Joseph Muscat and casino tycoon Johann Schembri have denied any wrongdoing in a consultancy deal nine months after Schembri's casino lease was extended by the ex-prime minister's government. 

Times of Malta reported that gross monthly payments of €11,800 started being routed to Muscat via a loss-making exotic bird company owned by casino managing director and shareholder Johann Schembri as part of a consultancy contract worth €141,600 annually. The payments started in April 2020, just three months after Muscat stepped down as prime minister, and while he was still a member of parliament. 

These are the full replies of Muscat and Schembri. 

‘Hellbent on characterising work as untoward’ – Muscat  

Muscat accused Times of Malta of seeking to tarnish his consultancy work. 

"The Times of Malta is clearly hellbent on characterising legitimate and documented work I do as in some way untoward. I totally refute this. 

I am the first prime minister locally to have withdrawn from the political scene before retirement age. My predecessors all remained in politics until retirement or went into semi-retirement after losing elections, or even promoted themselves to higher political echelons post-retirement.

The list is also endless of government ministers that on retirement immediately occupied positions in the corporate sector and as consultants. 

Nevertheless, you seem to think that at 48 years of age, I should have gone into oblivion, quit working and disappear into thin air, when in fact I have the rest of my productive life to live. 

Developing my profession into an advisory and consultancy role after my political life is a natural course to have taken and is no different from the path embarked by former prime ministers in many other countries. Again, the list is endless. 

Your focus is not on that but on trying to rubbish and discredit the consultancy profession that I am successfully developing

It would be interesting if you showed the same zealousness in reporting on posts held and work done by Maltese former prime ministers, cabinet ministers, European Commissioners and permanent representatives to the EU. 

I will not hold my breath, however, as clearly your focus is not on that but on trying to rubbish and discredit the consultancy profession that I am successfully developing.   

I have nothing to add on the subject of consultancy agreements that I may have in place."

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Consultancy nothing to do with Dragonara – Schembri  

Speaking via his lawyer Ron Galea Cavallazzi, Schembri denied that the consultancy deal had anything to do with the extension of the Dragonara Casino lease:

"At the outset, it appears that some form of correlation is sought to be made, or otherwise inferred, between the Dragonara Casino concession and the engagement of Dr Joseph Muscat as consultant.

For the avoidance of any doubt, the two matters are unrelated. Any statement, suggestion or inference to the contrary is refuted as entirely untrue, incorrect, and purely speculative. The company that holds the Dragonara Casino concession, Dragonara Gaming Limited, has never paid any consultancy fees to Dr Joseph Muscat. 

By way of context, Dragonara Gaming Limited had been awarded the original concession relating to the Dragonara Casino in 2010, after the submission of its ‘best and final offer’ pursuant to an international competitive tendering process. The contract awarded to Dragonara Gaming Limited in 2010 already contemplated a renewal of the lease, without the requirement for any further formalities. 

One must also distinguish between the concession to operate a casino and a lease on premises. The extension you refer to in your email only relates to the lease on the premises in St Julian’s.

The process through which this extension was acquired was entirely transparent, having gone through all the established procedures leading to it being the subject of a unanimous resolution by the House of Representatives in 2019. 

While refraining from commenting on what you report as being Ms Rosianne Cutajar’s comment, other than to state that her impartiality and credibility on the subject matter is at best in doubt, it is noted that Ms Cutajar was an MP in 2019 when parliament voted unanimously to approve the extension of the lease of the property.  

Ms Cutajar, in the same way as all other members of parliament from both sides of the house at the time did not raise any concern or objection to the lease extension – given that the parliamentary resolution was, as indicated above, unanimous.

As to the ‘rival casino operators describing the deal as scandalous’, it is suggested that divulging the identity of the rival casino operator would be sufficient to discredit any opinion that this operator may have on the matter. 

Your email also appears to infer that the annual lease payment of €500,000 for the premises, which by the way increases to €1.5 million annually, is somehow advantageous.

May we point out that this is the highest – both in absolute terms and in terms of rate per square metre – paid for any property along the ‘golden mile’. The said lease also entails other onerous conditions and investment obligations. 

The difference between the previous rent of €1.2 million and the current rent is logical and driven solely by economic considerations reflecting the changes in circumstances.

This is the highest – both in absolute terms and in terms of rate per square metre – paid for any property along the ‘golden mile

When Dragonara Gaming Limited leased the premises in 2010, there was only one other casino in the area, whereas by the time the new lease was being negotiated, a third casino concession for the area had already been granted to the Eden Leisure Group.  

This third concession was granted for the lowest concession fee to government ever recorded for a casino concession. Dragonara Gaming Limited also instituted legal proceedings in 2016 against Dr Muscat’s government challenging the award of this third concession, as it deemed this to have been awarded on subjective criteria, unfairly and without justification. Court records are available for your perusal.  

At the time, Dragonara Gaming Limited submitted a financial offer for this same concession, for a fee which was four times higher than that submitted by Eden.

The Dragonara Casino, as a direct result of what was deemed to be a vitiated tender award process, suffered significant financial loss. Consequently, all this, including the resulting reduction in market share, was obviously taken into account when negotiating and establishing the value of the new lease for the premises. 

Mr Schembri trusts that the above fully clarifies matters regarding the extension of the Dragonara lease. 

Moving onto the engagement of Dr Joseph Muscat as consultant, it is misleading to quote that the consultancy was for a rate of €11,800 per month.  The net amount receivable is just over half the amount being claimed. (Schembri lawyer later clarified: To be correct, the gross consideration indicated is €10,000. The figure of €11,800 also includes VAT payable on the gross consideration.)   

It is also relevant to note that the consultancy arrangement did not provide for any additional payment for services in excess of any number of hours in a month. This, therefore, represent terms which are commensurate with those of a consultant having an equivalent level of qualification, expertise, experience and leads with a vast international network. 

Dr Muscat was engaged as a consultant by Organicum Ltd because that company is held by Mr Schembri personally, as its sole shareholder and is totally independent and separate from any other interests that Mr Schembri holds.

The consultancy arrangement and its terms of engagement contemplate the provision of services in connection with any business interest, current or future, which Mr Schembri has, in Malta or internationally. 

Mr Schembri is involved in various businesses and his vision and focus is to also extend these businesses beyond Malta. Dr Muscat’s vast experience and international contacts were in this regard clearly relevant and valuable. Indeed, a number of leads were identified through Dr Muscat and are currently actively being pursued. 

As for your final question, Mr Schembri approached Dr Muscat with respect to the consultancy engagement around February/March of 2020. "