Prime Minister Joseph Muscat has asked the inquiring magistrate to investigate allegations that secret Panama company Egrant is owned by his wife Michelle.
"This is the biggest political lie ever told in this country," he told a swiftly-called news conference about the claims published by Daphne Caruana Galizia on her blog.
"In front of the Maltese public, I swear, I categorically deny I had, or have, any type of undeclared account or company in Malta or overseas. We never signed any type of document which transfers shares of a company. I have never signed, never been offered to sign..."
In a subsequent statement sent through the Department of Information, the Prime Minister said he had asked his lawyers to contact the police commissioner and ask him to "inform a duty magistrate tonight to investigate allegations published by Daphne Caruana Galizia...preserve all evidence and give instructions to the Attorney General and police commissioner to take all necessary steps."
The statement came after a man and woman carrying suitcases were seen leaving the premises of Pilatus Bank - where Ms Caruana Galizia alleged that documents proving her claims were being stored - late at night.
Dr Muscat challenged Ms Caruana Galizia to publish proof backing her claims and insisted that any such documentation would have to be authenticated.
He said that both he and his wife would be taking legal action against Ms Caruana Galizia and the Nationalist Party media, with lawyers asking for libel cases to be heard with urgency.
'PM has lost all moral authority' - Busuttil
In a televised address to the nation, Opposition leader Simon Busuttil said the Prime Minister had lost all moral authority to lead the country.
The allegations made, he said, were the most grievous and the people were angry and felt deceived.
"The country does not deserve this and it cannot remain in such a situation. The least I would have expected today was for the Prime Minister to appoint an independent inquiry to carry out a serious investigation on the allegations made.
"Instead he said the responsibility is mine. The responsibility is the Prime Minister’s because Joseph Muscat put himself in this situation when he kept (Minister) Dr (Konrad) Mizzi and (chief of staff) Mr (Keith) Schembri with him at Castille. Because of this no one can believe him," Dr Busuttil said.
He said that the country did not deserve a Prime Minister who had a black cloud of corruption shadowing him and he expected the authorities to take steps to ensure that justice and law reigned in Malta.
"I would have expected the police commissioner to open an investigation and seal Pilatus Bank in presence of a magistrate to see that evidence is elevated.
"Instead this is being lost. I am holding the Police Commissioner personally responsible and I am insisting with all other authorities to do what they have to do in the national interest.
"The people do not deserve this. The country deserves better. I appeal to all people of goodwill to unite so that together, as a national force, we will remove the most corrupt government in the country’s history and give the people the country a government they deserve. I am confident we can do this together and get the country out of the alley they have thrown us in," he concluded.
Dr Busuttil made his address before Dr Muscat's announcement that he had asked for an investigation into the claims by the duty magistrate working yesterday evening.
We never signed any type of document which transfers shares of a company
Caruana Galizia's allegations
In a blog post, Ms Caruana Galizia said that shares in Egrant Inc are held by Mossack Fonseca nominees for “Mrs Michelle Muscat”.
She said that a safe in the kitchen at the offices of Pilatus Bank in Ta’ Xbiex contains certain files and particular documents marked for extreme secrecy.
The Nationalist Party has long questioned the ownership of Egrant, noting that it was set up through Nexia BT at the same time as minister Konrad Mizzi and chief of staff Keith Schembri set up their own companies in Panama.
The safe, which used to be in the bank CEO's office, was for some reason moved to the kitchen, Ms Caruana Galizia wrote.
She said that the safe contains documents pertaining to Russian clients of the bank, and to Maltese politically exposed persons, including former minister John Dalli and Mr Schembri, both of whom had accounts with the bank in their own personal names.
Mr Schembri, she said, used his account regularly and his statements showed highly suspicious transactions involving people in Azerbaijan. This account was separate to the one held in the name of his once-secret Panama company, Tillgate Inc.
The safe, Ms Caruana Galizia claimed, also contained the documents that answered who owned Egrant Inc, the third company Nexia BT's Brian Tonna set up in Panama, “for somebody so important that the name had to be given over Skype, rather than in an email as it was for Konrad Mizzi and Keith Schembri”.
Mrs Muscat’s name was also given on another document held in the bank’s safe: the account opening form for Egrant Inc, she claimed, adding that the documents had been scanned and uploaded to the cloud, for security purposes.
'A lie I cannot ignore' - PM
During the news conference, Dr Muscat said he and his wife had for long decided to ignore Ms Caruana Galizia despite the "lies said against us, against our parents" but this latest claim was the limit.
"A lie like this cannot be ignored, especially when it is being substantiated in the most irresponsible and unethical way by the Opposition leader and his party’s media."
Asked why he had not taken action against his chief of staff Keith Schembri and Minister Konrad Mizzi in spite of evidence that they were found to have secret companies in Panama which they did not declare with the local tax authorities, Dr Muscat said that he did.
“I removed Minister Mizzi's portfolio and I took measures. One may not agree with the level of measures I took but this is another issue. I repeat that the latest allegation concerning me and my wife is an outright lie,” Dr Muscat insisted.
AD, PD call for investigation
The Nationalist Party said it has contacted the police commissioner about the claims but his reply was 'no comment'.
In a Facebook post, Alternattiva Demokratika chairman Arnold Cassola said if Ms Caruana Gazlia's claims are true, then Maltese democratic values are at stake.
"Daphne: your words and writing are not enough. Publish all the documentation as soon as possible to substantiate your words," he wrote.
In a statement later, AD requested an immediate investigation for the known facts and documents to be examined so that the necessary and required criminal action could be initiated.
Partit Demokratiku leader Marlene Farrugia called on the police to embark on an immediate investigation of Egrant and the other two companies that had been opened at the same time.
Former AD chairman Michael Briguglio asked for Dr Muscat's resignation.