Keith Schembri testified at a public inquiry into the murder of Daphne Caruana Galizia on Monday.
Schembri served as chief of staff to Prime Minister under Joseph Muscat until he resigned in late November 2019, just hours before being arrested in connection with Caruana Galizia's murder. He was later released without charge.
In more than six hours of testimony, Schembri said that:
• He saw no link between the Electrogas deal and 17 Black.
• He told Joseph Muscat that Yorgen Fenech owned 17 Black, but he cannot remember when.
• The 2017 election date was set before Egrant allegations were made public.
• He learnt of an Electrogas data breach during the 2017 electoral campaign.
• He knew Fenech was a person of interest in the murder around one year before Fenech's arrest.
• Labour Party poll numbers went up whenever Daphne Caruana Galizia wrote
• Macbridge was named as a source of funds for his company without his knowledge.
• He set up a Panama company to move his business out of Malta, after hearing that details about a trust he had set up with BOV had been leaked to the PN.
• He and Konrad Mizzi did not discuss setting up offshore structures or do so together.
• He has other offshore structures in England and Cyprus, as well as bank accounts in the British Virgin Islands.
• Egrant was one of the unused shell companies that belonged to Nexia BT director Brian Tonna.
• He planned to do business with Yorgen Fenech, after quitting politics.
• He had nothing to do with the Vitals hospital deal.
• He had emailed in his resignation in 2016 as he was seriously ill, but was roped back into government.
As it happened
Live blog ends
4.40pm This live blog will end here. Thank you for having joined us.
Inquiry to go on
4.30pm The board says it has no intention of ending their work today.
They read out a decree, to communicate to the prime minister.
There is no room for time limits which are not indicated in its terms of reference. The search for truth will not be limited and only the board itself can determine its time limits. All attempts to impose such limits are unacceptable, the board says.
The board notes that some Europol data that could be useful to the board will be available in mid-January and suspends hearings until then.
Judges Mallia and Said Pullicino [who are both retired and receiving an honoraria for their work] say they are willing to renounce payment.
State Advocate and family lawyer spar
4.12pm Therese Comodini Cachia tells the board that they wish to make some written submissions of more evidence which may be useful to its work.
But State Advocate Chris Soler objects. Soler says that under the terms of the inquiry, his office was granted status as an observer, not locus standi [legal standing].The state advocate was not given the chance to ask questions.
Comodini Cachia pushes back against this: the State Advocate had every right to ask questions. If he does not wish to make written submissions, the [Caruana Galizia] family does.
Keith Schembri ends testimony
4.06pm After six-and-a-half hours, Keith Schembri is done testifying.
'All big projects are criticised'
4.05pm Judge Said Pullicino says many controversial projects were pushed ahead during the witnesses’ time.
Schembri: All big projects cause controversy. Only those who do nothing are not criticised.
"I’ve learnt that there are shadows and doubts. But each person must be judged according to results. Surveys showed that people were living a better life. At end of the day, that was my job."
4.02pm Schembri says he had nothing to do with hiring UK PR firm Chelgate.
“Joe Zammit Tabone introduced us to the company but really and truly we got nothing from them. It was a PR and lobbying company engaged to help us after the assassination.”
How friendly was he with Muscat and Fenech?
4.01pm Schembri says he and Muscat were “close”.
What about him and Fenech?
“Much less,” he replies.
Where is the laptop? Where is the mobile?
3.59pm Azzopardi asks Schembri if he was involved in a ‘Where is the laptop?’ campaign concerning Caruana Galizia’s laptop.
That prompts judge Said Pullicino to quip “where is the laptop, or where is the mobile?”
[Schembri ‘lost’ his mobile phone hours before he was arrested].
Laughter all round.
Schembri says he had nothing to do with the laptop campaign.
2017 election date
3.57pm Schembri says he knew of the 2017 election date in March of that year.
Azzopardi: So Daphne Caruana Galizia was right!
Schembri: I never said she wasn’t.
Why the early election?
Schembri: The party had a good lead. This sort of decision is not taken overnight. And at the end of the day, we were proven right. People gave us an even greater mandate.
Azzopardi: So it definitely wasn’t Egrant that sparked the election?
Judges say the question is interesting, but political and therefore disallowed.
3.54pm Schembri is asked about a massive leak of documents from Electrogas. He says he learnt of it during the electoral campaign.
[Electrogas publicly announced a breach in April 2018].
3.51pm Schembri says he received instructions to issue certain pieces of information on Labour media but adds that he never passed those stories on to journalists.
He is asked about articles linking the murder to dirty oil.
Schembri turns to his file and looks up news reports. He reads articles published by Malta Today, The Malta Independent, Newsbook and [Italian broadcaster] Rai.
“Nobody could twist Rai News, let me assure you,” he says.
One of Daphne Caruana Galizia’s sisters remarks “actually, you can.”
Schembri denies spinning that story.
Fenech's farmhouse guest list
3.48pm Schembri says that he saw many public figures at Yorgen Fenech’s Żebbuġ farmhouse.
He mentions some of them: Muscat, Edward Zammit Lewis, Silvio Valletta.
Schembri: Other prime ministers also went there. Eddie Fenech Adami, Austin Gatt, Joe Saliba, Alfred Sant. Adrian Delia and Pierre Portelli went there regularly. I didn’t see them personally, but I was told this and I testified about it at an inquiry by [requested by PN MP] David Thake.
Meeting about Theuma
3.44pm Azzopardi asks about a meeting allegedly held last February concerning Melvin Theuma.
Schembri denies it and says he never discussed Melvin Theuma.
3.41pm Azzopardi reads from a Caruana Galizia blog post (in October 2013) which noted that Konrad Mizzi had said the power station would cost €376m.
Does he still insist the deal was not sown up before the election?
Schembri: Yes, I do.
Azzopardi refers to a Times of Malta story about a confidentiality agreement signed between the Labour Party and a failed bidder for the project, Energy World.
Schembri: I was not involved in that 2011 agreement. I was not part of the Labour Party, I was its electoral campaign manager.
3.38pm Azzopardi asks how long he spent at Joseph Muscat’s house on the night of November 26, 2019.
Schembri: It’s in the public domain. We chatted for an hour or so.
Azzopardi returns to Schembri’s call to Fenech. Had it crossed his mind that by calling him, he was tipping him off about his impending arrest?
Schembri: No. But I don’t think he needed me. He had been abroad for a year or so.
Azzopardi: Fenech knew that you knew he was leaving.
Schembri: He’s not fool [mhux ċuċ].
The judges stop the line of questioning as it is veering into opinion.
On Melvin Theuma
3.33pm Jason Azzopardi takes up questioning.
Why was Projects Malta always assigned to Konrad Mizzi?
Schembri: That’s the prime minister’s prerogative.
Azzopardi: You stressed that you never did anything behind the prime minister’s back.
Schembri: As far as government matters went.
Azzopardi: When were you informed of Melvin Theuma’s involvement in the assassination?
Schembri: I’m not sure. But much later than 2017.
Azzopardi: Between October and December 2017, did you know of Yorgen Fenech’s involvement?
Azzopardi: Do you confirm an email from Yorgen Fenech about a problem Melvin Theuma had with some land?
Azzopardi: Do you confirm having a group chat together with Joseph Muscat, [former MFSA chief] Joe Cuschieri, Kenneth Azzopardi and [former deputy police commissioner] Silvio Valletta?
Still friends with Muscat
3.26pm Schembri says he had no warning in advance that police were going to interrogate him and that ever since he left the police depot after interrogation, nobody has ever spoken to him about it again.
Schembri says he and Muscat are still friends.
When did they last meet?
“That’s not relevant, I think,” he says.
Judges confer among themselves, and Schembri uses the brief pause to snack on some food.
3.24pm What does he have to say about the claim that Joseph Muscat was betrayed?
Schembri: I never did.
Judge Said Pullicino: The whole administration had to step down.
Schembri: That’s politics.
Resigning as chief of staff
3.22pm Schembri recalls the day he resigned as chief of staff.
“I handed in my resignation, not the other way around. I went to his [Muscat’s] home that evening and told him that a friend had been arrested and I felt I ought to resign. At that point, the police had not spoken to me.”
He is asked why it took him days from Fenech's arrest to resign, and says he had already taken the decision.
WhatsApp chat group
3.20pm Schembri says he doesn’t remember when a WhatsApp chat group between himself, Fenech and Muscat was set up.
Schembri’s lawyer Edward Gatt tells the inquiry that there’s an ongoing investigation into this. Schembri says he has no problem talking about the chat group, but that police have told him not to speak about it.
'I warned him not to leave the country'
3.18pm Muscat has testified that he asked Schembri to call Fenech, to urge him not to try and flee the country.
Schembri: “I called him. He said he had been advised to take a three-day break to rest. I warned him, ‘better not leave the country’. I tried to talk him around. Then the next morning, I heard about the arrest.”
Schembri knew Fenech was being investigated
3.15pm When did Schembri get to know that Yorgen Fenech was a person of interest in the murder investigation?
Schembri: I don’t remember the exact date. It was a terrible shock and a problem. He was a friend and I felt uncomfortable. I could not open up to anyone while respecting my office. It was one hell of a year.
"So you knew for at least a year," Schembri is told.
Calling the FBI
3.13pm Judge Said Pullicino asks about the FBI. Who had reached out to them?
Schembri: I told the prime minister that unless we got foreign help, we would end up with another unsolved case on our hands. Within five minutes, I called [US Embassy charges d’affaires] Mark Schapiro. I told him we needed help.
Schembri says he called Schapiro right after he received a call from then-Mater Dei Hospital CEO Ivan Falzon.
Meeting the MSS
3.10pm Schembri is asked when he had his last meeting with the Malta Security Services.
He says he does not remember, but that he never attended a meeting he was not invited to. The judges say any further questions about the MSS should be tackled behind closed doors.
On Daphne Caruana Galizia
3.08pm Schembri is asked about his relationship with Daphne Caruana Galizia.
Schembri: I wore two hats: my personal one as a family man, and that as campaign manager. When she attacked me personally, I didn’t like it. But when she attacked the party, our numbers went up. We saw that.
This is where I disagree with the prime minister [Joseph Muscat]. He said she was irrelevant. To me she was very relevant, because as campaign manager my job was to lead the party to victory.
Judge Said Pullicino: So she harmed you when she was alive and also when she was killed.
3.06pm Schembri defends Glenn Bedingfield. [Bedingfield, now a Labour MP and whip, used to write a blog which often attacked Caruana Galizia while working at the OPM].
“He had freedom of expression,” he says.
Comodini Cachia wants to ask Schembri about some particular blog posts Bedingfield published. As she looks them up, judge Said Pullicino asks the witness to talk about a campaign between 2011 and 2013 to neutralise Caruana Galizia’s criticism.
Schembri: There was never any disparaging language in her regard.
Was he involved in [anonymous blog] Taste Your Own Medicine?
Schembri: I was not involved and it was in no way a part of the Labour Party campaign.
3.02pm Schembri is asked about meeting with journalists. He says some were closer than others.
Did he ever discuss Pilatus and the Panama Papers with them?
Schembri: I never talked about things concerning me.
He says some journalists demanded things and applied pressure.
“There must be a distinction between journalists and lobbyists,” he says. Coming to my office demanding things is not on. They would wield their pen the following Sunday.”
Comodini Cachia asks for names.
Schembri: [Malta Today editor] Saviour Balzan came to me more than once asking for [TV] programmes. Not once, it was a normal occurrence. He would lobby for certain companies. Now I know what to expect next Sunday!
Meeting Chris Kalin
2.57pm Questions about Chris Kalin, who leads Henley & Partners. The global firm were sole concessionaires of Malta’s golden passport scheme.
Schembri says he had first met him when a PN administration led the country but that at the time the discussions were not about a citizenship scheme.
Comodini Cachia reads Schembri an email Kalin sent to him, Joseph Muscat and [former Justice Minister] Owen Bonnici in which Kalin said he intended to sue Caruana Galizia. Schembri had replied “Good move Chris”.
Schembri: I felt he was not doing anything wrong in seeking action in the UK against Daphne Caruana Galizia blog posts.
Relationship with Ali Sadr
2.52pm Questions turn to Pilatus Bank owner Ali Sadr Hasheminejad. When did he first get to know him?
Schembri: In 2013. He came to my office with a Deloitte representative.
What’s his relationship with him?
Schembri: None, except for me having an account at the bank.
The witness denies having anything to do with helping the bank get a licence.
Comodini Cachia reads from a blog post by Caruana Galizia in which she alleged that Schembri called Hasheminejad the day after he was seen walking out of the bank’s offices with a suitcase. [The blog post cited a female bank employee as a source]
Schembri: That was [former employee] Maria Efimova! I did not call him. My relationship with him was like that with all other bankers.
Schembri confirms that he was invited to Ali Sadr's wedding "as chief of staff".
Meeting Cheng Chen
2.48pm Schembri is asked about Cheng Chen, an engineer who was negotiating the power station project on behalf of Shanghai Electric.
He says met him once in Shanghai and then again at the contract signing at the OPM. “I have no business relations with him,” he says.
Who introduced Chen to Nexia?
Schembri: Definitely not me.
How does he explain an email from Chen to Konrad Mizzi, Keith Schembri and Brian Tonna about an offshore investment hub? The email was cited in the Egrant magisterial inquiry.
Schembri: I never replied to that email. I never discussed anything of the sort with Chen.
'I see no link between 17 Black and Electrogas'
2.42pm Schembri says he did not know about an email from BOV noting that Electrogas was in default.
“I trusted the technical people involved,” he says. “What I know is that the project was done and done on time.”
Did Schembri ask Yorgen Fenech why the project was described as “non-bankable” in the email?
17 Black is mentioned.
Schembri: I see no relationship whatsoever between 17 Black and Electrogas.
Chasing Electrogas delays
2.39pm Schembri is asked whether he intervened when the Electrogas project was delayed, given that he had said his job was to enforce deadlines.
Schembri: “I sometimes rang [Finance Ministry permanent secretary] Alfred Camilleri, a very knowledgeable person, at 10:00pm. He always answered my calls and I knew that he was doing something about it.”
'I did not recommend Nexia to Mizzi'
2.37pm Schembri denies ever speaking to Mizzi about the Electrogas project, save for what was said in meetings at cabinet.
He says he got to know Mizzi at Labour headquarters and did not recommend Nexia BT to him.
Back in public
2.30pm We’re back inside and Schembri is at the witness stand.
He’s being asked about his involvement in the power station project.
He says his job was to make sure the project is carried out as soon as possible to deliver cheaper tariffs for consumers.
Board: “When was finance minister involved? He was involved at cabinet and his permanent secretary was also involved.”
Judge Said Pullicino: “But this is serious. You’re contradicting yourselves. He stated otherwise.”
Schembri: “I insist that everything was put to Cabinet.”
Inquiry resumes behind closed doors
2.05pm The three judges are back and the inquiry can resume. But Schembri will be giving some testimony behind closed doors first.
The press will then be allowed back in to hear the rest of his testimony.
Involvement in power station
2.25pm We're back inside the court room. Schembri is still at the witness stand.
He's being asked about his involvement in the power station project.
His job was to make sure it is carried out as soon as possible, which would make it possible to reduce tariffs for the consumer.
Board: "When was the finance minister involved?"
Schembri: "He was involved at cabinet level. His permanent secretary was also involved."
Judge Said Pullicino: "You are contradicting yourselves. He stated otherwise."
Schembri: "I insist that everything was put to cabinet."
Inquiry takes a break
1.42pm The judges call a brief recess. Schembri will continue testifying when it resumes. Part of Schembri's testimony will take place behind closed doors.
'Kitchen cabinet never existed'
1.38pm Judge Said Pullicino brings up the “kitchen cabinet” statement which Edward Scicluna made while testifying.
[Scicluna had said that Muscat’s inner circle ran a ‘kitchen cabinet’ which “bypassed the system”].
Schembri: It never existed. There are three tiers in cabinet: those who show an interest in government work, others who show an interest in their own ministry, and others who need to be pushed.
I’ve learned that it’s not possible to be liked by everyone. Sometimes you have to be hard on people to get things done.
“After cabinet, the prime minister would summon individual ministers. I would attend when I was invited, [but] I never gatecrashed meetings. I would try to push ministers to get things done."
1.35pm Judge Said Pullicino: Did the minister sign the MOU behind the prime minister’s back?
Schembri: I don’t know. I would lie if I said yes or no. The MOU is non-committal.
'Ask for cabinet minutes'
1.32pm Schembri says the tender for the hospital privatisation deal was issued by the health ministry, which at the time was under Konrad Mizzi, under the direction of cabinet.
He is asked why [health minister] Chris Fearne testified that he knew nothing of it.
Schembri: Ask him. I’m not sure I can divulge cabinet discussions. Perhaps you should ask for minutes of cabinet meetings. They indicate who was present and who said what. Then you’d know who is telling the truth and who is not.
NAO 'did not include my version'
1.28pm Comodini Cachia says Schembri’s claim that he only provided a room for the MOU signing “seems to contrast with the NAO report” about the deal.
Schembri: Please read my affidavit. I was called to testify at the NAO just one day before the report was published, and my version of events did not feature. I also provided a room for other government project deals, such as that for the American University of Malta. But I did not take part in meetings to sign MOUs.
Schembri and Vitals
1.24pm Schembri reiterates that he was not involved in the project to hand Vitals Global Healthcare three state hospitals. He reads from an affidavit stating that the only thing he did was provide a room at Castille for the signing of the MOU.
Judge Said Pullicino: But [former finance minister] Edward Scicluna has testified that he did not know about that MOU. He said the project never went to cabinet.
Schembri: No project goes ahead unless it is approved by cabinet. Every decision
must be a collective one.
The witness is asked whether he met [Vitals director] Ram Tumuluri.
Schembri says he met him at a presentation given about the project.
Comodini Cachia reads out a series of names mentioned in an NAO report about the deal. Schembri says he knows none of them and that he only met Tumuluri.
Cracking the whip
1.20pm Comodini Cachia asks about his role as chief of staff in government projects.
Schembri says his job was to communicate with various ministries to ensure deadlines were being met.
“After a project was presented to cabinet, I would be told to push this or that,” he says.
Schembri confirms he attended cabinet meetings, “like all chiefs of staff.”
1.16pm The judges say questioning will now switch to other topics - the word "Vitals" is mentioned. They would like to wrap things up today if possible.
Keeping BOV in the dark
1.13pm Comodini Cachia: Didn’t you tell BOV about the company which you planned to transfer funds to?
Schembri: No. I wanted to have fait accompli. I had lost my trust in the bank after the leak and their admission about it.
So where were assets transferred to?
Schembri: Nothing has been transferred. All assets have remained in Malta. And been scrutinised three times over. I would have told BOV about the company, eventually.
Father's business with Fenech
1.10pm Schembri said that he never did business with Fenech. What about a 2017 deed concerning a sale of land in Mellieha from Alfio Schembri and Yorgen Fenech, Azzopardi asks.
The lawyers hands the witness the deed.
Schembri confirms that his father’s name is on it, but says he does not know about.
Dubai and Bangladesh
1.07pm Schembri denies giving Muscat any documents to take with him to Dubai.
Azzopardi asks about his ties to Yorgen Fenech and Bangladesh. Schembri confirms that Fenech had told him that he had gone to Bangladesh.
“It’s common knowledge,” he says.
1pm Schembri is asked whether he knows [Times of Malta journalist] Jacob Borg.
“He’s chased after me a few times!”
Did he chase after Borg or anyone else?
Losing faith in Maltese banks
1pm Schembri says he felt no need to speak to Konrad Mizzi about his offshore plans. So how does he explain an article [published by Lovin Malta] about Mizzi saying that he got the idea after talking to Schembri?
Schembri says he told Mizzi about the BOV leak and that he had lost trust in Maltese banks.
'I told Cini to stop everything'
12.59pm Schembri says he had been advised that he could not use the offshore companies he had set up in the UK and Cyprus to transfer his business out of Malta.
Azzopardi reads from a Nexia BT email to Mossack Fonseca requesting documents about Tillgate and Hearnville. . Schembri says he only got to know about it from the media and that he had subsequently told the email author, Karl Cini, to “stop everything”.
Nexia BT and OPM
12.56pm Azzopardi asks about Nexia BT. Why did they continue to receive direct orders [from the government]?
Schembri says that’s a question to ask the various ministries. Azzopardi notes many of those direct orders came from the Office of the Prime Minister [which Schembri led as its chief of staff].
Schembri denies claims that Nexia had an office at the OPM.
17 Black timing
12.54pm Azzopardi presses for more details about the chronology surrounding Schembri’s 17 Black knowledge.
“You say it was no news to you in February 2017 [when Caruana Galizia first mentioned the company. When before that date did you know who its owner was? Between April 2016 and 2017?”
Schembri: “100 per cent”.
Telling Muscat about 17 Black
12.50pm Azzopardi: When did you know who owned 17 Black?
Schembri: I don’t know the exact date, but I know that I would do business in the future.
Schembri says he did not tell Muscat about 17 Black when word of it first emerged.
“He didn’t ask about it and I did not sense the need to tell him,” he says.
Judge Said Pullicino says that had something been done about it in time, "the crime would not have happened".
Schembri: "I don't see how you reached that conclusion. I didn't see the need to tell him or sense anything wrong".
Schembri on Schillings
12.45pm Before Azzopardi begins his questioning, Schembri would like to clarify something. It’s about his previous reference to Schillings’ letter about Konrad Mizzi being in the public domain.
He notes that Konrad Mizzi was asked about the letter when testifying in the inquiry, and he reads a passage from a Times of Malta live blog of that occasion to make that point.
[In that session, Comodini Cachia had quoted from a seven-page letter which the law firm purportedly sent to the ICIJ]
12.41pm The judges return to the courtroom and the session resumes. Lawyer Jason Azzopardi takes over questioning.
12.24pm Judges calls a 15-minute break.
12.23pm Comodini Cachia: Tillgate was not meant to take in assets, yet in the document it is stated that assets were to be transferred.
Schembri: You’re not understanding. These structures work this way. Many Maltese complain about the tax imbalance in Malta [foreign firms get tax rebates, while local ones do not].
But why open a Panama company?
Schembri: I didn’t need that. I only wanted to get my funds out of Malta ASAP. I was told I couldn’t open a company in New Zealand and was advised to use Panama.
Judge Said Pullicino: So not because funds in Panama could not be traced…
Schembri: No, not at all.
Shifting business scope
12.18pm Questions turn to documents stating that his scope of business was to shift from consultancy to brokerage.
Schembri says he had nothing to do with that and had asked Mossack Fonseca for more details.
He is asked whether any of the signatures on documents he has seen were forged.
“No,” he replies.
Crane and Kasco
12.15pm Schembri is asked about Crane Currency [a US firm which Joseph Muscat had said Schembri was key to bringing over to Malta].
He says he is “proud” of that project and says that his company, Kasco, offered technician services to it.
Schembri reels off a list of other entities which his company offers technical services to.
12.11pm Comodini Cachia goes back to the Labour Party’s pre-2013 electoral campaign. Schembri had “total control” over it. Did he control its working group regarding energy?
Schembri: I was not a member of that group. There were third parties and experts in the energy sector.
Comodini Cachia: You said that when you were asked to be chief of staff, you said you would not take any government contracts.
Schembri: I got more government tenders under the PN than under Labour.
Schillings and Konrad Mizzi
12.04pm Schembri is asked how he explains the fact that he and Mizzi both hired Schillings, to do the same thing.
Schembri says that’s not correct and that the law firm’s letters for him and Mizzi are “not identical”.
Comodini Cachia asks him how he knows that.
Mizzi's letter is "in the public domain,” he says. [We cannot find the letter online]
Comodini Cachia: That's not true. He realised that the letters are identical and so said there's another letter concerning Mizzi.
Schembri confirms that letters which Schilling sent to Mossack Fonseca regarding himself and Mizzi are the same, but says letters sent to the ICIJ are not.
[Here's a 2018 article we published about Schillings' letter to Mossack Fonseca about Konrad Mizzi.]
12pm Schembri is asked whether the ICIJ [which published the Panama Papers leak] had sent him questions.
He says he has paperwork about this, and mentions Schillings [a UK-based law firm he and Konrad Mizzi have engaged in the past].
Draft business plans
11.54am Comodini Cachia returns to 17 Black and Macbridge. As she begins to ask her question, Schembri asks her to read the statement he had issued back in 2018 about it.
[In that statement, Schembri had acknowledged that 17 Black and Macbridge were included in draft business plans of his].
Comodini Cachia: Which is true? The statement you issued in 2018 or what you told us today?
Schembri says that his statement noted that the companies "'were included', but not by me".
"I only named 17 Black, not Macbridge," he says.
Terms of reference
11.51am Schembri now turns to the inquiry he is testifying in. He says its terms of reference included a reference to impunities.
“How come [former Opposition leader] Adrian Delia never featured? Daphne Caruana Galizia had written about his deals in Soho and Times of Malta reported that his New Jersey account was used for money laundering.”
“Daphne wrote about Michael Falzon and Ninu Zammit, who had money in Switzerland. And no action was taken.”
'Perhaps I took shortcuts'
11.45am Did Fenech help Schembri?
“He gave me support like many others.”
Did Schembri help him?
“I’d give him advice every now and then. Our motto was to help people. One of the first people I spoke to was [developer Zaren] Vassallo. I would tell him, ‘check out the market’.
“All I did, was in the interest of the country. Perhaps I took shortcuts, but was I wrong? The country benefited. Take the Times [of Malta] inquiry [into former managing director Adrian Hillman]. They never published it. They didn’t see that I gave them a piece of machinery for €2 million cheaper.”
Plans with Yorgen Fenech
11.40am Comodini Cachia returns to the Bangladesh mention. Yorgen Fenech was his friend.
Schembri: I have many friends.
How were Yorgen Fenech’s contacts there going to help him?
Schembri says “let me explain” and then gives a roundabout reply.
Judge Mallia tells the witness to answer the question.
Schembri says he had no business with Yorgen Fenech – “he was my friend like many others, not only from this side of the political fence” – but that he planned to do business with him in the maritime sector.
Did Yorgen Fenech know of those plans?
Schembri: Yes. There’s a big difference between a potential client and a business plan. We’re taking matters out of proportion. I used to tell Yorgen Fenech that while I was chief I could not do business with him, but that after that, yes [we could].
'This headline never ages'
11.34am Meanwhile, a tweet from Corinne Vella, Caruana Galizia's sister, sums up the family's sentiments about Schembri:
Eyes on Bangladesh, gaming
11.33am Comodini Cachia shows Schembri a document.
“You signed that, regarding Tillgate,” she tells him. [Tillgate was Schembri’s Panama company].
“Don’t assume,” he replies.
The document listed the scope of business as being in the maritime and fisheries sector. Why did it cite Bangladesh?
“I mentioned it because there’s room for development there and I also knew that Yorgen Fenech had some project there,” he says.
Schembri says there were also indications that there was room for growth in the gaming sector in Malta. He got that impression after speaking to people in the sector.
Comodini Cachia: So as chief of staff, you got information from international meetings and put it to own business use?
Schembri: The information was in the public domain. Did my life end just because I was chief of staff?
Comodini Cachia: But did you intend to go into business while chief of staff?
Schembri: Certainly not.
Taking business overseas
11.25am Schembri is asked about a reference to consultancy services.
He says that the plan was to transfer his Malta business out of the country.
Scope of business
11.22am The witness is asked what instructions he gave Nexia BT’s Karl Cini.
Schembri: To open a New Zealand trust, to transfer companies to.
Comodini Cachia reads out from a document which indicated that his company would be changing its scope of trading. Did Schembri tell Nexia to change the scope?
Schembri: I just told them what the main scope was to be. It was to be a very temporary company.
Why did he need to select such a clear scope of business?
Schembri: “You’re going into a lot of details! They asked for the scope of business. This was the international business I planned on doing after stepping down as chief of staff. I never imagined that I would stay on for so long…
“I ask myself if it was all worth it, but then I look at the surpluses we got. All this talk of corruption, but a corrupt government does not generate those surpluses over and over. But there was a lot of worry for me, my family, my parents.
An attempt to resign
11.14am Schembri says he had handed in his resignation, via email, in 2017.
“I had cancer. If it were for me I would have packed everything up and stayed at home. Then the hijack happened. I was facing a final round of chemotherapy and I was asked to lend a hand, as I spoke Arabic. And I was pulled back in.”
[The hijack in question was actually at the very end of 2016].
Levels of friendship
11.12am Schembri is reminded that he was a friend of Joseph Muscat’s.
He replies: “There are different levels of friendship. Some I invite into kitchen, others into the hall.”
Telling Muscat about 17 Black
11.09am Judge Said Pullicino steers questioning to Schembri and Muscat.
Did Schembri give all this information to Muscat when the Panama Papers leak emerged?
Schembri: Yes, he obviously knew. He knew that I had offshore structures before I joined politics.
When did Muscat learn about his Panama company and New Zealand trust?
Schembri: After the Panama Papers. He asked for an explanation and I gave it.
How about 17 Black?
Schembri: I told him about it. We agreed that anything not related to business in Malta, I need not tell him about it. I don’t remember when exactly I told him about 17 Black.
Schembri is unable to say whether he told Muscat about 17 Black and its owner [Yorgen Fenech] when it was first mentioned in the media (in February 2017) or when Fenech was exposed as its owner (in November 2018).
Schembri: I always told him that that company would not have any business in Malta and nothing to do with Malta.
17 Black, Colson
11.03am Judge Said Pullicino asks about funds expected to be received from 17 Black.
“This has nothing to do with me. If a company is not mine, that’s someone else’s business.”
Schembri says he had other offshore companies in England and Cyprus, as well as bank accounts in the British Virgin Islands “in my name, I think.”
He is asked about Colson Services Ltd. [a BVI company which the Panama Papers revealed was Schembri’s].
Schembri’s lawyer Edward Gatt stands up and objects. This was all handled by a magisterial inquiry which found no criminal conclusion. The magistrate has told police to investigate further.
Judges say the question is to be disallowed, given that investigations are ongoing.
Little by little
10.58am Comodini Cachia: So your Panama company was part of a plan to transfer your assets away from BOV. How long was that going to take?
Schembri: My plan was to move my holding company, little by little. I was a chief of staff and did not want my assets waved about everywhere. That was my intention.
Schembri says he had no legal obligation to inform local tax authorities, but did so after the Panama Papers data leak.
Parallels with Mizzi
10.54am Comodini Cachia: How do you explain that Nexia handled your structure and Konrad Mizzi’s in parallel?
Schembri: I only gave instructions about my structure. I had no interest in telling Konrad Mizzi what I was about to do.
Questions about Panama
10.53am Comodini Cachia asks when specifically Schembri instructed Nexia to buy the Panama company.
Schembri says years have passed and he cannot recall the date, but confirms that it was “probably” done verbally.
Comodini Cachia: Nexia had asked for three Panama companies.
Schembri: You’re asking the wrong person.
Comodini Cachia: But a businessman like you would keep records…
Schembri: I needed an asset company. They chose Panama, because it was the fastest route. I wanted to open a trust in New Zealand.
Comodini Cachia: Didn’t you object when they told you the company would be in
Schembri: It was to be temporary.
Comodini Cachia: But how come bank accounts were opened?
Schembri: When I saw all this, I went to Nexia and told them ‘please stop’.
Comodini Cachia: But you gave instructions to open a bank account?
Schembri: Yes, obviously. But it was not obvious where that account would be opened. Maltese and UK advice was to choose a Commonwealth jurisdiction.
Comodini Cachia: So you gave Nexia carte blanche?
10.45am Questioning returns to Nexia BT. Schembri says they were his auditors “since I was 17” and until they shut down recently.
“But they harmed you!” he is told.
Schembri retorts: “Perhaps they might think that I harmed them!”
He is asked if he looked for new auditors.
“With all the things on my mind, looking for auditors was last on the list.”
Comodini Cachia: Not now, then.
Schembri: Then, I was chief of staff.
10.42am Judge Said Pullicino asks about 17 Black. How can the judges reconcile it with what Schembri is claiming?
“If a potential client of mine gets into trouble, what’s that got to do with me?”
10.40am Schembri says his plan was to transfer his companies to the trust and to close the Panama company.
“It was a temporary structure,” he says.
10.37am Schembri reiterates that he never discussed things with Konrad Mizzi.
The judges return to the Macbridge reference. How was it listed if he did not mention it?
“I’m telling you, I didn’t mention Macbridge to them. I asked about it and they
said they couldn’t find it in their records.”
The judges find all this hard to swallow. How could he let them get away with that?
Judge Lofaro: I would have fired them and found another auditor!
Schembri: My character is different. I gave them the benefit of the doubt. I’m not going to judge my auditor.
Schembri knew who owned 17 Black
10.34am Therese Comodini Cachia takes up questioning.
She asks about the named sources of funds mentioned for his offshore company – 17 Black and Macbridge.
Schembri: “I definitely indicated 17 Black.”
So he knew who owned 17 Black?
“Yes. But Macbridge I didn’t. I didn’t mention that.”
So was it made up by Nexia BT?
“I’m not saying that. I gave them [Nexia] around four others.”
“I don’t recall.”
Can you check?
“No I can’t.”
10.30am Schembri says Konrad Mizzi’s mindset differs from his.
“He’s not from the business world, but can understand business.”
Did Mizzi tell him why he wanted a Panama company?
Does he know who Egrant belongs to?
“It was one of the unused shell companies that belonged to [Nexia BT director] Brian Tonna.”
'What's wrong about opening a company in Panama?'
10.25am Schembri says his instructions about this trust had “nothing to do with other trusts or [Konrad] Mizzi”.
Did he ever discuss anything with Mizzi?
“No. This is mind-boggling to me.”
The judges say that the controversy ended up bringing down the government.
Schembri pleads naivete.
“What’s wrong about opening a company in Panama!? To me, coming from the business world, it was normal. Perhaps I was naive. There were times when I wanted to go back to the business world. Perhaps what I did wrong was to go on thinking like a businessman.
“I used to tell Joseph Muscat that my time in politics would be temporary. I was a businessman who entered politics, not the other way around.
“I had set up the company for potential future clients. I explained this to Joseph Muscat and he accepted my explanation.”
'I wanted to lead a quiet life'
10.22am How does Schembri explain that companies were opened on the same day, with the same amounts?
Schembri says this is standard practice, as companies like Nexia BT buy shell companies to have them ready for any clients which come looking for one.
The judges again ask about that €50,000 sum. Did Nexia BT include that without consulting him?
Schembri: "I didn’t give that figure. There are many things I’m not consulted about. I set up that structure because I wanted to lead a quiet life, without the spotlight.”
Schembri's offshore plans
10.18am Conversation turns to Schembri’s offshore dealings and stated plans for €50,000 to be paid into his account every month.
“I already had offshore structure before entering politics,” he says. “Then I opened a trust with BOV. A number of people told me that the PN knew of that trust and the amounts [of money] in it.
“I wrote to [former BOV chairman] John Cassar White. He told me that an investigation had been opened but could not guarantee that there had been no leaks. I let things pass. Then I sought advice and decided to open a trust in New Zealand and transfer funds abroad.
“An asset was needed, and Mossack [Fonseca] told us the fastest way was to go through Panama. X amount of revenue was needed. Nexia BT were my advisors and auditors. I never told them that amount.”
The judges are perplexed. So did Nexia BT just make up a figure?
Schembri: “I cannot reply to that.”
'Lying about me'
10.11am Schembri is told there are “shadows” concerning him and Yorgen Fenech. How does he explain the suspicions?
Schembri: “People have been coming here and making things up about me. I never said anything. They spent years saying I took kickbacks on passports. An inquiry was concluded. I asked for its conclusions. And there’s not a single sentence saying I took any kickbacks on passports.
"The magistrate says that she could not understand why I had to lend money. Police froze all my accounts, my daughter could not even receive her stipend."
[The State Advocate has highlighted "other issues" which the inquiry found]
10.09am Schembri recalls a high-ranking German official calling him when he was at a Four Seasons hotel in New York, to ask about the power station tender.
“So yes, there was some lobbying,” he says.
Schembri is asked about the government-issued tender, but says he does not have details about it.
My job was to make sure that it was brought together and that things were done,” he tells the inquiry.
Question and answer
10.05am Does Schembri exclude talking to [Electrogas investors] Paul Apap Bologna, Yorgen Fenech and Mark Gasan before 2013?
Schembri: “I certainly didn’t. I never discussed energy with those people you mentioned. They came after 2013, to understand what was going on.”
What about [Electrogas investor] Siemens?
Were there any dinners or lunches at Portomaso?
Six month deadline
10.02am Judge Mallia is not satisfied.
“But you had all plans ready, to commit yourself to get it done within six months.”
Schembri: “To us, it was doable. We checked with suppliers to get an idea. Without wanting to be arrogant, perhaps before we were using others’ yardsticks. Things used to take ages to get done before."
The witness talks up his penchant for efficiency.
"Certain solutions were so obvious, so logical and not done, it boggled my mind.
I used to hate picking up the phone on Sunday and not getting a reply."
'We did not invent the wheel'
9.57am Schembri says the “number one priority” was to slash the cost of energy production, to bring down tariffs.
“The idea was there, but not the project per se,” he says.
“We did not invent the wheel. This was a simple power station. My question is, how come the project was never done before?”
9.55am Judge Said Pullicino asks if specific projects – he mentions the Electrogas power station as an example – were put to the party before the election.
“No, never,” Schembri says.
The judges say other witnesses have said that there was a presentation given about a power station plan prior to the election.
"There was more than one [proposed] project. You have to take them with a pinch of salt," Schembri replies. "Electrogas was not presented to us, but other projects were."
9.54am Schembri says the party met “all sorts” in the run-up to the 2013 election.
“There was a desire and need for change and people were telling us what that change was to be,” he says.
The number one concern was high utility tariffs. Planning delays were also frequently mentioned.
He brushes aside talk of secret meetings at the fabled fourth floor of Labour HQ.
'Joseph told me he needed me'
9.47am Schembri says he then decided to “help Joseph” when Muscat entered politics.
“I went to his home to tell him that I would help him,” he says. “He told me he needed me.”
Schembri says that when Muscat asked him to be chief of staff following the 2013 electoral step, it was a “difficult step”.
Schembri was Labour’s campaign manager for that election, he confirms.
9.44am Schembri tells the board that he was at sixth form at St Aloysius with Joseph Muscat.
He says he had gone to work at One while still a student and Muscat had also wished to help out. Evarist Bartolo had found Muscat a place too.
They were among the people who started [Labour newspaper] Kulħadd, Schembri says. "Then I went to BOV for two years, and then started my own business for 20 years. That was pre-1996," he says.
9.41am Schembri tells the board that he will be answering all the inquiry’s questions.
9.40am “I’m being investigated for a €100,000 passport kickback claim and for my chats with Yorgen Fenech,” he tells the inquiry.
He is asked if he is a person of interest in the Caruana Galizia murder.
“So far, after being released on police bail, they have not said anything else,” he replies.
Right to not reply
9.38am Schembri tells the court he is under police bail [Schembri was arrested in connection with a kickback inquiry in September]. He is told he has the right not to reply to avoid self-incrimination.
Keith Schembri called in
9.35am The judges are out and the inquiry is in session. Keith Schembri is called into the courtroom to testify.
He walks into court, black ring file and pen in hand.
9.31am Prime Minister Robert Abela has said he expects the inquiry to wrap things up by December 15. That's tomorrow. The judges have pushed back against that imposed deadline.
Keith Schembri's lawyers
9.27am Keith Schembri is seated at a table outside hall 20, leafing through papers as he waits.
He is represented by lawyers Edward Gatt and Mark Vassallo.
State Advocate Chris Soler is present too.
9.24am The inquiry is led by three judges: Michael Mallia, Joseph Said Pullicino and Abigail Lofaro.
They have been asked to ascertain whether the state caused a real immediate risk to Carauna Galizia’s life, as well as whether it had effective deterrents and criminal investigative powers in place. Read more about the inquiry's terms of reference.
The Caruana Galizia family has its own legal representatives in the inquiry: they are Therese Comodini Cachia and Jason Azzopardi, both lawyers and PN MPs.
9.14am The inquiry has heard from all sorts of people over the past year, from OPM workers to journalists and ministers. Few witnesses, however, have been as anticipated at Schembri and his former boss, Joseph Muscat.
Muscat spent five hours testifying at the inquiry two weeks ago. Will Schembri's testimony last as long?
9.10am Good morning and welcome to this live blog. We're at the Valletta law courts.
The session is scheduled to begin at 9.30am.
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