GUEST POST: Could this have been the Egrant roadmap?

The author, who is known to me, had written about this subject on this blog some time ago.

So far, investigators have been unable – maybe intentionally – to come up with the name of who was the ‘original’ local mysterious real owner of Panamanian registered company Egrant. Why I lay stress on the word ‘original’ will become evident later in this article. My conclusions are based on such factual information that has emerged so far and also a good idea of how notoriously secretive offshore financial jurisdictions (e.g. the Bahamas; British Virgin Islands; Cayman Islands and Panama) have traditionally been used mainly for tax evasion reasons but also, very often, to hide funds gained from illegal or even criminal activities.

Malta’s reputation has suffered immensely from the revelation over the past few years that one of our politicians, Konrad Mizzi and former Prime Minister Joseph Muscat’s Chief of Staff, Keith Schembri (now under an indictment for alleged fraud, forgery and other misdeeds) had established companies in Panama (respectively named Hearnville and Tillgate) with the intention of each receiving €5,000 daily from Yorgen Fenech’s Dubai registered company, 17 Black and, additionally, from a company registered in the BVI (linked to Schembri). This came to light after the two Panamanian company owners had publicly declared that they had done nothing wrong as the companies were intended for private family purposes by Mizzi and for business purposes by Schembri. But now the truth has come to light.

The above-mentioned three offshore companies are only part of a much wider web of companies established in offshore financial centres of ill repute. Much has already been written on the subject and the purpose of this article is to attempt to map out what, to my mind, is the likely roadmap, and how this went awry, although so far the likely changes in Egrant’s ultimate beneficial owner (UBO) remain nebulous. This notwithstanding the fact that, thanks to the Panama papers revelations and to a group of international journalists, including our brutally assassinated Daphe Caruana Galizia, we have definite knowledge of who were the UBOs of Hearnville and Tillgate; and even 17 Black. In the case of Egrant, what is indisputable is the fact that its UBO was more important than Mizzi and Schembri at the time that Nexia BT (NBT) transferred ownership to the, as yet, undisclosed person(s).

Coming back to Egrant, Mossack Fonseca Panama (MF) was in the business of registering companies there and subsequently selling these so-called shelf companies (with a nominal paid-up capital represented by registered or bearer shares) to willing buyers providing also nominee shareholders and directors (usually MF’s own clerks) so as to cloak the names of the true owners. Three of these shelf companies were bought by NBT early in 2013 with the clear intention of these being used, soon after the March 2013 general election, by Mizzi, Schembri and, in the case of Egrant, by somebody whose name, according to an email from Karl Cini of NBT to MF, was so important that this could not be notified in black and white but revealed only through a Skype call. All facts.

For a few days NBT (or rather Brian Tonna) would have been recorded by MF as being the owners of the three companies but title would then have been transferred, by way of the requisite simple paperwork, from NBT to the real owner(s) who wished to make use of Egrant (the same applies to the two other companies), obviously after NBT were paid the relevant fees. So as to make doubly sure that the name of Egrant’s real UBO was well protected, its shares were issued in bearer form thus making unnecessary the signing of transfer forms and other formalities if at any time it became necessary to switch ownership to a new UBO.

So as to give Egrant’s real UBO some evidence of ownership (more so if he/she preferred that the bearer share certificate be retained by MF in Panama or elsewhere for secrecy purposes) MF would have issued to the owner a Letter of Trust (LT) confirming the name of the real owner of the company. At any time that the UBO wished to change ownership, all that was necessary was for instructions to be given to MF (always through NBT as the agents who would have been given full powers by the real owner to act as may be found necessary) and thus authority to issue a new LT in the name of a new owner as and when required. As the shares were in bearer form there was no need for a fresh share certificate to be issued and all that was needed was for a new LT to be issued in the name of Brian Tonna thus recording him once again as Egrant’s UBO, as was the case when NBT originally bought the company from MF.

NBT were left with the task of looking after all communications between the UBOs of the three Panamanian companies thus eliminating the risk of the real UBOs becoming known through any communication leakages. Evidently it never crossed the minds of Mizzi and Schembri that the revelations that emerged from the Panama papers early in 2016 would put paid to all the attempted secrecy. Once these leaks came to light, NBT went into panic stations and did everything within their capabilities to eradicate from their records any correspondence or other references to Egrant and its real UBO. One will recall that the lights at NBT’s offices were on right through the night over the following week-end and on that Monday morning several black bags of shredded paper were noticed outside their offices. Egrant as well as Hearnville and Tillgate were dissolved in April 2017 but not before efforts were made by NBT to put pressure – unsuccessfully one should add – on MF to produce a document, for submission to the inquiry led by then Magistrate (now Judge) Aaron Bugeja, giving false information that Egrant’s UBO was Brian Tonna. There was a flurry of emails between NBT and MF in January 2017 when the former pressed the latter to create false and backdated documentation regarding Egrant’s ownership.

Evidence later emerged that there existed in NBT’s computerised records a sub-folder marked ‘Egrant’ that had been attached to an NBT laptop but no proof could be traced by the investigators as to its contents. Evidently, Tonna and Cini made sure that the relative pen drive or other digital device was kept well away from the police who eventually raided their offices, well after the cleaning up week-end and even throughout all the time in which NBT was given the opportunity to make a complete clear out, with the then police chief Lawrence Cutajar turning a blind eye, as he did when vital evidence was allowed to be taken away from Pilatus Bank. Since then, Tonna and Cini, together with two other NBT senior officials have been indicted to face charges for fraud; forging of documents; false accounting and money laundering.

It is important here to highlight that the terms of reference of the inquiry requested by then prime minister, Joseph Muscat, were apparently drafted by himself. It appears from statements made by Muscat himself that he craftily requested that the investigation determined if he or a family member was then (not if they had ever been) Egrant’s UBO. This point cannot be over-emphasised as Magistrate Bugeja was not asked to ascertain if the Muscat family could at any stage have been connected with Egrant. Indeed, the Magistrate had made it known publicly that his inquiry was restricted to the alleged ownership of Egrant by Michelle Muscat; not if she ever was the owner of that company. The inquiry concluded that no documentation had been found linking the former prime minister, his wife or his family to Egrant. Quite a different kettle of fish.

Pilatus was a vital element in the roadmap. The bank was hastily licensed by the MFSA in January 2014 as a credit institution and this was upgraded to a more comprehensive category 2 banking licence in August 2015 when due diligence procedures should have been taken to a higher level, but apparently were not. According to sketchy details on its website at the time, the bank offered services to private and corporate clients, respectively to high-net-worth individuals and financial institutions; the areas served being Europe, the Americas and Asia. Later, the website also claimed that Pilatus was the 13th largest bank in Malta with deposits topping €300 million. It transpired that the bulk of these deposits belonged to politically exposed persons at the highest levels from Azerbaijan. By the time the bank had been given a banking licence Pilatus had already accumulated €223 million in customer deposits in two years. Clearly, the strategy was to have a local bank whose main shareholder and CEO, Seyed Ali Sadr Hasheminejad, was ready to permit all sorts of money laundering activities and other fraudulent and dubious transactions not only by companies connected with local politically exposed persons but also by members of the ruling family in Azerbaijan.

In the darkness of late one evening Pilatus’ CEO was seen making a hurried visit to the bank’s Ta’ Xbiex premises claiming, when his presence there at such an unearthly hour was questioned, that he simply went to collect a few papers. He was challenged by a NET News reporter and photographed exiting the bank by a back entrance in the hope of not being noticed, along with a female staff member, holding a large travelling case and hastily leaving the scene. Later that night a private jet flew with no passengers to Dubai, first making a stop on the way in Baku, Azerbaijan.

All Ali Sadr needed to spirit away was any documentary or other evidence concerning Egrant (including the LT held in the bank’s safe which the ex-employee Ms Maria Efimova claimed to have seen in the course of her employment there) together with the pen drive or other digital device containing whatever records the bank had concerning the three Panamanian companies as also regarding all other persons/companies pertaining to politically exposed persons from Azerbaijan.

It was established by the Bugeja inquiry that Pilatus operated a ‘hidden’ filing system and dual accounting. This facilitated the quick removal of any incriminating records by simply taking away the secret ‘hidden’ records. So, the claim that his case contained his personal clothing could well have been true but the fact remains that vital information could very easily have been removed from Pilatus late that evening and spirited out of Malta whilst Commissioner of Police Lawrence Cutajar was munching away at a fried rabbit dinner with his friends at an Mġarr restaurant.

Quite apart from the fact that the three companies ended up using Pilatus after their failed attempt to open bank accounts in various overseas jurisdictions, why was Panama the offshore centre chosen by all three companies? Clearly because Panama is one of the most secretive financial offshore centres where there is no requirement for companies registered there to maintain accounting records, nor to file an annual return. Due diligence is non-existent. All that is required is the payment of an initial registration fee and, subsequently, annual charges for a company to be confirmed as ‘being in good order’ apart, of course, from payment of fees for nominee shareholders (for registered shares) and directors (usually just clerks who sign documents blindly). Incidentally, MF admitted – when requested for information by the Bugeja inquiry – that they themselves had no idea who was Egrant’s UBO after the company’s ownership was transferred to Tonna/NBT in 2013. And this notwithstanding the fact that Cini had provided the information by means of a Skype call so as to avoid any written communication between NBT and MF.

The above are all logical conclusions that should have led the investigators to seek ways and means of legally relieving Tonna and Cini of their excuse that they were bound by professional secrecy to match their knowledge with the evidence given by Ms Efimova that the document she allegedly saw, when working at Pilatus Bank, showed Michelle Muscat as being the real UBO of Egrant.

In a report published in the print media in December 2019, Ms Efimova was reported to have said, in an interview with the then commentator (now MP) David Thake, that she had told slain journalist Daphne Caruana Galizia that she hadseen documents, whilst employed with Pilatus, showing that Michelle Muscat was indeed Egrant’s UBO. She went on to say “maybe the police should go ask about the ‘second system’ or maybe no, because maybe they have destroyed everything by now”. It is reasonable to assume that, through the inaction of the police at that time, the evidence was no longer there by the time that the MFSA removed Pilatus’ CEO and appointed an administrator in March 2018 – much too late.

Based on the alleged fraudulent activities by Tonna and Cini of NBT that have come to light recently, it is most unlikely that they will ever reveal the truth even if they are relieved of the professional secrecy they have so far claimed.

“People who long to be rich are prey to trial; they get trapped into all sorts of foolish and harmful ambitions which plunge people into ruin and destruction”. (1 Timothy 6:9-10) One still lives in the hope that the time will come when we will see the police removing all the cobwebs surrounding the attempts made to conceal for whom NBT had originally purchased Egrant from MF and for the person who was said by Cini of NBT to be more important than Mizzi and Schembri finally to face justice in court.