Attorney General Peter Grech warned the police that seizing evidence in connection with a possible Panama Papers investigation into Keith Schembri and Konrad Mizzi would be a “drastic” move, two sources have confirmed.

In a written note, dated May 16, 2016, Grech advised the police that it would be “highly intrusive” to follow through on the Financial Intelligence Analysis Unit’s suggestion to seize evidence from Nexia BT’s servers.

He said it would carry a considerably high legal risk which could be “counterproductive”.

The police, he said, were legally entitled to exercise their judgement with caution and to demand a “high level of reasonable suspicion” in deciding whether the proof available justified such a measure in view of the legal risks involved.

Grech’s advice to the police came at a time when the Panama Papers had already caused shockwaves and sparked investigations across the globe.

Data would only be seized from Nexia BT a year later, after then prime minister Joseph Muscat gave his blessing for an inquiry to begin into the Egrant allegations.

Police sought Grech’s advice after investigators received an FIAU report in April 2016, in which the anti-money laundering unit said there was a reasonable suspicion of criminal activity by the former chief of staff in the Office of the Prime Minister, a prominent minister and former Allied Newspapers Limited managing director Adrian Hillman, among others.

Nexia BT was instrumental in helping the men set up asset-concealing structures in places like Panama and the British Virgin Islands.

Grech’s memo was addressed to former Economic Crimes Unit chief Ian Abdilla and former head of criminal investigations Silvio Valletta.

The attorney general declined to comment on the specific advice when contacted by Times of Malta, though he maintained he never specifically ordered a “go-slow” on the investigation as alleged last week.

Demand a high level of reasonable suspicion

Abdilla cited the attorney general’s advice in his own memo about the investigation request that same month, emphasising Grech’s quote about Nexia BT server seizures being “highly intrusive”. A decision was taken by Abdilla and Valletta to stand down until further intelligence was provided by the FIAU.

The move was endorsed by then-acting police Commissioner Lawrence Cutajar, as all three found it unclear what the precise crime they were meant to be investigating was.

FIAU intelligence cannot be used during prosecutions, meaning the police have to start their own investigations after receiving an FIAU report, or carry out a parallel investigation on their own initiative.

Former FIAU director Manfred Galdes this year told the public inquiry into Daphne Caruana Galizia’s death that there was nothing precluding the police from carrying out their own investigations.

Abdilla, who has since been removed as the ECU’s chief, admitted during a public inquiry that basic steps like putting in a formal request for information from Panama were never taken.

Mizzi and Schembri never called in for questioning 

Without information from Panama or the Nexia BT server seizures, the police did not even have basic evidence about Mizzi’s and Schembri’s offshore structures or any verification about whether transactions had been carried out through them. The two government officials were never called in for questioning.

Investigators carried out some steps to gather basic documentation after receiving another FIAU report about a potential €100,000 passport kickback between Nexia BT’s Brian Tonna and Schembri.

By March 2017, the police had said there was no reasonable suspicion to even begin an investigation into Schembri and Mizzi.

The Panama investigation would only kick off again in 2018, after the FIAU sent the police a report about secret company 17 Black in March and Times of Malta revealed murder suspect Yorgen Fenech owned the company that November.

Abdilla claimed in the public inquiry that Valletta, his superior at the time, blocked an attempt by the economic crimes investigator to speak to Fenech after the revelations in November 2018, because the 17 Black owner was “sick”.

A request for information sent by the police to Dubai about 17 Black was never answered.

During Fenech’s interrogation in November 2019, homicide investigators were constrained to ask the murder suspect if he really owns 17 Black, as their colleagues from the Economic Crimes Unit never obtained evidence to confirm the FIAU’s intelligence and Times of Malta/ Reuters’ reports.

At the time when Grech was advising the police against the seizures, he also served as chairman to the FIAU’s board.

Grech did not respond to questions by Times of Malta if he felt he had a conflict of interest, as the advice given to the police went against what the FIAU was pushing for.

He has always maintained he was not privy to the FIAU’s ongoing investigation.

Galdes resigned in July 2016.

As part of a recent reform package, the attorney general no longer sits on the FIAU’s board.

Nexia BT’s managing partner Brian Tonna was a consultant on a “person of trust basis” with the Justice Ministry at the time, under whose responsibility the Attorney General’s office falls.

Questions put to Peter Grech 

In May 2016, you advised the police that seizing Nexia BT’s servers would be legally risky and potentially counterproductive. 

• On what basis did you formulate this advice, seeing that such seizures fall well within the police’s powers?

• Didn’t you feel you had a conflict of interest, seeing that the FIAU, whose board you chaired, was pushing for all the necessary steps to be taken to seize evidence?

• Why did you feel that the seizures would be heavy handed, when it was the only realistic avenue through which the police could gather evidence at that stage?

• Did you discuss this advice with then Justice Minister Owen Bonnici, or anybody else in political office? 

• How come you denied issuing a go-slow to the police, when the advice you gave them was ultimately used to block a serious investigation from starting?