked her if there was good or bad news and she replied that it was up to me to judge it. She asked who in Swedish Match was able to make a financial commitment. I replied that it was important to understand [what] the issue at stake was and that we would have clarified it during the meeting we were going to have."

But there was nothing at this point to suggest that the 10 February meeting with Kimberley had never happened. Dalli himself told OLAF he did meet Zammit that day - the feast of St Paul in Malta - but claimed it had nothing to do with the snus issue, and that it was about Zammit having been accepted as a PN candidate for the local council elections.

Overhearing his telephone conversation with Kimberley in their Brussels office, vice-president Patrik Hildingsson - chairman of ESTOC - noted Gabrielsson's concern. "He said something had gone very wrong in Malta, but Kimberley can't tell [him] about it on the phone."

Gabrielsson flew to Malta alone on 12 February, and met Kimberley at lunchtime on 13 February to meet Silvio Zammit at his Sliema pizzeria. "He was not present but Kimberley told me he would have come later, when the two of us would have spoken."

Here Kimberley told Gabrielsson of the 10 February meeting, saying that Dalli appeared very well informed about the snus debacle, that he "understood the absurdity of having the list of tobacco products excluded from the internal market; that he was aware of all the positive health effects that snus had in Sweden; that he had sufficient support within the Commission to defend this point."

Gabrielsson says that at this point Kimberley added that - it was either Dalli or Zammit who said it - lifting the ban would have a big negative effect on Dalli's political career "and that it would be costly."

"Then Kimberly added that Dalli left the meeting and once again, I don't know if it was Dalli or Zammit who told [her] that no further contacts would have occurred between Dalli and Kimberley, and [that] all future contact on the issue would have been maintained between Zammit and Kimberley. After another conversation I had with Kimberley, my impression is that it was Dalli himself who passed this instruction to Kimberley to never contact him and again always pass through Zammit."

Kimberley then told Gabrielsson, referring to Dalli: "He wants money", without mentioning any figure but adding that it was a lot.

At this point Zammit arrived, carrying with him the papers that Swedish Match had sent Kimberly on the science of snus, and repeated the same things that Kimberley had just told Gabrielsson. As the conversation unfolded, Zammit demonstrated his own knowledge of both Swedish Match's financial situation and of the potential enormous profit it stood to gain from lifting the snus ban.

"Zammit said the operation would have a cost. At that stage he said the amount to be paid to Dalli was €60 million," Gabrielsson said of Zammit, who jokingly offered him his heart medication. "My reaction was to tell him 'how would he imagine that a publicly-listed company makes €60 million disappear'. His reply was that 'if there is a will, there is a way'."

Swedish Match refuse to pay

Back at his hotel, Gabrielsson informed an "astonished" Patrick Hildingsson of what had happened. Later that day, he dined with Gayle and Matthew Kimberley. "I expressed my astonishment [at the request] and I insisted on my opinion that this would never be accepted. Kimberley's husband followed the conversation with certain amusement and found that the situation was exciting."

Kimberley claimed she was embarrassed: "When he asked me for Silvio's credentials I did not have any idea that he would ask for money. Johann asked me if I thought that this was money to go to the Commissioner."

Contrary to Gayle Kimberley's statement to OLAF, at no point at this dinner did Gabrielsson suggest that she should put her services to British-American Tobacco - a curious statement that would later cement the perception of the intense relationship between the Kimberley couple and Silvio Zammit.

Gabrielsson returned to Brussels on 14 February to meet Frederik Peyron, Swedish Match's general counsel in charge of corporate compliance, who had been informed of the situation by Hildingsson. "It was very clear from the very beginning that none of us even considered paying the amount requested," Hildingsson told OLAF.

"We had a discussion or rather a concern that we would be penalised for not paying. Even a concern of reporting this without any clear evidence of Dalli's involvement (word against word) came up. We decided to inform the Swedish government since we also felt that this was a Swedish issue beyond just a Swedish corporation."

Gabrielsson was instructed to cease contact and on 21 February he told Kimberley that Swedish Match would not pay. "Her reaction was that she would inform Zammit about that. She said 'I had already told Zammit before the meeting that they will never accept that'."

In the meantime, Dalli was finalising the revised tobacco laws: meeting tobacco lobbies and health NGOs on the 7 March, and carrying out an impact assessment of the law, which included the ban on snus, planned for the 21 March.

When, towards 29 March, the EC's health directorate (Sanco) was preparing to uphold the snus ban, Gabrielsson contacted Kimberley asking her if the development was linked to the refusal of the bribe. "She said that she did not have any contact with Zammit after she informed him about our position" - a claim that would eventually be disproved by OLAF's analysis of telephone exchanges between the two.

In a later interview with OLAF on 19 September, Gabrielsson would learn that Kimberley had not been present for the 10 February meeting - ostensibly the meeting in which Dalli or Zammit would have floated the money request. It was here that Gabrielsson learnt that Kimberley had lied to him about the meeting, as he would later tell Green MEP José Bové: "It was only during the long investigations with OLAF that [it turned out] that Gayle was not in the second meeting... [OLAF] had clearly already revealed this in investigations," Gabrielsson told Bové.

In fact, OLAF's transcript of the interview - which paraphrases Gabrielsson - suggests that the investigators asked him whether he felt Kimberley was in on the €60 million bribe. "She acted like a middleman. She never expressed that she did not want to participate in the meeting and she never said that she did not want the meeting to take place. On the other hand I did not have the impression that she was part of the offer or deal."

Kimberley claimed she was embarrassed with Zammit's indecent proposal, she was still in constant contact with Silvio Zammit, even after Gabrielsson instructed her that Swedish Match would not pay. Ten SMSes and two telephone calls took place between Kimberley and Zammit between 7 March and 8 March 2012. Throughout the period of March, an exchange of calls took place between Zammit and Kimberley, and also between Zammit and Dalli

Although Kimberley told OLAF that Zammit "pestered her" after his offer was turned down by Swedish Match, telephone records show that she was contacting Zammit regularly and relying on his assistance for various matters. OLAF deemed that her claims that she was not in contact with Zammit, were contradicted by the constant exchange of phone calls - 40 telephone calls and 110 SMSes between 13 February 2012 and 5 July 2012.

 Sometime in mid-March, much to the surprise of Swedish Match officials, Silvio Zammit emailed ESTOC with a similar replica of Kimberley's proposal that she had sent back in November 2011. Gabrielsson had told Kimberley that Zammit was trying to make the same deal with Inge Delfosse by using her consultancy proposal and present it as a package for his services. "I told Johann that I was not part of this and that I have never had any discussions with Silvio about this. I never had any further contacts with Silvio on the snus issue," she claimed.

When on 7 September, she was again interviewed at the IAID offices in Valletta by Giovanni Kessler, this time accompanied by her lawyer Gianella de Marco, Kimberley said that t it was her husband who had sent the proposal to Zammit, ostensibly to be forwarded to BAT.

Gabrielsson would later deny having talked about BAT during his dinner with the Kimberley couple.

The 29 March telephone call

OLAF investigators believed that the recorded conversation refers to talk about John Dalli, considering that on 16 March Delfosse asked Zammit how much would he charge to organise an "informal meeting with Dalli in Brussels".

OLAF also sets store in the fact that in the phone call, Delfosse mentions "John" twice; Zammit mentions "high level meetings" and reference to his "boss"; Zammit refers to both himself and someone else by saying "tell us where you want to do it"; Zammit states that "when you have a high person who works in favour of it, he's risking"; and on the payment request, Zammit says that "this is the price he's asking".

Zammit would later tell OLAF that he was acting on his own.

After finishing this telephone call, Zammit spoke to Gayle Kimberley for more than 25 minutes in a call made at 3:34pm. Later at 5:10pm, Dalli called Zammit twice in calls lasting 15 and 26 seconds.

With the recording of the Zammit conversation of 29 March, where he requested €10 million with a view to lift the snus ban, Swedish Match's general counsel Frederik Peyron decided to inform Clifford Chance lobbyist Michel Petite - formerly head of legal services of the European Council - who on his part informed the European Commission's secretary-general Catherine Day.

On 21 May, Swedish Match officially filed a complaint with Day, and the case was taken to OLAF on 25 May.

Portugal interview

Kimberley was on official business for the LGA in Troia, in Portugal, on 14 June when Giovanni Kessler informed her of the OLAF investigation and carried out an interview between 10:15am and 4:31pm.

Also in Portugal was co-worker Iosif Galea, Zammit's friend, who immediately after learning of the OLAF investigation contacted Zammit on the matter.

In her claims to OLAF, Kimberley said that Zammit had told her that Dalli was interested in knowing what savings in health care could be made by lifting the ban; and that he could face down any criticism.

But Zammit also wanted to be paid, according to Kimberley, hoping that he would get exclusive rights to sell snus in the rest of Europe, and then that lifting the ban was a risk for Dalli's political career.

"Silvio told me that if I wanted, he could try and push for the lifting of the ban. Silvio was telling me things that were obviously coming from the Commissioner. Silvio did not know anything about the subject... I knew that they technical things were coming from the Commissioner or maybe Inge, and not from Silvio. Silvio was not the kind of person to be able to know these things and details."

On the 10 February meeting - which OLAF would later find out did not include Kimberley - the lawyer claimed that she had been asked to leave the room after receiving the answers to the questions of Swedish Match from Dalli. "I told Johann that the Commissioner nominated for contacts with him only Silvio. I said to Johan that Silvio had now said that the matter is no longer a cause and that there was a price for pushing further. I made it clear to him that I was out of this and that he should deal directly with Silvio from now on. I was very upset and annoyed with Silvio to be put in such position."

Zammit interviewed by OLAF

In his second interview with OLAF - held the day after his first interview - Silvio Zammit was forthright in admitting that his emails to Inge Delfosse in mid-March, referred to cash payments even though he denied mentioning John Dalli in his conversation with Johann Gabrielsson.

"I told Inge on several occasions that if I would have got my payment I would have also repaid her and all of them. That is why the amount is so big, because it is not all for me...."

But Zammit was cagey when faced with Gabrielsson's statement that he had asked Swedish Match for €60 million to be paid to Dalli.

"My answer is 'ha-ha-ha'," Zammit said.

OLAF director Giovanni Kessler, who conducted the interview at the offices of the Internal Audit and Investigations Department in Valletta, face Zammit with the fact that he asked for €10 million during a 29 March telephone call to Delfosse, to broker a meeting with Dali.

"When I asked Inge for the money I insisted that I always ask her for my services only and not for what you are stating..."

Kessler asked him: could you tell who is your boss that you are referring to in this telephone conversation?

"God."

Kessler: Did you ask for money on behalf of Commissioner Dalli as it appears in the telephone conversation of 29 March 2012?

"No, this is not true and I did not do it even in this telephone conversation. I never mentioned the Commissioner.... OLAF is manipulating the conversation, the documentation and the evidence at their hands."

Dalli interviewed by OLAF

OLAF's investigations, and their records of the telephone exchanges, also suggest that Zammit may have kept Dalli informed of what had happened - even though Dalli always claimed that he became only aware of the OLAF investigation when he was invited for the first interview of 16 July.

After his first interview with OLAF, Dalli wrote back to the office on 24 July 2012, clarifying his answers and informing the office that he had spoke with Silvio Zammit on the matter "to understand what was happening". In a subsequent interview with OLAF on 17 September, Dalli claimed he had never been informed of OLAF's investigation before the first interview of 16 July - even though OLAF faced him with records showing that Zammit spoke to him twice on the phone, on 17 and 18 June, the day after Zammit had learnt that Gayle Kimberly had been questioned by Giovanni Kessler in Portugal.

Instead he recalled a 6 July phone call he made to Zammit, lasting 15 minutes. "I recall this telephone call because at that time I was at a dinner in Cyprus. I must have been returning a phone call. The conversation was about a serious health issue of a common friend of ours, in fact a very sad issue."

At this point, OLAF faced him with the fact that Zammit had only been interviewed on 4 and 5 July, and that it seemed "rather unlikely that during such conversation Zammit would not have referred to his interview that took place the previous day."

Dalli stood his ground, claiming that Zammit may have been trying to check "whether I knew that such investigation was taking place".

He also told OLAF that in August 2012, he sent a letter through his lawyer to Silvio Zammit, warning him not to compromise his standing.

Dalli also denied discussing snus with Zammit on 16 March in a two-minute conversation they had at 4pm, the same day that Zammit had spoken to Inge Delfosse for 18 minutes, on a possible meeting with Dalli. He adds he does not remember the content of his conversation with Zammit on 29 March, which took place between two crucial phone calls: first at 2:45pm where ESTOC asked Zammit whether it would be possible to meet Dalli, and then before 4pm when Zammit said that the meeting would come at a price.

Instead Dalli claimed that Zammit had told him that "he was being pushed by ESTOC and Swedish Match, offering him money to meet with me. In fact he told me that there was another off of money on the 3 or 4 July. He insisted that he never mentioned my name and that he had told the snus people in writing that he has been offering his services on his own behalf."