Keith Schembri

Keith Schembri is chief of staff to the Prime Minister of Malta, Joseph Muscat. He managed the 2013 electoral campaign that saw the Labour Party elected with the largest margin of victory in Malta since independence.^[1]

Kasco

Prior to his involvement in politics, Schembri established Kasco Holdings in 1996, a group of companies providing various services and products within the fields of graphic art and engineering.^[2] The group's flagship company is Kasco Paper.^[3] The financial affairs of the Kasco Group came under scrutiny when Schembri's name was mentioned within the Panama Papers leaks in April 2016.

Panama Papers

Schembri was one of the Maltese individuals mentioned in the initial Panama Papers leaks in April 2016, together with then Minister for Energy & Health Konrad Mizzi. These revelations led to calls for Schembri's resignation from Government on behalf of the Nationalist Party Opposition, civil society groups and independent MP Marlene Farrugia, who attempted to table a no-confidence motion in Schembri.^[4] As Schembri was not an elected official, this motion was later amended to censure the Prime Minister, under whose employ Schembri falls.^[5]

Schembri first set up an offshore shell company in January 2011.^[6] He went through a Spanish financial advisor to set up that company, Colson Services Ltd.^[6] On the same day Malcolm Scerri, managing director of Schembri’s company, Kasco Limited, also set up a shell company, Selson Holding Corporation, based in the British Virgin Islands (BVI). Then, four months later on 10 May 2011, Adrian Hillman, the managing director of Allied Publications, also set up a shell company, Lester Holdings Group Limited, also in the BVI. He also used the same Spanish financial advisor. Allied Publications publishes the Times of Malta; Daphne Caruana Galiza alleged March 12, 2016 that Schembri was giving Hillman kickbacks.^[7] Both men deny this accusation.^[6] The setting up of trusts and offshore companies is quite common in Malta especially when one considers that the economy depends on financial services.^[8] 714 Maltese companies were listed on the Panama papers and included names such as Louis Farrugia of Farsons, who is also Chairman of the Strickland Foundation, which owns Allies Newspapers, the publisher of the Times, former PN Minister Ninu Zammit among many others.^[9] Maltese financial services companies were also included in Panama papers, as they provide financial services to non-Maltese nationals in particular FZD Trustee and Fiduciary Services, whose CEO was a former PN Minister Francis Zammit Dimech and EMD, which is linked to Richard Cachia Caruana, Malta's former Permanent Representative to the European Union under the previous administration.^[10]

Various insinuations were made against Keith Schembri. However, it was later revealed that the Nationalist Party owed KASCO, Keith Schembri's company €121,000,^[11] as they were unable to finance their daily newspaper immediately prior to the last general election.^[12] His intervention can be viewed as saving the Nationalist Party's ability to convey its own message during an election campaign.^[11] Kasco, had to even intervene to help Allied Newspapers, publishers of the Times, to finance their investments and keep the company afloat.^[13]

After meeting with his board of directors, Hillman was put on leave. The board also commissioned an independent review of purchasing decisions.^[7] In June 2015 both Schembri and Mizzi and Schembri purchased Panama companies from the Mossack Fonseca-related firm ATC Administrators Inc, respectively named Hearnville Inc and Tillgate Inc.^[6] Both companies were shelf companies, already in existence and previously used for other business transactions. Shelf companies are more expensive than shell companies but allow a much higher level of secrecy.

Brian Tonna, managing partner of tax advisory and audit firm Nexia BT, is the Mossack Fonseca franchise in Malta. He also audits the accounts of Schembri's companies in the Kasco Group.^[6] Schembri hired Nexia to help him set up his New Zealand trust and associated company. Mizzi also used Nexia for this purpose; he says Schembri suggested an overseas trust and brought him to Nexia.^[14] Rotorua, Mizzi's trust, and Haast, the trust created for Schembri. are both run by Orion Trust (New Zealand). Under New Zealand law the trusts pay no tax on foreign earnings; New Zealand regulators may demand this information, but do not disclose it to other governments.^[6] Mossack flagged both Schembri and Mizzi as politically exposed persons due to their roles in the Maltese government,^[6] and noted "some negative coverage regarding the tender process for supply of paper to the government," and also concerns about the level of compensation received by Mizzi's wife.^[6] FPB Bank of Panama refused to open accounts for the two, judging them potential corruption risks.^{[6][15][16][17]}

However, Keith Schembri has lately won a libel case against the Nationalist Party's newspaper. The newspaper was ordered to pay €5,000 in case involving a man who ran away from the island due to debt problems. The Magistrate in his ruling said that "this court cannot ignore the fact that this kind of journalism is detrimental to the general field seeing that the report is not based on fact but rather on the intent to cause damage to Keith Schembri, who is considered to be a political adversary".^[18]

References