5.40pm Updated with Prime Minister's comments
Konrad Mizzi, who last year declared bank deposits totalling €389,440, had “personal revenue” amounting to €6.4 million prior to becoming a minister, according to his financial advisers.
Last November, Dr Mizzi’s local accountants and financial advisers Nexia BT sent a source of funds declaration to Mossack Fonseca saying Dr Mizzi’s money came from “personal businesses”. The declaration said he set up a practice in the UK and developed major accounts “with personal revenue amounting to GBP 5 million” (€6.4 million) prior to becoming a minister.
Leaked e-mails show that the New Zealand trust accepted the declaration.
The Panama Papers were made available to the Times of Malta through an investigative partnership with the International Consortium of Investigative Journalists and German newspaper Süddeutsche Zeitung.
E-mails show that the accounting firm which would be administering the New Zealand trust spent months questioning the source of the funds going into it and the proposed business activities of Dr Mizzi’s company in Panama due to his status as a politically exposed person. PEPs are subject to an enhanced due diligence process due to the inherent corruption risk in any financial dealings they enter into while holding public office.
An extract showing Konrad Mizzi’s “personal revenue”.In an e-mail sent by Nexia BT partner Karl Cini to Mossack Fonseca last August, Mr Cini said Dr Mizzi’s and the Prime Minister’s chief of staff Keith Schembri’s Panama companies would act as a “vehicle of [sic] extracting the profits from this venture, since from [a] commercially sensitive perspective they cannot appear as direct shareholders, either personally or via holding entities”.
The “joint venture” in question included “trade in used tyres” and “waste trading” as well as ventures in remote gaming, the e-mails show.
“I want to stress the fact that, under our legislation, PEPs are openly allowed to hold shareholdings in other businesses,” Mr Cini’s e-mail continued.
Dr Mizzi, who declared bank deposits of €389,440 in 2015, had always maintained that the New Zealand trust was set up to hold his London property and any rent coming from it.
Dr Mizzi and Mr Schembri said they would be submitting themselves to audits when news of their secretive set-ups was made public last February. Just a few months earlier, they both expressly ordered that no accounts or audits be prepared for their New Zealand trusts, the leaked documents show.
Further e-mails show that Mr Cini instructed Mossack Fonseca to transfer the two men’s Panama companies to the New Zealand trust using nominee shareholders, thus further concealing their identities. The two companies in question were bought by Nexia BT in 2013. Dr Mizzi and Mr Schembri took over ownership of the companies last summer.
Konrad Mizzi’s asset declaration in Parliament.Mr Cini first sent an e-mail to Mossack Fonseca inquiring about the possibility of setting up a New Zealand trust for an unnamed client in October 2014. Mossack Fonseca informed Mr Cini that an account for the trust could be opened through Sparkasse Bank in Malta and two other banks in Luxembourg and Switzerland.
A standard trust deed was sent to Mr Cini in December 2014, shortly before Dr Mizzi, Mr Schembri and the Prime Minister went on a visit to Azerbaijan unaccompanied by civil servants. E-mail correspondence about the trust only picked up again on May 16 “as the clients finally started to collate the information,” Mr Cini informed Mossack Fonseca.
Analysis of 800 e-mails involving Mr Cini indicate the clients in question to be Dr Mizzi and Mr Schembri. The e-mails show both men did not want to alert local banks about their secretive financial set-ups.
Dr Mizzi and Mr Schembri were turned away by a number of banks around the world that refused to take on accounts held by PEPs.
Last December, Mr Cini gave the go-ahead to Mossack Fonseca to open accounts for the two men with a Swiss bank’s subsidiary in Panama.
E-mails say the bank was willing to accept an initial deposit of $100,000 and would close the account if significantly less than $800,000 went into it throughout the year.
KONRAD MIZZI REACTION
In a reaction, minister Konrad Mizzi said Times of Malta was quoting a document which was a short biography of his work experience abroad prior to his candidacy with the Labour Party.
"Therein, it is stated that I personally generated GBP5 million in revenue, obviously for the firm I formed part of.
"Any other reading of that statement would be entirely out of context, disingenuous or plain malicious," he said.
Times of Malta this morning insisted it was quoting a document (the Source of Funds declaration) presented by Nexia BT's Karl Cini to Mossack Fonseca for the Trust set-up. The document specifically refers to GBP5 million as "personal revenue".
'I believe him' - Prime Minister
Prime Minister Joseph Muscat stood by his Minister this afternoon, saying he believed his explanation that the funds referred to money Dr Mizzi had generated for his former employer.
He insisted there was nothing odd in Dr Mizzi's claims. "There's an explanation for all this. The explanation is clear and very legitimate," he said.
Dr Muscat criticised Times of Malta for not contacting Dr Mizzi prior to running the story.