David Lindsay & Kevin Schembri Orland

The Prime Minister’s Chief of Staff Keith Schembri had three quarters of a million dollars injected into his British Virgin Islands company in 2014 alone, documentation held by The Malta Independent conclusively shows.

The massive injection of funds into the company took place in the same year that his Maltese holding company declared losses of over €400,000.

The new information comes to light after The Malta Independent became an official partner of the International Consortium of Investigative Journalists and the German newspaper Suddeutsche Zeitung and gained full access to the full set of the Panama Papers.

Investigations so far by this newspaper do not show the extent of the total assets held by the company but the amount could far exceed this figure as the company was first set up in 2011. The funds injected into Mr Schembri’s company were combined in denominations of euro, sterling and US dollar holdings.

Financial specialists speaking with this newspaper yesterday described the financial manoeuvre as highly dubious from a legal perspective, and at best highly unethical considering it was enacted when Mr Schembri had already been installed as the Prime Minister’s Chief of Staff.

The accounting documentation also shows that Mr Schembri’s company, Colson Services Ltd, based in the well-known tax haven of the British Virgin Islands, also owed over US$820,000 to other companies within the “group” for over a year.

Other companies within that group most likely include Malcolm Scerri’s British Virgin Islands company Selson Holding Corporation, which show an injection of almost US$1.2 million in 2014. Mr Scerri took over the management of Mr Schembri’s Malta-based Kasco Ltd and Kasco Engineering when Mr Schembri was appointed as the Prime Minister’s Chief of Staff in March 2013.

While the currency of amounts is not specified in the documents seen by this newspaper, it is assumed the US$ dollar has been used since it is the official currency of the British Virgin Islands.

Also possibly related to the financial machinations employed by Mr Schembri and Mr Scerri is the British Virgin Islands company of former Allied Group managing director Adrian Hillman, Lester Holdings Group Ltd, which shows an injection of almost US$650,000, again, in 2014 alone. The association between this company and those of Mr Schembri and Mr Scerri appears all the more plausible given the obviously similar formatting of the accounting documents and the allegations of Mr Hillman’s cosy yet questionable business relationship with Mr Schembri.

Further reinforcing the link between not just the companies of Mr Schembri and Mr Scerri, but also that of Mr Hillman are emails between Nexia BT’s Karl Cini and an executive at Mossack Fonseca, whose compromised email server is the root of the Panama Papers. Mr Cini and his colleague Brian Tonna have been heavily linked to the Panama Papers and to Mossack Fonseca’s Malta branch.

In a Panama Papers email with the subject ‘Re: Lester-Colson-Selson’, Mr Cini writes to a Mossack Fonseca executive assistant: “As for your information required, please note that all these three companies will be holding companies, they will hold shares in a Cyprus company (to start with), and all bookkeeping and records will be kept at our office.”

In response, the Mossack Fonseca executive assistant confirmed this would indeed be the case.

This newspaper can also confirm that last Wednesday BT International, owned by Nexia BT, transferred its former entire shareholding in the Malta branch of Mossack Fonseca to M.F. Private Holdings Ltd based in Nassau in the Bahamas and Mossfon Holdings Ltd in Georgetown Grand Cayman.

Less than two months after the 2013 general election and being appointed as the Prime Minister’s Chief of Staff, Keith Schembri created several new levels of secrecy for his company in the British Virgin Islands.

While before the election Mr Schembri undoubtedly played an important role within the Labour Party, his appointment as Chief of Staff left no doubt that he had become a Politically Exposed Person.

Mr Schembri was originally the sole shareholder, with a single share, and director of a British Virgin Islands registered company called Colson Services Ltd up until 7 May 2013 – less than two months after the Labour Party won the general election.

According to documents in the Panama Papers, Mr Schembri increased the number of the company’s shares from one to 50,000 on 7 May, 2013. On the same day, ATC Administrators Inc. took on all 50,000 shares and Mr Schembri relinquished the single share he had held until then – effectively removing his name from the company.

On the same day, 7 May 2013, Mr Schembri also resigned as the company’s director, and in his stead appointed Jaqueline Alexander, a Mossack Fonseca employee who serves as a director of over 7,200 companies.

Later, on 5 July 2013, Jaqueline Alexander granted power of attorney for the company to Nexia BT’s Brian Tonna and Karl Cini. Mr Tonna had been Mr Schembri’s accountant for 18 years and his firm, Nexia BT.

Mr Scerri also had a company in the British Virgin Islands, Selson Holding Corporation, which was also set up on 24 January, 2011. Malcolm Scerri was the sole director and the only shareholder of the company’s single share.

As with the previous company, when Keith Schembri resigned as the sole director of Colson Services Ltd, Malcolm Scerri, on 7 May 2013, resigned as director of Selson Holding Corporation.

In the same manner, Mr Scerri told ATC Administrators Inc. to appoint a director as he had resigned, and a new 50,000 share certificate was issued, thus raising the number of shares to 50,000. ATC Administrators Inc. took the 50,000 shares. On 5 July 2013, the director who took over the company, Giselle Ocampo, gave Karl Cini and Brian Tonna power of attorney.

Prime Minister Joseph Muscat has said on a number of occasions that Mr Schembri enjoys his trust. When recently asked specifically about the possibility of inquiries into the actions of his Chief of Staff, Dr Muscat said he had faith in Mr Schembri, that he was a businessman before taking up his position at Castille, and that he had acted correctly when he relinquished his directorships when appointed to the position. He also said that he did not believe many of the “incorrect things said about Mr Schembri that had demonised him”.

Efforts to reach Mr Schembri for comment yesterday proved unsuccessful.

Statement by Keith Schembri

In a statement Sunday morning, Mr Schembri said, "The entire story is riddled with inaccuracies, incorrect facts and unfounded allegations and assumptions. No monies were transferred to my BVI company in 2014. All taxes have been paid on the funds held under the BVI company. The BVI company, its operations and activities all precede my entrance into politics. It is curious that the Independent, whilst failing entirely to understand basic documents, has once again, to its detriment, decided to repeat allegations and insinuations made by certain bloggers who have no journalistic integrity. It is now evident that the Independent has agreed to form part of a character assassination attempt at the behest of certain quarters that have taken over the Nationalist Party."

Reacting to another story in the media, Mr Schembri issued another statement, saying that he was never involved in correspondence between Nexia BT’s senior partner Karl Cini and Mossack Fonseca to avoid disclosing information to Maltese banks about their New Zealand trusts.

Mr Schembri said that on 6 May, he wrote to the ICIJ through his lawyers to ask for a copy of the documents mentioning him in order to be able to respond to any allegations. He said that this request was made as a European citizen so as to access his personal data and not be subjected to a media trial without knowing the contents of the Papers. Mr Schembri said that the ICIJ refused to give him access. He also said that his trust was declared in New Zealand and denied any allegations that he wished to enter into a joint venture with Konrad Mizzi.