‘Suspicious’ contract spotlighted Portelli’s 600k payments to Dalli

Over half a million euros in payments made by developer Joseph Portelli to former EU commissioner John Dalli were reported as “suspicious” to Malta’s anti-money laundering agency, documents show.

Red flags were raised by bank officials after Dalli allegedly presented the bank with what was suspected could be a “forged” contract to justify the payments he received from a company owned by Portelli.

The contract, supposedly signed in June 2017, contained references to the COVID-19 pandemic, over two years before the pandemic began.

According to the contract, Dalli was receiving payments worth €10,000 monthly for leasing a Portomaso office to Portelli’s Mercury Contracting Projects Ltd, a company involved in the development of Mercury Towers Project in St Julian’s.

Mercury Contracting Projects Ltd paid Dalli’s company Tabor Consult €637,000 between 2017 and 2022, according to financial records analysed by Times of Malta and Amphora Media.

When contacted, Mercury Towers CEO Marcel Bonnici said there was nothing suspicious about the arrangement, and the contract was merely drafted retroactively.

Dalli refused to answer specific questions, instead claiming to be the victim of an “inquisition”.

The existence of the payments shed doubts on Portelli’s claim in a 2021 Times of Malta interview that he has never done business with Dalli, who is facing corruption charges.

The payments were flagged to Malta’s anti-money laundering unit, the FIAU, by Bank of Valletta, through what is known as a suspicious transaction report.

Banks are legally obliged to file such reports when there are grounds to suspect a transaction may be linked to money laundering.

STRs alone are not necessarily evidence of financial crime but are seen as a starting point for further analysis and investigation by the authorities. 

BOV declined to comment on specific cases when contacted. The bank said it has very strong due diligence and credit governance processes that meet regulatory requirements and expectations.

The FIAU and police declined to comment on specific cases and clients when contacted.

A decade of company law breaches

Suspicions about the transactions were initially raised after bank officials asked Tabor Consult for its audited accounts and information about specific payments from Portelli.

It was noted by officials how Tabor Consult had repeatedly failed to submit audited accounts to the Malta Business Registry since its inception in 2014, in violation of company transparency laws.

A spokesperson for the MBR confirmed when contacted that administrative penalties had been issued and enforced against Dalli’s company.

Tabor Consult was set up in 2014 as a “consultancy and property development” company, two years after Dalli resigned as EU health commissioner for allegedly soliciting a €60 million bribe to change tobacco legislation.

Dalli, who denies wrongdoing, was only charged over the alleged bribery attempt in 2022.

Further suspicions were raised about the payments from the developer when the ex-commissioner provided the bank with a two-year lease agreement between Portelli’s company and Tabor Consult.

The reference to the COVID-19 pandemic in the 2017 contract led bank officials to suspect the contract had been backdated or even “forged” to justify the flow of funds and hide the real reason behind the payments from Portelli.

Bank officials said the payments may be linked to a suspected ploy to disguise how Dalli may have been lending money to the Mercury Towers project and charging interest rates that were higher than the 8% permitted by law.

The “lease” payments continued after 2019, even after the initial two-year agreement provided to the bank had expired.

Bank officials also questioned why Portelli, who owns various properties around Malta and Gozo, would even need to rent a property from Dalli in the first place.

Mercury used Dalli’s Portomaso address as its registered office between 2016 and 2024.

‘An inquisition’

When contacted, Dalli refused to answer the specific questions sent regarding the contract and the discrepancies flagged by banking officials, saying it was “appalling” to ask him to provide documentation about the arrangement with Portelli.

He insisted that the questions put to him were an “inquisition” and told reporters “you are ignorant of the business practices and the operations of professional offices”.

Marcel Bonnici, the CEO of Mercury Towers, confirmed there was no contract when the lease began, and the one provided to authorities was produced retroactively. However, he insisted that there was “nothing suspicious in the nature of the agreement”, despite the reference to COVID-19.

“Unfortunately, a standard template was used from the time which included a COVID clause. There is nothing suspicious in the nature of this rental agreement.

“An office was registered, rent was paid, everything was declared. The address was used as the registered office of a number of companies, as is perfectly normal,” Cassar said.

Portelli did not respond to a request for comment.

Corporate records show there are at least 30 companies that have at some point used the same registered address.

These include several companies linked to Dalli and Portelli, including Tabor Consult and Mercury, and other unrelated individuals, which include Vitals Global Healthcare’s Shaukat Ali, who is facing bribery charges in the hospitals scandal.

Apart from the transactions with Portelli, bank officials also flagged a €750,000 “lump sum” payment Tabor Consult received from a company associated with an alleged Ponzi scheme.

The payment was made by Corporate Group, a company run by Dalli’s daughter that has been associated with a scheme to defraud elderly American investors out of their life savings.

Dalli’s daughters Louisa and Claire Gauci Borda were charged with fraud and money laundering in connection with the alleged scheme in 2017. Gauci Borda is the chief financial officer of Portelli’s development company J Portelli Projects.

In additional comments following publication, a spokesperson for Mercury Contracting said the company had not been contacted by the authorities with any concerns about the contract.

“The fact that such a report appears to have been leaked to the press - rather than investigated through official channels - suggests that the matter did not warrant further action once reviewed,” the spokesperson said.

The company said all payments for the office rental were declared transparently through the appropriate banking channels.

“The office - which was rented at a fair market price - housed all the Malta-based technical and administrative staff of the company.

“It was especially useful to Mercury Projects because it was close to the excavated site and this allowed for more efficiency.

“The office was also used to sign property agreements, as most of the country’s notaries and estate agencies can attest,” the spokesperson said.

This story was updated on June 11 with additional comments from Mercury Contracting following publication.