Panama Papers | Nexia BT publishes answers to PANA committee questions

The audit firm Nexia BT, which opened the two secret Panama companies owned by minister Konrad Mizzi and the Prime Minister’s chief of staff Keith Schembri through the offices of Mossack Fonseca, have published their replies to questions by MEPs in the PANA committee.

The MEPs were in Malta on 20 February to speak to Mizzi as well as financial intermediaries involved in the Panama Papers, the international leak of Mossack Fonseca data, but Nexia’s managing partners Brian Tonna and Karl Cini refused to attend the hearing and instead sent answers in writing.

“In the interest of transparency, we are disclosing fully our replies to the questions raised by the PANA committee… we have committed ourselves to fully cooperating with the Committee, to the extent possible,” Nexia BT said in their email to the committee, citing legal obligations that prevented their appearance.

Nexia also cited client confidentiality and anti-money laundering rules that prevented it from answering certain questions. “The questions put to us reached us only after the press was able to report on what we were to be asked. While we understand that the Committee has a political role and that, as such, it must also communicate with the public, the manner of it seemed to us to be somewhat unorthodox,” Nexia said.

In their answers, Nexia did not say whether it was under any criminal investigation, insisted that a mysterious third company Egrant, acquired together with Hearnville and Tillgate, was a ready-made company available for a client to acquire and did not have an ultimate beneficial owner, and that the company was never active.

The full transcript of Q&As follows:

Are you under investigation? If yes for which reasons?

We are precluded, under the Prevention of Money Laundering Act and the Prevention of Money Laundering and Funding of Terrorism Regulations, from divulging any information relating to the existence or otherwise of any investigation. Were we to answer your question, we could be guilty of a tipping-off offence.

Are you aware that any of your clients are under investigation?

Our response to the previous question refers.

What is the relationship between Nexia BT or Brian Tonna and Mossack Fonseca Malta? Does Brian Tonna, own Mossack Fonseca Malta? Does Mr Tonna’s licensed fiduciary company hold shares in Mossack Fonseca Malta in a fiduciary capacity and/or on behalf of which ultimate beneficiaries?

See the answer to the next question.

Can you confirm that BT International Ltd, owned by Mr Tonna, is the only shareholder of Mossack Fonseca Malta Ltd?

BT international Ltd (“BT”) held all of the shares in Mossack Fonseca & Co (Malta) Ltd in its capacity as a fiduciary services company, licensed by the Malta Financial Services Authority under the Trusts and Trustees Act. Our confidentiality obligations towards clients preclude us from divulging the identity of the clients on whose behalf shares are held.

All of BT’s shares in Mossack Fonseca & Co (Malta) Ltd were transferred in April 2016.

How many suspicious transaction reportings has your company filed since 2000 until 2016. Please, specify for each individual year.

Our reply to the first question above refers.

What is the involvement of your company in the gaming industry? Could you explain your business model in this field and give key figures of your potential involvement? If you are acting as a consultant/service provider in the gaming industry, are you aware of any issue with money laundering and if yes, please specify.

Our wide spectrum of clients also includes gaming clients, which form a small percentage of our total client portfolio and to which we provide licensable services. In line with our obligations as subject persons, if we become aware of suspicious activity / transactions we would report them to the relevant authorities.

Can you confirm that Brian Tonna has a desk in the office of the prime minister? If yes, don’t you think there is a possible conflict of interest given that Mr Tonna has been in business with Mr Schembri, chief of staff of the Maltese Prime Minister?

Brian Tonna does not have a desk in the Office of the Prime Minister. We fail to see the relevance of these questions to the mandate of the PANA Committee.

Neither has he been in business with Mr Schembri, the Prime Minister’s Chief of Staff.

ABOUT EGRANT 

Why did you share the information on beneficial ownership of EGRANT by Skype while you were sharing the beneficial ownership information on the entities created for Mizzi and Schembri by e-mail? What was the precise reason for this difference in procedure?

We did not share such information by Skype or indeed any other means of communication. See our reply to the next question.

Who is the beneficial owner of EGRANT? Is the beneficial owner of EGRANT a politically exposed person?

As we have stated publicly on a number of occasions, Egrant Inc., which was purchased by Nexia BT in July 2013, is a shelf company, that is to say a ready-made company that is available for a client to acquire. It has never had, and does not currently have, any client as ultimate beneficial owner, and it has never been active. 

We have communicated this repeatedly in responding to press enquiries on the matter, including in the following instances (Nexia cites comments to MaltaToday on 19 February and comments to The Malta Independent on 11 April 2016, where they denied that the company belonged to Prime Minister Joseph Muscat).

Wee have always disclosed openly the facts surrounding the ownership of Egrant Inc. and, contrary to certain allegations being made in the press, we have never claimed professional secrecy in connection with Egrant Inc. Our replies to this same question have been, and remain, consistent and factual.

Have you shared the information on beneficial ownership of the company EGRANT with the police or any other relevant authority in Malta?

Our clarifications above in relation to Egrant as well as any interaction with the competent authorities, refer.

ABOUT MIZZI & SCHEMBRI

As a general reply to the questions below, we are precluded by law from answering any questions which relate to particular clients. Should we disclose the information being requested below to the PANA Committee, we would be in breach of our client confidentiality obligations as well as our obligations under the Prevention of Money Laundering Act and the Prevention of Money Laundering and Funding of Terrorism Regulations.

With respect to your last question on comfort letters below, as professionals and warrant holders, we are approached from time to time by our clients to provide character and professional references. We provide for clients we know well and hence have an in-depth understanding on which to base the content of these letters. We cannot divulge any specific information in this respect which relates to particular clients, for the reasons given above.

The questions referred were:

• Did the structure created for Mizzi and respectively for Schembri raise any suspicion? Please, explain for each case your reasoning why it did raise or not raise your suspicion.
• What was the economic rationale for the set up arranged for Mizzi and Schembri respectively?
• What was the rationale not to create the trusts in Malta?
• Have you conducted enhanced customer due diligence when dealing with Mizzi, Schembri and the beneficial owner of EGRANT? Please, answer on each case separately.
• Have you filed a suspicious transaction report when dealing with Mizzi, Schembri or in the case of EGRANT? Please, answer to each case separately and specify the reason in each case separately why such a suspicious transaction report was made or not made.
• Were you asked by any foreign demands, such as a mutual legal assistance request, to provide beneficial ownership information in the context of the companies created for Mizzi or Schembri or the case of EGRANT? If yes, please specify in which case and for which foreign actor.
• Was Mr. Brian Tonna aware that the prime minister, Mizzi and Schembri travelled to Baku/Azerbaijan before this fact was published? If yes, was this a reason for suspicion for a risk of illegal activities or of money laundering?
• Have you ever backdated any document related to the set-up of offshore structures for Mr Mizzi or Mr Schembri?
• Mr Mizzi’s trust in New Zealand has for objective ‘recycling and remote gaming’. Has this ever raised suspicion to Nexia BT given Mr Mizzi’s role as Minister for Energy?
• Is it a usual practice of Nexia BT to provide comfort letters for their clients to certify they are trusted person? Have you done so with Mr Mizzi and Mr Schembri? If yes, isn’t it contrary to your code of conduct to certify yourself one of your clients?