An investigation by Times of Malta reveals how the pair had already laid the groundwork to make money from the bottle recycling scheme as early as October 2014, before plans for the scheme had even been officially announced by the government.
In an e-mail to Fenech that month, Schembri’s business partner Malcolm Scerri suggested a meeting with “KS”, the initials of Keith Schembri, to discuss a way forward on the recycling scheme’s organisational structure and “tender call”.
At that stage, Fenech and Scerri had already drawn up a detailed cost-benefit analysis for running a bottle return scheme in Malta.
One month later, the government announced during the annual budget that it would be issuing a call for proposals for the operation of a bottle return recycling scheme.
When contacted, lawyers for Fenech pushed back at any suggestion that the Tumas businessman was acting on insider knowledge from the government.
The lawyers insisted that Fenech’s occupation as a businessman meant he was constantly on the lookout for potential business ventures, with waste management, a core issue in Malta, being one such potential venture.
Tumas Group’s core competence is tourism, property management and casinos. The company is not known to have any prior experience in waste management projects.
At the time of the plans, Fenech was 33.
Whatsapp messages discovered on his phone upon his arrest in November 2019 exposed how the influential businessman was good friends with both Schembri and then Prime Minister Joseph Muscat.
Fenech is facing trial for allegedly ordering the murder of journalist Daphne Carauna Galizia, a charge he denies.
Panama Papers firm Nexia BT was even roped in by Fenech and Scerri to study the profitability of the scheme, based on a 10c deposit on returnable containers paid by consumers.
Project’s Panama connection
Nexia BT is the same firm behind the setting up of a secret Panama company for Schembri to channel income from “recycling” and other sectors.
A leaked e-mail sent by Nexia BT in December 2015 revealed how Fenech’s own once-secret company 17 Black was planned to be one of the main sources of income for Schembri’s company. Both Fenech and Schembri deny having any such plans.
Schembri has in the past also denied any plans to profit from the bottle return scheme, which was championed by Muscat as a vital move to protect the environment.
However, his company Kasco was involved in the plans being drawn up.
The plans were referred to by Fenech and Scerri by the internal codename of ‘Project Petal’.
Scerri, who was Kasco Group’s CEO, acted as the local representative of Tomra, a Norwegian company specialising in reverse vending technology and waste recovery.
A few weeks after the government formally announced the plans, Scerri told Fenech and Nexia BT that Tomra would be conducting a “very important visit” to Malta.
According to the visit’s agenda, within an hour of landing in Malta on January 6, 2015, Tomra’s top brass were to be whisked away for a three-hour “visit to Kasco”.
Despite stepping down as a director of Kasco upon entering government in 2013, Schembri retained full control over the company’s shares.
Tomra’s visit to Kasco included meetings with the company’s recycling and engineering personnel, as well as a “discussion of [the] project timeline”, according to the agenda.
The following day’s agenda included a visit to Fenech’s Tumas Group and Nexia BT.
Tomra’s visit to Nexia BT included a “meeting with Brian”, who was described as an “OPM consultant” in the agenda.
Nexia BT managing partner Brian Tonna was a close friend and associate of Schembri.
The financial estimates for ‘Project Petal’ drawn up by Nexia BT projected revenues of €6.8 million in the first year alone, resulting in a €1.9 million profit once costs had been deducted.
Nexia BT estimated that the bulk of those first-year revenues, €5 million, would be from income on unredeemed vouchers for the 10c deposit paid on the bottles. The bottle return rate was then projected to gradually improve over the ensuing years.
Plans fizzled out
The plans by Fenech to profit from the scheme appeared to have been put on the back burner in the wake of the 2016 Panama Papers scandal, which outed the secret offshore holdings of Schembri and Scerri.
Both Schembri and Scerri have since been charged with money laundering in an unrelated case linked to bribery of Progress Press officials. They deny the charges.
In 2018, Schembri had played down his links with Tomra when suspicions emerged that the government tender was being tailor-made for Scerri to win.
The former OPM chief of staff was questioned by police in 2020 over suspicions of trading-in-influence with Fenech.
No further action has been taken by prosecutors against Schembri nor former minister Konrad Mizzi, who also set up a Panama company with “recycling” as one of its primary stated aims.
At the time, Mizzi was responsible for so-called public-private partnerships, handling numerous multi-million-euro government projects awarded to the private sector.
A spokesperson for Tomra said the company is regularly invited to consult with governments, NGOs, businesses and communities on every level, in different countries, to advise and share experiences about bottle return schemes, to promote and implement holistic solutions that enable the transition towards a circular economy.
The spokesperson told Times of Malta the discussion around the introduction of a deposit return system in Malta “started to accelerate” in June 2013, shortly after the country signed a UN environment programme known as the Mediterranean action plan.
“The Action Plan recommended to explore by 2017 the establishment of a deposit return system, which Malta has done. Being the global leader in the field of reverse vending systems, with decades of first-hand experience and knowledge related to deposit return systems, Tomra was at an early stage approached and consulted with multiple stakeholders in Malta,” the spokesperson said.
Schembri and Scerri did not respond to a request for comment. A lawyer for Brian Tonna said his client has no comment to make.
Replying to questions from Times of Malta, Fenech’s lawyers said any implication that their client was aware of the government’s plans to introduce a reverse recycling scheme prior to the plans being made public “is not only incorrect, but entirely malicious”.
“Assessing the feasibility and anticipating market demands of business ventures was and shall remain one of the central features of any businessman’s job.
“Undertaking a cost-benefit analysis for a potential venture which, eight years later, happened to start being implemented by the government, can in no credible way be construed as having inside information about unannounced government projects.”
The lawyers repeated that an implication that Fenech had prior knowledge about plans to introduce the scheme is “false and malicious”.
How did we get to the current scheme?
The public consultation document on the scheme, published in 2018, highlights a clear timeline of events.
In the budget for 2015, the government highlighted its intention to introduce a beverage container refund scheme.
Subsequently, at the EU ‘Our Oceans’ Conference in 2017, Malta committed to introducing a bottle return scheme, which was reflected in the 2018 budget speech. Then Prime Minister Muscat had announced that the scheme would be in place in 2019.
After years of speculation that the scheme was being eyed by Keith Schembri’s associate Malcolm Scerri, a consortium of the main bottle producers and importers pitched an alternative “not-for-profit” model that would see them run the scheme.
In 2018, the government remained non-committal, saying it was still evaluating whether to go for a concessionaire-type model such as the one that had been studied by Scerri and Fenech, or the “not-for-profit” model pitched by bottle producers.
That same year, the resource, recycling and recovery agency (RRRA) was set up by the government to see through the bottle return scheme.
The 2019 deadline set by Muscat came and went, as did the prime minister, who stepped down in the wake of the Fenech murder scandal which also took down his chief of staff.
In September 2020, the RRRA signed a licensing agreement with the current consortium of importers, producers and retailers running the scheme.
The following year was rebranded as Circular Economy Malta. The reverse recycling scheme was finally introduced earlier this month.
Friends, with benefits?
Fenech has been linked to myriad government deals mired in suspicions of corruption.
Last year, both Schembri and Konrad Mizzi were banned from travelling to the US due to their “involvement in significant corruption” linked to the 2013 Electrogas power station deal led by Fenech.
A magisterial inquiry is also probing how Fenech secretly profited, via 17 Black, off a 2014 decision by Enemalta to buy a wind farm in Montenegro.
Last month, Times of Malta revealed how Fenech was in 2018 promised €2 million in success fees for helping a Turkish bidder on the brink of bankruptcy win a tender to build a flyover in Marsa.
E-mails also indicate plans by Fenech to act as a middleman for bids on the Malta-Gozo tunnel and a planned tender to build a new ITS campus and hotel in Smart City.
Times of Malta has previously reported how Fenech was also found to be in possession of various inside information leaked from the various ministries Mizzi used to be responsible for.
Mizzi had urged the 17 Black owner to “delete Whatsapp” after Fenech lost his phone during a January 2019 trip to Miami.