Unravelling the 17 Black mystery

It started from a cryptic message on Daphne Caruana Galizia’s blog in February 2017 and reached a climax in April this year when Keith Schembri confirmed that 17 Black had been included in a business plan for his Panama company.

But the unanswered question was always who owned the mysterious Dubai company going by a name reminiscent from the gambling world.

The answer came last Friday in a Reuters report that named Tumas Group shareholder and CEO Yorgen Fenech as the owner of 17 Black.

Here is a breakdown of the information made available so far and a presentation of facts that have emerged since the publication of the Panama Papers in 2016.

What did Reuters uncover?

Reuters quoted unnamed sources saying that Malta’s anti-money laundering watchdog, the FIAU, had identified Yorgen Fenech from the Tumas Group as the owner of 17 Black.

The FIAU is believed to have passed on its report to the police to commence an investigation on money laundering.

But Reuters also quoted a source in the United Arab Emirates, who said account records at Noor Bank in Dubai identified Fenech as the owner of 17 Black. Reuters said it reviewed UAE banking correspondence that described Fenech as the owner and signatory of a 17 Black account at Noor Bank.

Who is Yorgen Fenech?

He is a shareholder, director and CEO of the Tumas Group. The group formed part of the Electrogas consortium that won a multi-million government concession to build and operate a gas power station, which was a key electoral pledge in 2013.

Fenech was the man from the Tumas Group who fronted the Electrogas consortium that included the Azeri company Socar and Siemens.
The gas power project was the brainchild of then Energy Minister Konrad Mizzi, who contested the election with the Labour Party for the first time in 2013.

What is the significance of the latest revelation?

17 Black had been identified as a target client of the Panama companies set up by Konrad Mizzi and Keith Schembri. This means that Mizzi’s and Schembri’s companies had to receive money from a Dubai-based firm owned by one of the shareholders in the gas power station consortium. While Reuters has not traced any fund transfers between 17 Black and the companies owned by Mizzi and Schembri, the connection on its own raises serious question marks over the intention behind the whole arrangement.

What did Yorgen Fenech say?

In the reply quoted by Reuters, Fenech did not comment on the specific allegation that he owned 17 Black. He neither confirmed nor denied owning the Dubai company.

Fenech said he and his companies “never had (or intended to have) any untoward business relation” with any politicians or politically affiliated individuals or entities. “We have always and consistently run our operations in compliant, transparent and above-board fashion,” he told Reuters.

What did Reuters discover about 17 Black?

Reuters said 17 Black was registered in Ajman, an emirate part of the UAE. The company opened an account at Noor Bank in Dubai in June 2015.

Banking correspondence from the UAE reviewed by Reuters stated that the company declared it was 100% owned by Yorgen Fenech. The correspondence also said Fenech was the account’s sole signatory.

A source in the UAE told Reuters that around €9 million to €10 million went through 17 Black’s account at Noor in 2015, after which the account became dormant. Reuters could not confirm the figures.

The source told Reuters that most of the money paid into the 17 Black account had “swiftly moved on to other entities”, while retaining a balance of about €2 million. The bank appears to have frozen the account in the absence of evidence for the business purpose of these in-out transactions.

The Maltese FIAU had traced two payments to 17 Black, one from a Seychelles-based company fronted by an Azeri national and one from the Malta agent of the gas tanker at Delimara.

READ ALSO: Konrad Mizzi and Keith Schembri must go

THE FACTS

Fact 1: Keith Schembri and Konrad Mizzi opened companies in Panama

Both men were initially outed by Daphne Caruana Galizia in February and March 2016, as having opened companies in Panama.
Caruana Galizia was ostensibly given a heads up on information that was to be made public in April that year by the International Consortium of Investigative Journalists, where her son Matthew worked.

The information known as Panama Papers came from a leaked email cache from Panamanian firm Mossack Fonseca (MF). MF’s Malta representative was financial services firm Nexia BT, owned by accountant Brian Tonna.

The Panama Papers showed that Nexia BT was authorised by Schembri and Mizzi to open companies in Panama on their behalf.
The process to acquire companies in Panama was initiated by Nexia BT shortly after the 2013 election but Schembri and Mizzi only formally acquired the companies In July 2015.

Schembri’s Panama company was called Tillgate, while Mizzi’s was called Hearnville.

Schembri and Mizzi had confirmed the acquisition of these Panama companies, whose shares were held by trusts the pair had in New Zealand.

Fact 2: The search for a bank

Email exchanges between Nexia BT and MF representatives in Panama showed that numerous attempts were made in different countries to open bank accounts for Tillgate and Hearnville.

Until December 2015, which is the latest information available from the Panama Papers, the attempts had not yet borne fruit. The biggest stumbling block appeared to be the fact that Schembri and Mizzi were politically exposed persons.

Both men have denied the companies ever held bank accounts and that they traded.

Fact 3: Companies were set up to trade and receive money

Documents included with emails exchanged between Nexia BT and MF indicate that both companies were set up to carry out international business in the fields of recycling, remote gaming, infrastructure projects, maritime and fisheries, and tourism.

Nexia estimated that the two companies would be generating $2 million within a year. But crucially, the documents also included the names of two Dubai-based companies called 17 Black and Macbridge as “target clients” for Tillgate and Hearnville. The information was contained in an email sent by Nexia BT in December 2015. The information was made public last April by the Daphne Project.

Fact 4: Keith Schembri knew about 17 Black

The name 17 Black was made public for the first time sometime in February 2017 when Daphne Caruana Galizia put up a cryptic blog depicting the words ’17 Black’ and photos of Joseph Muscat, Keith Schembri, John Dalli and Konrad Mizzi.

The next time it was mentioned was by The Malta Independent in May 2017 when it published excerpts from a leaked Financial Intelligence Analysis Unit report that indicated the company 17 Black as having received funds from the Maltese agent of the gas tanker supplying fuel to the new power station.

But in April 2018 the Daphne Project revealed the documents that showed how 17 Black was one of two target clients of Tillgate and Hearnville. Keith Schembri had released a statement in which he confirmed that 17 Black had been included as part of a business plan for his Panama company but nothing ever came of the plans. Schembri never clarified what the nature of the business with 17 Black was and who its owners were.

Fact 5: 17 Black received money

Information coming from a leaked FIAU report had revealed the existence of at least two money transfers to 17 Black. One of the transfers for $200,000 was made by Orion Engineering Group on 10 July 2015. Orion is owned by Mario Pullicino, who also acted as company secretary of the Maltese company that acted as agent for the floating gas storage tanker.

Pullicino has confirmed the money transfer to 17 Black, insisting it was to procure manpower unrelated to the gas power station project in Malta.

Another payment to 17 Black consisted of $1.5 million in November 2015 by the Seychelles-based company Mayor Trans Limited. The company, fronted by an Azeri national, transferred the money from its bank account in Latvia.

Fact 6: 17 Black was subject of FIAU investigation

The Financial Intelligence Analysis Unit has been probing 17 Black for more than a year. Excerpts of an incomplete FIAU report on Konrad Mizzi that was leaked last year had flagged the company and the money transfers it received.

Earlier this year, MEP Ana Gomes divulged part of the contents of an exchange she had with the Latvian FIU, which showed that the Maltese watchdog requested, and were provided with, information from its Latvian counterpart information on the ownership of 17 Black.

The Latvian FIU gave the details requested in February 2018. The FIAU has said it was precluded by law to divulge any information when asked to confirm whether it did pass on a report to the police for a money-laundering investigation into 17 Black.

Fact 7: Yorgen Fenech has not denied owning 17 Black

The latest revelations made by Reuters are based on multiple sources in Malta and the United Arab Emirates who spoke to the international news agency and documents pertaining to financial transactions from Noor Bank in Dubai.

The documentary evidence has not been published but significantly when Reuters spoke to the man at the centre of the allegation, Yorgen Fenech, he did not deny ownership of 17 Black.

It is inconceivable how someone who has nothing to do with 17 Black was not forthcoming with an outright denial when faced with the question.

Even if one were not to believe Reuters, Fenech’s non-reply is very telling.

Fact 8: All men have denied wrongdoing

All key players in the 17 Black saga have denied any wrongdoing. While Keith Schembri did admit that 17 Black was listed as a target client for his Panama company, he denied knowledge of the company’s ownership. Schembri has also denied any involvement in the power station deal. He has insisted he did nothing wrong.

Konrad Mizzi has also denied any wrongdoing, insisting all along that the Panama company and a New Zealand trust were set up for family purposes. He has also denied knowledge of 17 Black and its ownership.

Mario Pullicino of Orion Engineering, who has admitted making a $200,000 payment to 17 Black has denied any wrongdoing, insisting that the payment was unrelated to the power station project.

Likewise, Yorgen Fenech has denied any wrongdoing or link with politically exposed persons.