At least two top officials in the private offices of the new government come from the business world. Will this bring a can-do approach to this Administration or open a Pandora’s Box of conflicts of interest? Mark Micallef reports.

One of the very first acts of this Government was to announce the appointment of 37-year-old entrepreneur Keith Schembri as Chief of Staff at the Office of the Prime Minister.

Legal experts in matters of public trust seem to agree that public officials should not have private interests as a matter of principle

Mr Schembri, who masterminded Labour’s electoral campaign, replaces what was previously known as the Head of Secretariat, a post formerly occupied by Edgar Galea Curmi and before him Richard Cachia Caruana.

The position is one of trust and, invariably, a political appointment, so his former incarnation as a key player in the Labour Party is no issue. But his business interests raise questions about the potential conflicts he could have as an entrepreneur entrusted with such a strategic government position.

Having worked at Bank of Valletta, Mr Schembri took over a relatively small printing supplies company owned by his father in 1996 and turned into a strong group of companies, the Kasco group, with a multimillion euro turnover.

The group has interests in catering and interior design but the bulk of its business comes from sale of printing equipment and supplies, especially paper.

Kasco Limited has positioned itself as one of the leading suppliers counting most of Malta’s major printing presses among its clients – this includes Progress Press, which forms part of the Allied Group along with this newspaper, as well as the Nationalist Party – but even has sales of equipment and paper in Europe.

The Office of the Prime Minister declared that he would be resigning from the directorship of all of his companies. However, he will remain the shareholder and effective owner.

Answering questions in this regard, Mr Schembri told The Sunday Times that his companies traded with other businesses, rather than Government, but added that he taken extra steps to ring-fence his business from his public position.

“As I said, I will be resigning all of my director positions but I have also instructed the board not to bid for government tenders.”

Another businessman, Silvio Scerri, a successful lighting specialist involved with Nexos and even at one stage partner in the Where’s Everybody group of companies, has been appointed Chief of Staff of the Home Affairs and National Security Minister Manuel Mallia, who is also responsible for the public broadcaster PBS.

On this latest appointment, the Office of the Prime Minister said Mr Scerri had sold all his business interests in November of last year to his former partner Jesmond Bondin. “He is not part of any board of directors in any company. Therefore, Dr Mallia decided to use his expertise in communications and administration and other related fields.”

His still appears as a shareholder of two companies on the records of the Malta Financial Services Authority as well as on the Nexos website, but Mr Scerri said this was simply a case of the records and the website not having been updated.

Mr Scerri said he had decided to sell off the business well before he involved himself in politics again (he was a member of staff of two PN ministers after 1987) as Dr Mallia’s campaign manager but insisted that at this point he has no interest in any company.

Legal experts in matters of public trust seem to agree that public officials should not have private interests as a matter of principle.

“Divesting oneself of any private interests is the correct position,” a lawyer who specialises in fiduciary relationships and trusts told The Sunday Times. But in reality, this is not the first time that a public official held even higher office while keeping a private interest.

Most architects and lawyer ministers, over the years, kept their shareholding and even received retainers from their respective practices, while Parliamentary Assistants – a role which was introduced in the last legislature – such as Beppe Fenech Adami (lawyer) and Robert Arrigo (owner of the highly successful travel agency Robert Arrigo and Sons Ltd) were allowed to keep running their private business, while in office.

On balance that position did not have any real executive power attached to it but beyond the political level, there are also top public positions of trust, such as chairmanships, which often go to big businessmen, who are allowed to retain a myriad of interests, while running public corporations.

“This is a less than ideal situation and the previous administrations were rather casual about some of these issues which often landed them in trouble, even in scenarios when there was essentially nothing untoward,” another lawyer said.

The argument made repeatedly in this regard is that the country would be alienating its best managerial talents if it insisted on a total separation between public and private interests and therefore that these situations should be regulated with full disclosure.

“The next best thing, if the private interest is held, is to manage the situation with full disclosure and transparency,” the lawyer said.

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