- Power station deal ‘most likely’ structured for Electrogas win
- Azerbaijani ‘money-laundering machine’ used to hide payments
- Murder suspect’s company acted as ‘payment hub’ in corrupt deals
A magisterial inquiry into Keith Schembri and Konrad Mizzi uncovered “corrupt deals” fuelled by major energy contracts and millions of euros in funds “laundered” from Azerbaijan.
The probe concluded that Schembri, the former OPM chief of staff, and Mizzi, a former energy minister, conspired to profit from government energy deals and hide their illicit gains via “money laundering structures” in Panama and the United Arab Emirates.
Investigators allege plans for the “money-laundering structures” were hatched in mid-2012, and “accelerated and became a reality” once the Labour Party returned to government in March 2013.
Financial experts concluded that the €450 million government contract to build and operate a new power station in 2013 was “most likely” awarded to the Electrogas consortium to create funds for this corrupt scheme.
The planned money flows link the ex-government officials with funds generated by Electrogas consortium members by virtue of their successful bid for the energy deal, investigators allege.
Investigators say the consortium’s Azerbaijani partner Socar Trading passed money intended for Schembri and Mizzi through a complex “Azerbaijani money-laundering machine”.
Fake invoices, art purchases
Fake invoices, loan contracts and art purchases were used to create the “illusion” of legitimate transactions and hide the origins of the money, the inquiry found. Money from the alleged money-laundering operation then found its way to 17 Black, an offshore company owned by ex-Electrogas director Yorgen Fenech.
From there, the funds were set to flow to companies in Panama secretly set up while Schembri and Mizzi were in government.
Attempts to set up bank accounts to receive money from the alleged scheme appear to have been disrupted after assassinated journalist Daphne Caruana Galizia outed the existence of Schembri and Mizzi’s Panama companies in 2016.
Without these bank accounts, the final stage of the money-laundering process, which was moving the money from 17 Black to the Panama companies, could not be completed, investigators said. Schembri, Mizzi and Fenech were all charged over the alleged scheme in February.
Ex-Electrogas director Paul Apap Bologna and businessman Mario Pullicino have also been charged, along with Nexia BT accountants Brian Tonna and Karl Cini.
All involved deny the charges.
The inquiry also recommended charges be filed against Socar Trading.
Cini confirmed to the inquiry that Schembri and Mizzi seemed to “give up” opening bank accounts for their Panama companies after the 2016 Panama Papers leak.
The Nexia BT accountant testified in the inquiry that it was the ex-government officials who told him they planned to deposit €350,000 into the bank accounts as soon as they were opened.
Cini also authored an email detailing plans for the Panama companies to receive up to €2 million yearly from Fenech’s 17 Black and another company called Macbridge.
Investigators linked Macbridge to a key player in a separate government energy deal that saw state-owned energy company Enemalta buy shares in a Montenegro wind farm.
Fenech, who stands accused of complicity in Caruana Galizia’s October 2017 assassination, is alleged to have also profited from the wind farm deal via 17 Black. The 17 Black businessman denies complicity in the murder.
To ensure a pool of funds was available to be used for corruption, investigators allege it is “most likely” that the tendering process for the power station contract was structured and evaluated to ensure Electrogas won.
This was done by appointing key individuals who enjoyed pre-existing relationships with members of the Electrogas consortium, experts who worked on the inquiry, say.
One of these key individuals was Tonna, Cini’s partner in the audit and advisory firm Nexia BT.
The inquiry describes Tonna as a “professional money-launderer”.
Tonna was appointed by Mizzi’s energy ministry as a “team leader” on selection committees that chose Electrogas as the preferred bidder to supply the state-owned energy company Enemalta electricity and LNG.
“In our opinion, it is crucial to the investigation to appreciate that Brian Tonna was a government advisor. This provided him with continuous contact with Keith Schembri, Konrad Mizzi and the Office of the Prime Minister,” the inquiry experts said.
Tonna was found to have been in communication with Fenech prior to his appointment on the selection committee.
Multiple meetings with Fenech
While scouring data seized from Nexia BT, investigators also uncovered calendar entries indicating Tonna and or Cini met with Fenech 25 times between July 2013 and December 2015.
The inquiry found the Electrogas selection process was managed in a way “that broke its own rules and did not comply with generally accepted protocols”.
These deficiencies included the failure to apply essential checks on both the financial qualifications and the general suitability of bidders that could have forced the elimination of Electrogas from the process.
Most important judgments about supplier selection and scope were made well before the process began.
“Key pieces of negative or incomplete information about Electrogas were then ignored. In our opinion, the selection process deployed therefore served only to create an illusion of fair, transparent decision making,” experts concluded.
The inquiry found suspicious dealings even after the tender was awarded.
Investigators said the lack of any audit trail detailing how commercial terms were agreed between the government and Electrogas after the tender is a “disturbing lapse in governance”.