The records, among 11.5 million documents leaked in a global media investigation led by the International Consortium of Journalists, show how Mossack Fonseca bragged to clients how easy New Zealand laws made it for foreign investors to hide their tax-free profits.

New Zealand Prime Minister John Key was forced to defend the country's tax laws last week, dismissing an Australian Financial Review report that detailed the offshore trusts set up in New Zealand for Mr Schembri and Mr Mizzi.

The saga in Malta began with an email on March 14, 2013, from Karl Cini, a partner at Maltese financial adviser Nexia, to Mossack Fonseca's Panama office.

Five day earlier, Mr Muscat's Labour Party had swept to power after 15 years of Nationalist Party rule, thanks to a strong campaign run by Keith Schembri, who made Mr Muscat's chief of staff.

Mossack Fonseca didn't reply to Cini's first email and he tried again on March 21.

New Zealand prime Minister John Key with British prime David Cameron at CHOGM in Malta on November 27 last year. Both have faced criticism in the wake of the Panama Papers leak. MATT CARDY / POOL

"When you can please send me details for setting up a Panama company and possibly a trust," he wrote.

The ultimate beneficial owner (UBO) for the Panama company and trust "will be an individual and I will speak to Luis on Skype to give him more details", Mr Cini wrote.


Next he turned to three companies in the British Virgin Islands that Mossack Fonseca managed.

"From now on I need to be the person of contact for these companies," Mr Cini wrote.

On January 24, 2011, an American financial intermediary, Michael Del Vecchio, had set up a British Virgin Islands company for Mr Schembri called Colson Services Ltd.

Mr Del Vecchio had also set up Selson Holding Corporation for Malcolm Scerri, who runs Mr Schemri's Kasco industrial group.

On May 10, 2011, Adrian Hillman, the managing director of Malta's leading media group, Allied Newspapers Ltd, also got a BVI company, Lestor Holdings Group Ltd, from Mr Del Vecchio.

These were all long-term account clients of Nexia BT—and now Nexia was cutting out the middleman, so to speak. Exit Del Vecchio.

And there would need to be some changes. "I need for each company a [nominee] director and a nominee shareholder is appointed," Cini wrote.

This would remove Mr Schembri's and Mr Hillman's name from the records, making them even harder to find.


Mr Cini also needed a new British Virgin Islands' company, Blue Sea Portfolio.

The British Virgin Islands companies exploded into the news last month, when Mr Hillman stood down from Allied Newspapers after Malta blogger Daphne Caruana Galizia reported that Mr Schembri had been making payments to the Hillman company as an inducement for Allied to buy newsprint from Kasco.

Mr Hillman and Mr Schembri have strenuously denied the claim.

Dormant companies

On August 8, 2013, Mossack Fonseca came through with Mr Cini's original order for a Panama company. But by now the order had grown to three Panama companies: Tillgate Inc, which would be controlled by Schembri, Hearnville Inc, which would be controlled by the newly appointed Energy Minister, Mr Mizzi, and a third company, Egrant, but this one had no details of its owner.

On paper all three were controlled by Mr Cini and a Nexia senior partner, Brian Tonna, under a power of attorney. But who was the third player behind Egrant?

It didn't matter, in the short term. The companies would lie dormant for a year, as the Maltese investors contemplated the next step: New Zealand trusts.

"Can you send me ASAP the quote for the COMBO Pack ... This is high priority," Mr Del Vecchio emailed Mossack Fonseca's New Zealand office in March 2014.


Mr Del Vecchio might have lost his high-profile Malta clients but he still had a solid clientele, including several offshore online gambling operators.

The combo packs he was chasing were a combination of New Zealand foreign trusts (which pay no tax on foreign income) and what is described as Look Through Companies (LTCs), which could be owned by the trusts, and which also pay zero tax on offshore earnings.

Buy them in combination and Mossack Fonseca would cut $1900 off the price. Mr Del Vecchio ordered four combos.

Cutting prices was part of Mossack Fonseca's marketing drive in New Zealand. "Chase the money," head office in Panama had ordered.

In 2012 Mossack Fonseca's New Zealand staff reported advice they received from an executive at Nexus Trust: "NZ has very weak laws in regard to due diligence; they only require utility bill and passport. Trust companies are not required to hold a licence."

You never have to explain in New Zealand

There was no need to register who put assets into a foreign trust (known as the "settlor") and a Staples Rodway lawyer explained another advantage: "The New Zealand definition of 'beneficial owner' is different to that of many other jurisdictions, in that we do not require due diligence on the person/s who will benefit from the funds."

In other words, you never have to explain who gets the money – and Mossack Fonseca never needed to know either.


Setting up a bank account was just as easy. "Sparkasse Bank Malta Plc is an excellent private bank," Mossack told a client. Its fee for opening the account was $US1500.

Mossack Fonseca's clients included a French family hiding money through Luxembourg, another hiding profits in San Marino, and an Argentinian wanting to send money to his children in the US.

"I had no idea about these people's backgrounds," Mr Del Vecchio told The Miami Herald. "I can't really vouch for clients."

On December 4, 2014, Mr Cini told Mossack Fonseca he would be setting up two New Zealand foreign trusts, which would own the Panama companies set up for Mr Schembri and Mr Mizzi.

It wasn't until May last year that Mr Cini's clients had their document ready to go ahead with the trusts.

Haast Trust was set up for Mr Schembri's company, Tillgate, while Rotorua Trust was set up for Hearnville, which was Mr Mizzi's.

While Schembri and Mizzi were the settlors of the trust (putting assets into it, in the form of the Panama companies), this did not necessarily mean they would be the only beneficiaries of the trust. New Zealand law did not require such details. Even so, the paperwork would take months to work through.

Mossack Fonseca's compliance division had realised that Mr Schembri and Mr Mizzi were Politically Exposed Persons.


Haast and Rotorua trusts

The due diligence procedure this required involved copies of passport for Mr Schembri and Mr Mizzi, and letters of recommendation, before Haast Trust was set up for Tillgate and Rotorua Trust set up for Hearnville.

It all took time and the clock was running. On August 8, with the trust formation still in place, Mr Cini wrote to Panama: "We are in the process of opening a bank account in Dubai for two of our Panama companies.

"The bank is asking as for the following documents which need to be attested from the UAE Embassy of Panama. They will then attest them further in Dubai."

Mr Cini wrote again on August 20: "How are the documents coming? I have a meeting with the BOs [Beneficial Owners] this coming Tuesday."

That would be Mr Schembri and Mr Mizzi that Mr Cini wanted to show the finalised trust documents to, on August 25.

But the combination of two Politically Exposed Persons and a Dubai bank account set off alarm bells at Mossack Fonseca.

"As both Settlors are PEP, our NZ colleagues need to be comfortable that sufficient due diligence has been carried out to ascertain that funds being settled are not subject to any corruption risk, and ideally that they come from income generated prior to the Settlors´ political appointment," Mossack Fonseca Panama told Mr Cini.


Perhaps he could get more information about the source of funds when he met the clients.

"With respect to Haast Trust, it would appear that there was some negative coverage regarding the tender process for supply of paper to the government shortly after the settlor's appointment as Chief of Staff, so if you could also include a detailed information about this," Mossack Fonseca's New Zealand wrote.

And what would the companies be doing? The clients' description, "'Management consultancy and brokerage' does not explain this," the New Zealand operative complained.

Remuneration for Mizzi's wife

Again on August 24, the day before Cini was to meet the Beneficial Owners, Schembri and Mizzi, Mossack Fonseca NZ noted: "There is also some negative publicity regarding the amount of remuneration for [Konrad Mizzi's] wife."

Mr Cini was still pressing for the documents for Hearnville and Tollgate for the Dubai bank, and now he wanted docs for Schembri's BVI company, Colson Services, as well. And he needed them by Friday, August 28.

Mr Cini didn't say what was happening on the Friday, but by the Sunday he was asking how the application for a bank account for the two companies in Panama was going.

On September 10 Panama came back: "Please note that the FPB Bank, have decided to not proceed with the opening of the bank account for the companies Hearnville Inc and Tillgate Inc for some reasons, the principal of them it's that the UBOs of the said companies are PEP."


Mossack Fonseca noted, "We have contacted two persons who will help us with these bank accounts."

It's not clear from the documents whether the attempt to open a Dubai account was successful. Mr Mizzi last week said no account was ever opened, and that the accounts were the initiative of Nexia. He never signed anything.

Meanwhile in this period when the attempt to open a bank account for the Panama companies had apparently failed, Nexia was working on another deal.

British Virgin Islands

This one involved Blue Sky Portfolio, the British Virgin Islands company that Mr Cini had set up in 2013 at the same as the Panama companies.

In November Nexia asked Mossack Fonseca's British Virgin Island's office to have the nominee directors certify an assignment of debt between companies linked to Pierre Sladden, another Nexia client and strong supporter of the government.

The documents showed that Sladden's company, Redmap Constructions Ltd, owed a Cyprus company A2Z Consulta, €900,000 for "the provision of services consisting in quality checks and negotiation with suppliers".

Apparently A2Z Consulta had sub-contracted the quality checks and negotiations to Blue Sea Portfolio in the British Virgin Islands, which was now due $US978,150 – and it turns out it was another Sladden company that would pay the debt.


This convoluted series of transactions was actually dated December 2014, the month that the New Zealand trusts were first ordered by Nexia.

Mossack Fonseca records show that behind a nominee holding it is Mr Sladden himself who owns the 50,000 shares in Blue Sea, though it's held in four blocs of 12,500 shares apiece. It's not clear if he is the ultimate owner of all the blocs.

"Kindly treat this email as urgent," a Nexia partner wrote on November 24 with another request to rush the documents.

On November 27 the prime minister, Mr Muscat, together with Mr Schembri and Mr Mizzi were mingling with heads of state, hosting the Commonwealth Heads of Government Meeting, including New Zealand's prime minister, who remained unaware of just how valued his tax laws were.

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