Keith Schembri at PAC: ‘I do not remember if I instructed Nexia to open Panama company’

Keith Schembri faced yet another grilling of sorts inside the parliamentary public accounts committee on Tuesday, his second appearance. Facing a formidable inquisitor, the PAC chair Darren Carabott, Schembri resumed his combative stance: at times rueing the way the press dealt with him or his medical episodes, at times obfuscating on his secret Panama offshore business, and at times claiming he had forgotten episodes from the early years of Labour’s administration.

While Carabott was expected to keep questioning Schembri – who appeared in the PAC with lawyers Edward Gatt and Mark Vassallo by his side – on the Electrogas contract for the LNG gas plant at Delimara, it was Nexia BT and his offshore Panama company that were the focus for the committee hearing.

Specifically, Schembri was adamant in disassociating himself from the actions of Nexia BT on his offshore interests, claiming responsibility only insofar as having wanted an offshore trust – in New Zealand.

[WATCH] Keith Schembri on Panama: Mizzi thought I had the Midas touch, PAC is told

Schembri, he told the PAC, requested his longtime auditors Nexia for an offshore trust in New Zealand. That happened in 2015, he said. But he did not request an offshore company in Panama.

“Nexia BT told me soon after that a Commonwealth trust needed a corresponding company,” Schembri said, but claimed it was Nexia which proceeded – allegedly without his consent – to pick shelf companies it had already acquired, one of these was Tillgate, and ostensibly, connect it in, again allegedly, unauthorised correspondence with Yorgen Fenech’s 17 Black, another secret offshore company in Dubai.

It was a small game, that Schembri tried to play as far as it would take him.

Schembri denied having requested Nexia to open a Panama company for him. “It had already been acquired by Nexia before,” he said, and was then allocated to his request for a New Zealand trust.

He denied any connection to Nexia emails authored by partner Karl Cini in his search for a corresponding bank account for Tillgate, or former energy minister Konrad Mizzi’s Hearnville, even though they included Schembri’s diplomatic passport. The reason? “The passport was kept by Nexia on file, but I did not authorise that email,” he claimed.

He even said that emails from Nexia tying 17 Black and Macbridge as ‘target clients’ of his own Panama company, again were authored without his consent, but that he had supplied a list of some 10 companies to Nexia to use... those company names happened to be selected by Nexia.

“When we opened the Panama companies, we were told we needed to declare ‘x’ amount of money as revenue for the business,” he said about the alleged $2 million his business prospects – one of them was a Bangladeshi recycling venture he is actively pursuing today – that Nexia cited in its search for a bank for Tillgate. But Schembri again said, the amount was not provided by him.

Schembri claimed he was then planning his exit from politics, saying the New Zealand/Panama plan laid the foundations for his future business. But, a planned exit in 2016 was prevented due to the Panama scandal, and then he said three other resignations were refused by his boss, disgraced prime minister Joseph Muscat. “I gave my resignation four times… I planned to leave in 2016, but then I had to stay on, and the same happened in 2017 right up to 2019.”

They were explanations he never gave back in April 2016 when the Panama Papers made global news. Back then all he offered were denials right up to the point where he could no longer deny documented proof.

On the third, mysterious offshore company cited in Nexia emails – Egrant, the company Muscat denied was his with a full-blown magisterial inquiry – Schembri was even more categorical. “It never belonged to anyone,” he said.

When attention turned to Yorgen Fenech’s 17 Black, exasperatedly Schembri tried to take the focus of the questions elsewhere. “I have been unable, for three years now, unable to access a bank account, credit card, or effect a bank transfer…”

It was 17 Black, a company owned by Fenech, that was found to be connected to a Chinese national through offshore company Macbridge, as well as other Azeri-owned offshore companies, and then the Panama companies of Schembri and energy minister Konrad Mizzi, that sealed the theory of a secret slush fund from the €200 million Electrogas plant, which Fenech was a shareholder in.

“It hurts me that you publish these affairs,” Schembri protested with Graham Bencini, a Nationalist MP whose profession is in the financial services world, who showed him emails form the Panama Papers trove. Schembri was referring to Daphne Caruana Galizia. “This person once said that I was about to die... and published my medical records,” – a reference to Caruana Galizia’s post on Schembri’s eye tumour and his subsequent hospitalisation in the United States, a slight that Schembri has been unable to put to rest.

When pushed to give clear replies, Schembri tried hard to confuse – there were enough dates, countries, and names to put up a smokescreen – but when pressed he had to row back on certain claims. On supplying Nexia his own diplomatic passport, naturally enough post-2013, he conceded it must have been him who supplied it when originally he denied it; and while he confirmed asking Nexia to open his trust, he insists he did not authorise it to open a Panama copany. “That’s all,” he insisted. “No, I did not authorise the opening of companies in Panama. The trust in New Zealand has got nothing to do with 17 Black.”

And yet, he seemed at ease not having protested at the time with this allegedly, unauthorised action by Nexia. “I was told later by Nexia that I needed a company for the trust,” refusing to explain why he did not complain at his auditors’ apparent zeal in opening a Panama company and related bank account. “The plan was to close the Panama company a year after, once it allowed me to open the trust.”

And when Schembri he was asked three times by Carabott whether he authorised the opening of a related company to the New Zealand trust, not necessarily in Panama, he told him: “You are playing with my memory.”

Nothing wrong in seeking business

His only regret, Schembri told MPs mirthfully, was having stayed in politics, but defended his business acumen in seeking out a future for himself beyond his role as chief of staff to Muscat.

He said he saw nothing wrong that Konrad Mizzi too was planning his own future, making hay with contacts he made while in politics for later gains. “I saw nothing wrong with that… many people asked me similar questions on this kind of planning. Don’t they ever come to ask you that?” Schembri asks Carabott, to which the PAC chairman replied. “No. But you are the one answering the questions here, not me.”

Indeed, when asked whether it was acceptable to him that a sitting minister seeks out additional business income while in office, Schembri said he had no opinion on the matter. “When you are born with a business mind, you are always thinking terms of business.”

15:57 The PAC sitting is adjourned for Tuesday at 25 April. Matthew Vella

15:56 “The fact that you and the prime minister at the time knew that a principal contractor in Electrogas, had the intention of absconding from the country… was that not a reason to convene the Cabinet to take ulterior action?” “There was no chance. Impossible,” Schembri says. “Nothing would have changed in Electrogas,” he says. Matthew Vella

15:55 Carabott turns to the exchanges between Yorgen Fenech and Schembri on the eve of the arrest of Fenech. Matthew Vella

15:51 Schembri refuses to answer whether he stayed in contact with Yorgen Fenech after he learnt he was a suspect in the Caruana Galizia assassination. Matthew Vella

15:47 Schembri denies calling Abdilla on the phone to stop him from questioning Yorgen Fenech on 17 Black. He denies a claim by former deputy police commissioner Silvio Valletta that he did this – “not on Electrogas”, says Schembri. Valletta had told the Caruana Galizia public inquiry that Schembri had called him up, paraphrasing the call as Schembri saying “are you going to question Fenech simply on a newspaper report?” – Schembri denies it. Matthew Vella

15:45 Schembri says Abdilla never asked him whether there was a connection between 17 Black, Electrogas and his Panama company. Matthew Vella

15:44 Carabott asks Schembri whether he ever met the then-head of the police economic crimes unit, Ian Abdilla. “Maybe once or twice.” Matthew Vella

15:38 Schembri chooses “not to say anything” on what action the Labour administration took with respect to Fenech’s position as shareholder in the LNG plant, when they learnt he was a suspect in the assassination. Matthew Vella

15:37 Carabott turns to Schembri’s knowledge of Yorgen Fenech as a potential suspect in the Caruana Galizia assassination. Matthew Vella

15:35 And now he says he did not authorise specifically that Macbridge and 17 Black be identified as target clients to the Panama companies… “I gave them a list of company names and they chose those company names.” Matthew Vella

15:33 When Schembri is asked whether he authorised the opening of a related company to the New Zealand trust, not necessarily in Panama, he tells Carabott: “You are playing with my memory.” Matthew Vella

15:31 Schembri says the plan was to close the Panama company after a year, once it allowed the establishment of the New Zealand trust. Matthew Vella

15:29 Schembri says that it was in 2015 – not 2013 - that he learnt that, after opening a New Zealand trust, he was told by Nexia that he needed an offshore company; he says he did not authorise the opening of the Panama company. So did he not contest his own auditors’ alleged non-consensual decision to open a Panama company? Here Schembri tries to obfuscate the nature of his “non-consent” to Nexia to open the Panama company. “I stopped at that point…” Matthew Vella

15:21 Now Schembri says “I do not remember if I instructed Nexia to open a Panama company for me.” Matthew Vella

15:18 Schembri claims he did not give any consent to Nexia BT to open any offshore companies in Panama. He specifies that he gave Nexia authority to open an offshore trust in New Zealand. “That’s all,” he insists. “No, I did not authorise the opening of companies in Panama. The trust in New Zealand has got nothing to do with 17 Black.” Matthew Vella

15:17 Schembri first said he did not supply Nexia with a scan of his diplomatic passport; now he says, “it must have been me”, referring to previous occasions. Nexia, therefore, kept his passport on file, he suggests. Matthew Vella

15:15 Graham Bencini – on 8 May, 2017, Daphne Caruana Galizia makes a reference to an email leaked in the Panama Papers, with Mossack Fonseca copied in, for the opening of bank accounts for Hearnville and Tillgate, with Schembri’s diplomatic passport attached to the email. Schembri plays his medical card. “It hurts me that you publish these affairs… a person who said once that I was about to die, who published my medical records” – a reference to Caruana Galizia’s post on Schembri’s eye tumour. Matthew Vella

15:11 Schembri denies giving Karl Cini of Nexia any instructions on the revenue projections for his business, which were used by Cini to source bank accounts for his Panama company. Matthew Vella

15:08 This is quite surreal... but at least 10 minutes have been spent to discuss the authenticity of the documentation published by the Panama Papers. Matthew Vella

15:08 Schembri’s lawyer says: “If he is not part of this documentation… this is not the small claims tribunal, so if you are quoting this document, you need to ascertain its authenticity… I am asking for the source, and all you say is public domain.” Matthew Vella

15:06 Even government whip Andy Ellul now is claiming the government side should have had access to the documents presented by the Opposition, and plays the ‘authenticity’ claim on the Passport Papers documentation. Matthew Vella

15:05 Schembri claims he has not seen the documentation published in the press on the Panama Papers. Bencini cites an email from Karl Cini of Nexia, to Mossack Fonseca, dated 20 August, 2015, where Cini attaches Schembri’s diplomatic passport: does he recognise the email… here Schembri’s lawyers contest whether their client should answer on a purported document that has not been authored by him. Matthew Vella

15:01 Schembri now denies any association with the Nexia BT email that says Tillgate and Hearnville were expecting revenues of $2 million from prospective business. Matthew Vella

15:00 Schembri now says that 17 Black could have been a target client of his Panama company. Exasperated, he turns to Bencini once again, and says: “I have been unable, for three years now, unable to access a bank account, credit card, or effect a bank transfer…” Matthew Vella

14:57 At this point, Schembri also turns to Nationalist MP Graham Bencini, who says that he knows how offshore business works. Bencini says he is not the owner of an offshore company, nor does he advise on unethical usage of offshore business. “What I am saying is that anyone in this business always has some four companies lined up for clients.” Matthew Vella

14:56 Schembri now says the mysterious third offshore company Egrant “never belonged to anyone”. Matthew Vella

14:56 Carabott says the emails show Nexia BT citing a prospected $2 million in revenue that the offshore companies would be receiving or generating. Schembri says the context was a post-political exit which he had planned for 2016 – such as a recycling business in Bangladesh, which he says is happening now. “I gave my resignation four times… I planned to leave in 2016, but then I had to stay on, and the same happened in 2017 right up to 2019.” Matthew Vella

14:54 Carabott displays documentation from the Panama Papers, but Edward Gatt is contesting the substance or admissibility of the emails, which were published in newspapers. Matthew Vella

14:50 Schembri: “When we opened the Panama companies, we were told we needed to declare ‘x’ amount of money as revenue for the business…” Matthew Vella

14:47 Attention is turned to the connection between Yorgen Fenech’s secret company 17 Black in Dubai and its connection to Panama companies Tillgate and Hearnville. Schembri claims this claim was not authored by himself, and that he says he is unaware of this alleged connection. The claim was made in correspondence from Nexia BT auditors opening the Panama companies. Matthew Vella

14:46 Schembri says his only regret was that he stayed on in politics. Matthew Vella

14:41 Schembri says: “The kitchen Cabinet does not exist.” Matthew Vella

14:41 Schembri says Joseph Muscat would create specialised groups in the run-up to the Budget, starting from salaries and social services, to bring in experts to consult on the issues, and create ways of generating revenue to finance them. He says the OPM was not involved in creating a ‘kitchen Cabinet’ on the LNG power plant. Schembri says former finance minister Edward Scicluna’s claim that he was not involved in the planning or decisions concerning the costings of the LNG plant, were “senseless”. He was involved, Schembri says, “naturally enough and perforce, together with the permanent secretary Alfred Camilleri. It was no kitchen Cabinet… it was the Cabinet.” Matthew Vella

14:37 Schembri says Nexia BT had already acquired shell companies from Panama brokers Mossack Fonseca, and that these were later utilised for their own personal services. The companies in question are Hearnville and Tillgate, used by Schembri and Mizzi respectively. Matthew Vella

14:36 Schembri refuses to answer a question as to whether it is acceptable that a sitting minister seeks out additional business income while in office. He says he has no opinion on the matter. Matthew Vella

14:35 “Imagine it was PwC instead of Nexia BT… would you have asked me the same question? Everybody uses PwC,” Schembri tells Carabott – this is a point he labours often to show that the ubiquity of Big Four firms like PricewaterhouseCoopers is seldom under question. He says Nexia BT also served Muscat when he was MEP. “It was obvious for me to have Nexia BT as auditors… so it was obvious to suggest to him to go to Nexia BT.” Matthew Vella

14:32 Keith Schembri declares that he never did anything behind the prime minister’s back, he replies to Carabott’s question. But – he then says – he had not reason to inform Joseph Muscat that he had forwarded Mizzi to his auditors Nexia BT, over his decision to open an offshore trust. Matthew Vella

14:31 “I saw nothing wrong with that… many people asked me similar questions. Don’t they ever come to ask you that?” Schembri asks Carabott, to which the PAC chairman replies. “No. But you are the one answering the questions here, not me.” Matthew Vella

14:30 Schembri says he saw “nothing wrong” in Mizzi’s interest in seeking out ways of carving a post-political future, as Carabott points out to him that such a comment should have been reported to the prime minister. Matthew Vella

14:28 Darren Carabott is trying to bring out something of substance from Keith Schembri out of Konrad Mizzi’s alleged comment to him that “everything he touched turned to gold”… Schembri says, he would meet Mizzi around Castille, and now jokes that Mizzi must have mentioned this claim “around 10 times”. Schembri said it was “obvious” that Mizzi wanted to build contacts throughout his political career so that he could exit politics with a business project in mind. Matthew Vella

14:25 Schembri said he was informed of the LNG gas plant details “only at the last minute”; a case in point, on the costings for the prospective LNG plant, was that he worked with Konrad Mizzi and David Galea, as well as former deputy leader Louis Grech. Matthew Vella

14:22 Carabott asks Schembri how Labour came to introduce its gas pledge in the 2013 electoral manifesto. “The two parties work differently,” Keith Schembri replies. “In Labour, the leader and Prime Minister was on top of a pyramid, and it was up to him to delegate duties or pledges for people to implement, without others knowing of such decisions. It was in this way that this electoral pledge came to be on the Labour manifesto.” Matthew Vella

14:19 The PAC is led by chairman Darren Carabott (PN). Matthew Vella

14:18 Keith Schembri has entered the PAC, with lawyers Mark Vassallo and Edward Gatt by his side. Matthew Vella

13:45 Good afternoon. The PAC is expected to start at 2pm Matthew Vella