Panama Papers: The Malta Independent article ‘not libellous’, Court of Appeal rules
panama papers the malta independent article not libellous court of appeal rules - Panama Papers: The Malta Independent article ‘not libellous’, Court of Appeal rules

An appeals court judge has overturned a judgment which sentenced The Malta Independent to pay €3,000 in libel damages to Brian Tonna and Karl Cini, saying the fact that the newspaper was asking questions was “beyond legitimate.”

This emerged in a judgment handed down this morning by Mr Justice Anthony Ellul, in an appeal against an earlier decision that found Pierre Portelli, David Lindsay and Stephen Calleja guilty of defamatory libel against Tonna and Cini.

In the impugned decision, Magistrate Francesco Depasquale had ruled that the paper’s reproduction “almost in toto” of a blog post by Daphne Caruana Galizia meant that it had made her allegations its own and that the article was intended to reaffirm the allegation that Keith Schembri and Malcolm Scerri had made use of falsified documents to open offshore companies. This had been reflected in the comments section underneath the article.

Despite not being an editor Portelli had to bear some of the responsibility for the article because he had made contact with HSBC’s head of communications and had been told that the issue was a simple administrative error.

The defendants had filed an appeal, arguing amongst other things, that the first court had made a mistake in interpreting the testimony of HSBC’s representative. In addition to this, the third party comments had simply reflected information already in the public domain, argued the newspaper.

The court of appeal examined the timeline of events.

On 8 May 2016, The Malta Independent on Sunday had published an article titled “Panama Papers: HSBC investigation expected into alleged fraudulent documents vouching for Keith Schembri and Malcolm Scerri”. On the same day, on its online portal, another article was issued titled “Updated: Keith Schembri, Malcolm Scerri deny fraudulent documents allegations”. None of the articles had an identified author.

The first article wrote that HSBC was expected to launch an investigation into “the possible fraudulent presentation of documents concerning OPM Chief of Staff Keith Schembri and Malcolm Scerri, the general manager of the company Mr Schembri owns, Kasco Ltd, sources have told this newsroom”.

The article was related to a blog post on Daphne Caruana Galizia’s online blog, in which two documents dated 27 May 2013 on an HSBC letterhead, were titled “Information Report.” In them, it was declared that Keith Schembri and Malcolm Scerri had been known to the bank for a number of years “…. as honest and trustworthy and unlikely to enter into commitments he would be unable to fulfil. Highly esteemed in his business circles. Considered to be a good business relationship”.

The address to an Attard branch of HSBC was printed on the documents, noted the court. “Therefore they give the impression that they were issued by this office. But Caruana Galizia wrote that she had information that the Attard branch of HSBC had been closed since February 2012. The witness Franco Aloisio confirmed that the branch had been closed on 15 February 2012.”

The two documents had been addressed to BTI Management Limited, a company in which the plaintiffs were directors.  The only reference to the plaintiffs, said the court, read : “If this turns out to be case, action would very well be taken by the Malta Financial Services Authoirty, which could, in turn, result in punitive action against the directors of BTI Management Limited, who include Brian Tonna and Karl Cini. Both men are linked to Mr Schembri and are also heavily implicated in the Maltese spectrum of the Panama Papers.”

The story had later been updated with denials by Schembri and Scerri of having ever presented fraudulent documentation.

“That a newspaper comments and asks questions is beyond legitimate. The fact that no questions were sent before publication does not mean that the author or the editors are guilty of defamation. Defamation would subsist had the newspaper taken the position that they had falsified the documents in the article. This is not the case.”

The next day, said the court, HSBC had sent an email to Schembri, confirming that the report issued by the bank had been legitimate and issued under normal procedures. In an internal bank email, the official who had issued the report had explained “regarding the bank address of the relative reports, at that time, the address of CMB here at Qormi was not automatic, but the first ‘automatic’ address was that of Attard. Hence the address. This was an oversight from my part that I did not check the bank address at the bottom of the report.”

The day after that, on May 10, the plaintiffs had filed for libel. That same day, their lawyers had demanded that the paper retract its story and apologise. Portelli had replied to say that the paper would publish the plaintiff’s declaration, adding that “In the meantime the paper cannot apologize as yet, not until the bank or your clients’ show us the original documents. A retraction of the article cannot be made due to the fact that this is now an exhibit in the libel cases filed against us by your clients”.

On May 11, the paper published an article titled “Updated: HSBC 2013 documents on Keith Schembri and Malcolm Scerri authentic, not fraudulent” which explained what had happened and that HSBC had “taken full responsibility of the matter… This newsroom is now satisfied that in this matter no wrongdoing can be attributed to Mr Keith Schembri and Mr Malcolm Scerri, or their financial consultants Nexia BT. This newsroom acted in good faith and probed the issued until it was finally cleared by HSBC in its statement today”.”

In its final decision on the matter, the Court of Appeal, presided by judge Ellul said that the issue had to be taken in the context of the Panama Papers revelations which were all over the news at the time.

With Keith Schembri being the Chief of Staff at the Office of the Prime Minister and therefore one of the PM’s closest aides, it would be “obvious to everyone” that his mention in the Panama Papers and his companies in the BVI would draw the press’ spotlight on matters such as these. The same applied to Tonna and Cini who not only serviced Schembri but were also mentioned in the Panama Papers themselves.

“An important duty of the media is to act as a watchdog on those in public life and report things which are of public interest,” said the judge, ruling that the material was of public interest.

The newspaper had not taken the position that the documents were falsified, said the judge, but were simply reporting what Caruana Galizia had written in her blog. The fact that the documents appeared to be issued by a long-closed branch of the bank raised a legitimate question as to their authenticity.

The fact that the article stated that if falsified, the documents would be subject to sanctions by the MFSA was not defamatory, ruled the court, because it was obvious that had the documents been faked, there would have been repercussions.

The Court of Appeal observed that in both articles, “nothing defamatory had been said about the plaintiffs. They only report facts which were true and then comments on what the consequences could be if the documents were falsified.”

The first court had been wrong when it said that Portelli had been notified that the issue was an administrative error but had omitted to include it in the article, said the judge. From his testimony, it emerged that Aloisio had spoken to Portelli after the publication of the article.

The plaintiffs had argued that professionalism required that the journalists check with HSBC first before publishing, but it was obvious that the bank was not going to give information about its clients to the press, noted the court.

The judge said he was in no doubt that the article itself was not defamatory to the plaintiffs and revoked the fines imposed for this. Not so the comments, however, which alleged that Nexia BT had “faked the documents for them” and that Nexia, Tonna and Cini should be stripped of their professional warrants and licences.”

These posts were not expressions of opinion, but were attributing the falsification to the plaintiffs. Readers could not simply write whatever they wanted to.

“Whilst the newspaper was very cautious in how it reported the news, the comments section was allowed to be a ‘free for all’ as often is happening.” In addition, there were not so many comments that the newspaper would have had difficulty in controlling them.

The news portal was responsible as an intermediary for the comments of third parties published on its online stories, said the Court of Appeal, ordering the newspaper to pay €500 in damages to each plaintiff for this.


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