Minister Konrad Mizzi and the Prime Minister’s chief of staff Keith Schembri wanted to avoid informing Maltese banks about their New Zealand trusts, new evidence in the Panama Papers shows.
E-mail exchanges between Nexia BT’s senior partner Karl Cini and Mossack Fonseca New Zealand show that two bank reference letters were being requested in order to set up the trusts for Dr Mizzi and Mr Schembri.
Mr Cini balked at this and asked Mossack Fonseca if there was any way to get around it.
“It is not common to have more than one bank and my clients would like to avoid informing their banks here,” Mr Cini said in an e-mail dated May 23, 2015 with the subject line “NZ foreign Trust”.
The Panama Papers have been made available to The Sunday Times of Malta through an investigative partnership with the International Consortium of Investigative Journalists (ICIJ) and German newspaper Süddeutsche Zeitung.
Dr Mizzi had always insisted he intended to publicly declare his New Zealand trust and company in Panama, and maintains he did so at the first possible opportunity in his declaration of assets.
He is facing a fine for failing to declare the trust to the local tax authorities.
Local accountancy firm Nexia BT acted as Dr Mizzi and Mr Schembri’s intermediaries with Mossack Fonseca, the Panama law firm at the centre of an 11.5 million document leak.
Mossack Fonseca set up the New Zealand trusts through its intermediary there Bentleys, an accounting firm.
Mossack Fonseca agreed to accept one bank reference letter on the grounds that two professional reference letters were provided.
Problems were encountered with the setting up of Dr Mizzi’s trust when Bentleys flagged up that his wife Sai Mizzi – who at the time was Malta’s trade envoy to China – had not been marked as a politically exposed person (PEP) in the documents provided by Mossack Fonseca.
Mossack Fonseca was told to mark Ms Mizzi as a PEP and resubmit the relevant documentation.
The trust documents also show that both Dr Mizzi and Mr Schembri agreed not to have the trust accounts prepared or audited by Bentleys.
The documents show Dr Mizzi’s trust was set to hold 100 per cent of the shares of his Panama company Hearnville. Similarly, Mr Schembri’s trust was to hold all the shares of his Panama company Tillgate.
The trust agreement shows that the two companies had not yet traded but were set to eventually provide “management consultancy and brokerage services”.
Another e-mail exchange shows how the trustees wanted a clearer explanation of the “joint venture” Dr Mizzi and Mr Schembri were entering into and the business their Panama companies would be engaging in.
Mossack Fonseca told Bentleys last October that Hearnville and Tillgate would be used as holding companies for operations in the recycling and remote gaming sectors.
Further clarification was offered in another e-mail last November, in which Mossack Fonseca said the future business plans of the Panama companies included, “trade in used tyres” and “waste trading”.
Mossack Fonseca told Bentleys that waste buyers were lined up in India and China.
In Dr Mizzi’s case it said the intended activities of the Panama company fell in his area of expertise before he became a politician.
In various public statements Dr Mizzi had always maintained the New Zealand trust and Panama company would be used to hold his London property and any rent coming from it.
Nexia BT’s Karl Cini signed a source-of-funds declaration on behalf of Dr Mizzi in which he said the minister had “extensive expertise in waste management trading and waste management services”.
“Mr Konrad was also partner and head of the energy and infrastructure for the EMEA region with Pcubed, a global leader in projects delivery. He set up the practice and developed major accounts with personal revenue amounting to GBP 5m[illion]”, an extract of the declaration reads.
In Mr Schembri’s case, Mossack Fonseca pointed towards him being a shareholder “in the largest paper wholesaler on the island with 75 per cent of the market”.
Mossack Fonseca reassured the trustees that no major funds would be “put” directly into the trust. It said funds generated by Mr Schembri’s Panama company will be “eventually” channelled into the trust.
Several attempts were made to open up accounts for the companies in Panama and Dubai among others, but the banks refused due to Dr Mizzi and Mr Schembri’s status as PEPs.
Mossack Fonseca sent out one e-mail to a bank with an attachment saying it was envisaged Mr Schembri’s company would start operating immediately and a maximum of half a million euros would be filtered through it.
Mossack Fonseca said most of these funds would remain in the same bank account “unless transferred up to the trust in the form of dividends”.
Another attachment in the same e-mail indicated a maximum of €200,000 would pass through Dr Mizzi’s company, which was also envisaged to start operating immediately.
As with Mr Schembri’s company, Mossack Fonseca said the majority of these funds would remain in the company bank account unless transferred to the trust in dividend payments.
KEITH SCHEMBRI: CORRESPONDENCE WAS EXTRANEOUS TO ME
In a statement in reaction to the above, Mr Schembri said the correspondence referred to was all extraneous to him, not having been part of any of the exchanges referred.
"On the 6th of May, through my local and international lawyers, I wrote to the ICIJ requesting a copy of the documentation held by them concerning my affairs so that I am in a position to effectively respond to questions concerning the setting up of my trust in New Zealand and my company in Panama," Mr Schembri said.
"The request was based on my rights as an EU citizen to have access to personal data held anywhere in the EU, and so that I am not subjected to a 'trial by media' without having the knowledge of the documents upon which allegations are being made. For unknown reasons ICIJ have refused to accede to this simple and reasonable demand." (see pdf below)
"That being said, as I have stated on various occasions the article in question confirms that all monies received by the company where to be channelled through the trust. The New Zealand Trust was declared to the New Zealand tax authorities with whom Malta has various bilateral information exchange agreements.
"On the other hand, I categorically deny that there was ever an intention for a joint venture to be set up with Dr Konrad Mizzi," Mr Schembri added.
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