Nexia BT auditors Brian Tonna and Karl Cini resigned from the Institute of Accountants because they disagreed they should be investigated over their professional involvement in the Panama Papers, the Times of Malta learnt.

“The institute was looking into the matter to decide whether Mr Tonna and Mr Cini should be expelled in view of the allegations of their possible involvement in money-laundering activities exposed by the Panama Papers, particularly their professional conduct as auditors,” industry sources said.

The sources noted that the institute continued with its investigation despite the two auditors’ opposition but the process was stopped once the two decided not to remain members.

The Institute of Accountants cannot revoke the professional warrant of the two accountants, which is the competence of the Accountancy Board appointed by the Minister of Finance.

When contacted, a spokesman for the institute declined to comment on internal affairs.

The Institute of Accountants cannot revoke the professional warrant of the two accountants, which is the competence of the Accountancy Board appointed by the Minister of Finance. It can only revoke their membership in the institute, which, the sources noted, would reflect badly mainly on them but also their firm’s reputation.

It is not known whether the Accountancy Board, the watchdog of the accountancy and audit profession, is dealing with the matter and, if so, how. The board remained unconstituted for about six months last year and was re-appointed in April 2016. Information related to the Panama Papers, which were officially released in May, had been trickling out since as early as February 2016.

When contacted, Mr Tonna confirmed he had resigned from the institute in view of the investigation into his professional conduct.

There are commercial interests underlying the premature and hasty action taken against me

Accusing the institute of “abuse” and discriminating against him “for political reasons”, he said “there are commercial interests underlying the premature and hasty action taken against me, which is based, now evident more than ever, on spurious allegations”.

Mr Tonna said he “would have gladly cooperated with the MIA committee and rebutted the blatant allegations which they referred to and which I flatly and adamantly refute, had the MIA allowed the court inquiry to be concluded first, as was my fundamental right”.

Mr Cini also confirmed his resignation, adding that “while I offered full cooperation within my legal rights and duties, my request to wait until the ongoing inquiry is concluded was completely and repeatedly ignored”.

Mr Tonna said he “would have gladly cooperated with the MIA committee and rebutted the blatant allegations ... had the MIA allowed the court inquiry to be concluded first

According to the Panama Papers, Nexia BT and its sister firms gave financial advice on the complex overseas financial vehicles set up for Tourism Minister Konrad Mizzi and the Prime Minister’s chief of staff, Keith Schembri.

It also emerged that Mr Tonna was a shareholder of the local arm of Mossack Fonseca, the Panama-based law firm involved in setting up secret companies in Panama.

Mr Tonna was also named in reports by the Financial Intelligence Analysis Unit as having been the ultimate beneficiary owner of a British Virgin Islands company through which kickbacks from the sale of Maltese passports were allegedly transferred to Mr Schembri.

Both Mr Tonna and Mr Schembri denied this, the latter insisting it was a repayment of a €100,000 loan he gave to Mr Tonna. The FIAU questioned the ethical standards of both men, noting it was ethically prohibited for Mr Tonna to take a personal loan from his client.

At the time, Mr Tonna was the auditor of Mr Schembri’s business group, Kasco. It is not known whether he still is.

“The fact that certain lines might have been crossed should still be looked into by an investigator, especially once it is evident that [Mr Tonna and Mr Cini] appear to have had no qualms about compromising their professional career and the reputation of their business in order to proceed with these arrangements,” the FIAU commented at the time.

It concluded that the transfer of passport proceeds amounted “reasonable suspicion of money laundering” but so far, the police are not known to have taken any legal action over it. A magisterial inquiry into the allegations, prompted by the PN, is ongoing.

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