Updated at 11.20am with Keith Schembri's statement
The Financial Intelligence Analysis Unit last year reported it had a “reasonable suspicion” that Keith Schembri and Brian Tonna were involved in money laundering or the proceeds of crime related to kickbacks from the sale of Maltese passports, The Sunday Times of Malta has revealed.
The report of the FIAU’s investigation into suspicious transactions by the Prime Minister’s chief of staff and consultant is being made public for the first time today.
The report was approved by an FIAU committee and transmitted to the Police Commissioner on May 17, 2016 for further investigation followed by criminal action.
But despite the evidence, the police failed to investigate, interview those involved or preserve important evidence. Instead, they kept the report secret and under lock and key, this newspaper is informed.
The investigation was conducted by a team of FIAU investigators who gathered confidential data from banks, the public registry, the security services and other institutions.
Accounts opened only for such transactions
They did this after receiving information on the Panama Papers and the possible involvement of top government officials in secret offshore companies and tax havens, and in money laundering and kickbacks from the cash-for-passports scheme.
The FIAU found that Mr Schembri received at least €100,000 in two separate transactions from a BVI registered company, Willerby Trade Inc, soon after three Russian citizens paid to obtain their Maltese passports.
It was only through the Panama Papers that it was learnt the BVI company was owned by Mr Tonna, who owns accountancy firm Nexia BT. Soon after money reached Willerby's account in Pilatus Bank in Ta’ Xbiex, a portion of the funds were transferred to an account at the same bank in the name of Keith Allen Schembri. The investigators found these accounts were opened “only for such transactions”.
A loan agreement that Mr Schembri claimed to have with Mr Tonna to justify these transactions could have been a “bogus loan”, commonly used in money laundering.
Eleven days ago, Opposition leader Simon Busuttil passed on similar evidence to a magisterial inquiry which has now concluded that a criminal inquest is warranted. He did not reveal his source.
The FIAU report also concluded there were close connections between Mr Schembri, the owner of Pilatus Bank Sajed Ali Sadr Hasheminejad and the Malta Financial Services Authority, which had licenced the bank after the 2013 election. It appeared the Prime Minister’s right-hand man “took a personal interest in the licensing process”.
Pilatus “failed to file a suspicious transaction report with the FIAU”, thus breaking the law, the report says.
“In view of the above circumstances, the information available to the FIAU is deemed to be sufficient to conclude a reasonable suspicion of money laundering and/or the existence of proceeds of crime subsists.
“It is therefore being recommended that this report is transmitted to the Police in terms off Article 31 (1) of the Prevention of Money Laundering Act for any action the Police may consider to be appropriate.”
Report smacks of political expediency - Keith Schembri
In a statement this morning, Mr Schembri expressed amazement "at the detailed reporting" of the FIAU report, since to date he had never been informed or otherwise made aware of the existence of any such report.
"Neither have I ever been questioned by any official of the FIAU nor been asked to provide any information to the unit."
Mr Schembri said he would not comment on the "apparent conclusions" of the report as reported, apart from re-affirming that he never received, solicited, or otherwise induced anyone to give him monies he was not rightfully due.
"I would like to point out that it makes no sense that I would have participated in the activities the alleged report refers to by making use of a personal bank account, registered in my name here in Malta and then further proceeding to make use of it for personal use by means of a credit card, thus making the existence of same account and funds known to all regulatory entities," he said.
He noted the timing of the publication "of this alleged report", right in the middle of an electoral campaign saying the report itself, the methods, and strategies deployed in this regard all smacked of political expediency.