Keith Schembri: What he said, the context and his denials

THE TESTIMONY

‘Yorgen was a loved person’

Keith Schembri knew Yorgen Fenech since they were children but they drifted apart and became very close again around 2010.

“I felt comfortable having him at home… Knowing him since childhood, there was chemistry. He was easy to go along with, easy to talk to,” Schembri replied in court when asked how close he was with Fenech.

This was how Schembri introduced his relationship with Tumas Group magnate Yorgen Fenech, who stands accused of masterminding the assassination of Daphne Caruana Galizia.

Schembri was testifying in the compilation of evidence against Fenech.

The former chief of staff to Joseph Muscat told the court that his companies had done some business with the Tumas Group in the past but this was “nothing big”.

Schembri also described how they used to visit each other’s homes and engage socially.

“I would sometimes visit the [Żebbuġ] ranch, other times go on his boat. Yorgen was a loved person, I would always see different people with him, from every social strata, business, politicians, and police,” Schembri testified.

At the ranch: ‘they come to eat, drink and ask for money’

‘Ranch’ was how Fenech referred to his sprawling residence in the outskirts of Żebbuġ.

Asked whether he remembered particular politicians or persons in attendance at the ranch, Schembri replied: “Business people, the best in the country etc… On one occasion, Silvio Valletta (the former deputy police commissioner) was there.”

But he also emphasised that Fenech was a highly-regarded businessperson before his involvement in the murder came to the fore.

“Before all this, Yorgen Fenech was a very highly regarded person in society. After what happened, everyone who met with him was demonised. We'd go there to eat and drink,” Schembri said.

He also described what Fenech told him about “someone in politics”, who played the virgin but went to him to eat, drink and ask for money.

Schembri then claimed that Fenech once told him that Opposition leader Adrian Delia had gone to him to ask for €50,000 to stop David Casa’s re-election.

“He [Delia] would also send the secretary general of the party to collect 20k every week. This would happen regularly. It is extortion of money,” Schembri said, referring to Pierre Portelli, the former PN head of media.

Distancing himself from the ‘klikka’

The former chief of staff to Joseph Muscat told the court that in the last year before his arrest, Fenech would go abroad a lot and contact became less frequent. He added that in 2019, Fenech spent nine months abroad but wouldn’t tell Schembri the reason why.

“Sometimes, I'd call him and he wouldn't answer… He distanced himself from us (the klikka). He might have had some health problems. Nobody had

THE CONTEXT

Labour’s reach-out, an energy working group and 2010

Keith Schembri owns the Kasco Group, which operates a diversified portfolio that ranges from the importation of paper to foods, and industrial engineering equipment.

Schembri had no known links to politics before Joseph Muscat was elected leader of the Labour Party in June 2008. He had helped Muscat in his European Parliament election campaign in 2004 but was never at the forefront.

Even after Muscat became Labour leader, Schembri was never in the limelight despite having been appointed to chair a party working group on energy.

Schembri went on to become a key player in Muscat’s strategy team and when Labour won the 2013 election, he was appointed chief of staff in the Office of the Prime Minister.

The two had been long-time friends, with people close to Muscat describing Schembri as “the brother Joseph never had”.

But Schembri’s reference to 2010 is not casual. It coincides with the period when the Labour Party was making overtures to the business community.

Muscat had been leader of the party for two years. By then he had consolidated his position within the party and effected the necessary administrative changes. The party’s organisation was transformed into a well-honed electoral and communication machine.

But Muscat wanted to reach out to different sectors of society, particularly the business community, which had been wary of the PL.

Charming the business community

Schembri played a key role, with others, in the PL’s outreach as he drew on his contacts and charm to get business players to cosy up with the relatively young Muscat.

In February of 2010, the PL set up a business forum led by Marlene Mizzi with the specific aim of reaching out to business organisations and individual business leaders.

Later that year, Muscat, in his vestiges as Opposition leader, travelled with a party delegation to China and later to Libya. On those visits, Muscat explored areas of cooperation for when his party got into government.

Schembri had accompanied Muscat on the Libya trip.

This is probably the period when Labour’s overtures to the business community drew Schembri and Fenech back together.

In this year, controversy raged over the new power station contract that was awarded to Danish firm BWSC. The Nationalist administration back then had scrapped plans to shift power generation to gas, opting instead for a plant that would continue running on heavy fuel oil.

A rejected gas plan

According to the testimony of former PN secretary general Paul Borg Olivier in the Caruana Galizia public inquiry, in 2009 the PN had received a proposal for a power station that worked on gas supplied from a storage ship.

The PN had turned down that proposal made to it by Paul Apap Bologna.

Apap Bologna had told Borg Olivier that he would rope in influential Maltese business families along with foreign investors. British firm Gasol had also been listed in a presentation given back then.

Borg Olivier testified that Apap Bologna had told him “we will do our bit if you do yours”.

The former PN secretary general told the inquiry he was troubled by that phrase. “I asked him what he meant. He replied with a cryptic smile,” Borg Olivier said.

Eventually, the gas plan presented by Apap Bologna became the PL government’s energy plan in the 2013 general election. It was fronted by Konrad Mizzi, a new candidate attracted to the PL by Muscat.

In September 2012, Mizzi had told Times of Malta in an interview that he was working on an energy plan for the PL. “We have a roadmap,” he had said.

The PL government immediately put in motion the process to issue a tender for a new gas power station and liquefied natural gas terminal soon after winning the 2013 general election, held in March.

Electrogas eventually won the contract - its shareholders were Apap Bologna, the Gasan and Tumas family groups, Gasol, Azerbaijan’s SOCAR and Germany’s Siemens.

Yorgen Fenech, who also owned personal shares in Electrogas, apart from those held by the family company, was the one appearing on all dealings between the company and government.

Apap Bologna has always denied ever approaching the Labour Party before the election with his idea despite the remarkable resemblance between the PL energy plan and the presentation rejected by the previous PN administration.

This was the climate in which the revived relationship between Schembri and Fenech was forged 10 years ago.

A business relationship called 17 Black

But the relationship took a business turn in 2015 when Schembri’s accountants included the Dubai companies 17 Black and Macbridge as target clients for his Panama company Tillgate.

Schembri’s Panama company was revealed in 2016 when journalist Daphne Caruana Galizia pre-empted the international journalistic investigation, Panama Papers, and published the information.

Schembri and Mizzi were outed for opening Panama companies and trusts in New Zealand but the link to 17 Black was not yet known.

According to testimony given by her son Matthew, Daphne had mentioned 17 Black and Macbridge to him around April 2016 but there was no information yet on the two secretive companies and she never wrote anything about them.

This changed in February 2017 when Daphne published a cryptic post, referring to 17 Black as a Dubai company that was allegedly used by Schembri, Mizzi, Joseph Muscat and John Dalli to move money.

Ownership of 17 Black was unknown until then and neither was it known that it was a target client of Schembri’s and Mizzi’s Panama companies.

Court testimony by murder middleman Melvin Theuma suggests that it was around this time that Fenech hatched the plot to murder Daphne.

A leaked report from the Financial Intelligence Analysis Unit during the 2017 election campaign indicated that 17 Black had received money from the ship agent of the gas power station’s floating storage unit.

But the news got lost in a campaign overshadowed by the Egrant allegation.

After Caruana Galizia was murdered in October 2017, her work was taken up by a consortium of international journalists and in April 2018 the information was outed that 17 Black was a target client for Schembri and Mizzi’s Panama companies.

For the first time, Schembri admitted 17 Black’s inclusion as a target client but kept denying knowledge of who it belonged to and what it does. We now know that Schembri had lied back then and not only did he know who it belonged to but had a plan for it.

It was in November 2018 that Reuters discovered that 17 Black belonged to Fenech, shedding light on the incontrovertible business link between himself, Schembri and Mizzi.

More recent revelations show that 17 Black benefitted to the tune of millions from a Montenegro wind farm project purchased by Enemalta.

Fenech was arrested last November and charged with masterminding the murder of Caruana Galizia.

The pardoned middleman has said that Fenech wanted the journalist dead because she was going to publish something about his uncle, Ray Fenech. Theuma added that he later came to understand that the damning information was about Yorgen himself and not his uncle.

Although the motive has not yet been explained in court, all fingers point towards 17 Black and the dirty business it may have been involved in.

SCHEMBRI’S DENIALS

Keith Schembri’s court testimony contrasts with that given by Melvin Theuma in several aspects. We outline some of the denials Schembri made in court in an exchange with prosecuting Inspector Keith Arnaud about claims that he promised bail to the three men accused of murdering Caruana Galizia:

Schembri: “I have no connection with things like that. I heard the recordings... at the police lockup when I was given disclosure. When you pressed Melvin Theuma as to why he mentioned Keith Schembri, he said that he wanted to needle Fenech. I never spoke to anyone about bail for anyone.”

Inspector Arnaud: “In one of the tapes, Yorgen tells Theuma that you had confirmed bail.”

Schembri: “I deny it. Bail was never mentioned.”

Schembri was also asked whether he knew of the murder plot.

Schembri: “Yorgen never told me about a crime. I found out about it when I was with Arnaud and other investigators [during security meetings with the Prime Minister after the murder took place]... Yorgen never told me that he had committed this homicide.”

On Theuma’s claim that Schembri and Fenech had engaged him to murder Caruana Galizia.

Schembri: “I categorically deny it.”

Magistrate: “So everyone who mentioned you... what do you say to this?”

Schembri: “I think my position made me the perfect target... as the government we would discuss it a lot, but I wouldn't discuss it with my wife. What I can say is that I would really go through fire for Yorgen Fenech but I never spoke to him about this case. Not even when I was getting close to him, I had to keep a straight face and pretend not to know.”

Magistrate: “So all these people are lying?”

Schembri: “I deny ever having this involvement as described by the people in this case.

On whether he knew the Degiorgios.

Schembri: “I never spoke to, or knew George Degiorgio and the other men... I don’t know Mario Degiorgio (a brother of George and Alfred, who was chasing Theuma on bail for his siblings), and never had contact with him.”