Former Chief of Staff to the Office of the Prime Minister Keith Schembri has revealed the existence of a WhatsApp group chat between himself, his private secretary Kenneth Azzopardi, former chief investigator in the Daphne Caruana Galizia murder case Silvio Valletta, former MFSA CEO Joseph Cuschieri, and alleged murder mastermind Yorgen Fenech.
Schembri on Monday became the latest high-profile figure, after former Prime Minister Joseph Muscat and former government minister Konrad Mizzi, to testify in the public inquiry into the murder of Caruana Galizia.
Answering questions from parte-civile lawyer Jason Azzopardi, Schembri confirmed the existence of the group chat, but said he could not remember if it was still operational. Schembri said that he could not remember the date when it was created, although Azzopardi suggested that it may have been around the time that the three men charged with carrying out the assassination of Caruana Galizia were arrested.
Valletta was transferred away from the case and retired from the force soon after it emerged that he had holidayed with Fenech in 2018. His wife, Justyne Caruana, was forced to resign from a ministerial post only days after being sworn in under a new cabinet as a result.
Cuschieri meanwhile recently also resigned from his post at the MFSA under a cloud of controversy after it emerged that he had travelled to Las Vegas during the transition period between his moving from the Malta Gaming Authority to the MFSA.
Photo: Mike Camilleri
Also during the sitting, Schembri insisted that he does not know who owns the company Macbridge, saying that this was included in documents by Nexia BT without him knowing.
Macbridge was, along with 17 Black, the company listed as a target client for Schembri’s Panama company.
“I don’t know who Macbridge belongs to – I told the auditors that I never gave them that name. 17 Black, I indicated myself, but Macbridge I did not”, Schembri told the inquiry.
Schembri – one of the most controversial figures in Malta’s recent political history – stepped down from the role of OPM Chief of Staff in November 2019 after he was questioned by police in connection with the Daphne Caruana Galizia murder case. Prime Minister Joseph Muscat’s resignation came only days later.
Fenech continues to allege that Schembri had a major role in the murder of the journalist, a claim which Schembri vehemently denied when he testified in the compilation of evidence against Fenech some months ago.
After Muscat, and along with Konrad Mizzi, Schembri will be the highest profile name to face the inquiry.
Mizzi testified three weeks ago, but did not answer the vast majority of the questions put to him, citing the fact that he is under investigation and out on police bail as the reason for this.
The inquiry is led by retired judge Michael Mallia and includes former chief justice Joseph Said Pullicino and Judge Abigail Lofaro.
The six-and-a-half-hour testimony can be viewed below:
16:24 The board upholds the request by the family for closing submissions to be made in this inquiry. The board puts the sitting off for presentation of notes and more information for Friday 29 January 2021 at 9:30am.
16:23 Comodini Cachia says the Caruana Galizia family are surprised by the State Advocate’s submission: “I can’t even understand how the State comes and says it has no final submissions to make and then sends a lawyer here to say that the people who had been fighting for two years for the right to make submissions should not do so.”
16:22 Said Pullicino: “The fact that the State Advocate didn’t participate would, if anything be a shortcoming of his.”
16:20 Mallia: “You’re telling me this now, when we’ve closed everything?”
16:17 Soler had argued that there was no adversiality in these proceedings and therefore there is no need for notes of submissions. He insists the State Advocate had no opportunity to bring witnesses.
16:13 Judge emeritus Michael Mallia dictates a decree.
16:13 Said Pullicino says the State is not on trial here. Comodini Cachia says she would be doing a disservice to her clients if she doesn’t make written submissions now. “If the State Advocate wants to renounce his right to present a note he could but I am going to,” she says.
16:11 Comodini Cachia: “I understand that the former PM comes in and says that the State Advocate did nothing, but representatives were here always and could ask questions. But if the State Advocate doesn’t want to make submissions, as a family we want to make submissions after two years fighting for the inquiry to be held and listening to over 100 witnesses.”
16:10 State Advocate Chris Soler who was quiet up till now stands up and argues that the office was only given observatory status. “The proceedings are of an observatorial nature not an adversarial one. The State Advocate could not bring up his witnesses, or cross-examine,” Soler says.
16:04 Comodini Cachia briefs the board with how long her closing arguments will take.
16:03 Schembri steps off the stand.
16:03 “Winning an election by 40,000 is more of a bad thing than a good thing, as people come and claim they voted for you,” he ends his six-and-a-half-hour testimony.
16:02 Schembri says that people were living a much better life than before. “That was my job as chief of staff. My PM told me to create wealth and help business… those were my KPIs,” he says his hands trembling as he tells a story about how he helped the family of an eight-year-old boy with Cerebral Palsy.
16:00 Schembri: “I had no relationship with Chelgate. Obviously, after Daphne Caruana Galizia’s murder we had an earthquake and Chelgate fit the bill for a company to help us with international PR.”
15:58 Azzopardi asks his last question, about UK PR firm Chelgate as mentioned by former government head of communications Kurt Farrugia.
15:57 Asked about how he ranked his friendships, Schembri replies: “I had trusted Muscat almost with my life… Yorgen Fenech, less than that.”
15:55 Schembri denies any correlation.
15:55 Azzopardi says that in April 2018 a Castille official [Bedingfield] came out with this idea while Vincent Muscat, one of three murder suspects, started to talk. “I don’t believe in coincidence,” Azzopardi says.
15:54 Schembri: “Nothing.”
15:53 Azzopardi says that in April 2018, a campaign ‘Where is the laptop?’ was started by Glenn Bedingfield. “What was your involvement?”
15:52 Caruana Galizia had indicated that a decision for an early election had already been taken by February and March of 2017. Azzopardi points out that the period coincides with the first report Daphne had on 17 Black. “The reason for the election was definitely not Egrant,” Azzopardi suggests.
15:51 Schembri: “I never said she wasn’t. You are a politician and you work on numbers. We had a sizeable lead over the Opposition and then Egrant came out and destabilised the country. At the end of the day the people are always sovereign.”
15:48 Asked about the leak of emails and documents from Electrogas, Schembri says he learnt about this in 2017.
15:47 Asked about Konrad Mizzi’s frequent trips to Montenegro, Schembri says he was not informed.
15:46 Schembri denies leaking the narrative linking fuel smuggling to Caruana Galizia’s murder. He takes papers out of his file. They are news reports from MaltaToday, The Malta Independent, and Newsbook which said that Daphne was murdered over oil smuggling. He excludes this was a red herring placed into the public domain by the Labour media.
15:44 Schembri says that other regulars at Yorgen Fenech’s farmhouse were former PN leader Adrian Delia and Pierre Portelli. “100% they visited regularly,” he says.
15:42 Asked about meetings at Yorgen Fenech’s house in Żebbuġ, Schembri says that he had seen the prime minister, Edward Zammit Lewis, Silvio Valletta, as well as others. He was certain that other prime ministers had attended the farmhouse, including Eddie Fenech Adami, Alfred Sant and Cabinet members from Fenech Adami’s time, including Austin Gatt and Joe Saliba.
15:37 Schembri: “Fenech already knew. I didn’t need to tip him off. He had spent a year abroad… Fenech did not ask me how I knew he was leaving. He’s no fool.”
15:35 Azzopardi says he had spent 30 minutes on the phone with Fenech the day before the businessman was arrested. “Did it pass through your mind that you were tipping him off?”
15:35 He is asked about the meeting with the PM where he handed in his resignation. “I went with a fait accompli. It was 26 November. I had been reflecting on it for five days since Fenech’s arrest,” Schembri replies.
15:33 To another question, Schembri confirms a WhatsApp chat with Silvio Valletta, Joe Cuschieri, Kenneth Azzopardi and Yorgen Fenech.
15:31 Azzopardi asks Schembri to confirm whether in January last year, he received a communication from Fenech on a problem about a field. “No,” he replies.
15:29 Schembri: “For sure not. It was long after that.”
15:29 Azzopardi suggests October 2017.
15:28 Azzopardi says he emphasised that he hadn’t done anything behind the PM’s back. He asks Schembri when was the first time he was made aware of the involvement of Melvin Theuma in the Caruana Galizia assassination.
15:28 Azzopardi says he emphasised that he hadn’t done anything behind the PM’s back. He asks Schembri when was the first time he was made aware of the involvement of Melvin Theuma in the Caruana Galizia assassination.
15:27 He asks why Projects Malta always ended up in Konrad Mizzi’s hands. “It is the PM’s prerogative and we discussed it a number of times,” Schembri replies.
15:26 Lawyer Jason Azzopardi stands up to ask more questions to the witness.
15:25 He says Muscat is still his friend, although he “obviously doesn’t see him every day.”
15:25 He doesn’t know. Schembri says that from the day of his interrogation, nobody ever spoke to him about the assassination again.
15:24 Was he still a person of interest in the murder investigation?
15:24 Comodini Cachia says he was arrested hours after his resignation. She asks whether he was tipped off. “No,” he replies.
15:23 Schembri denies betraying Muscat. “I never did anything without informing the PM,” he reiterates.
15:22 Asked by the board as to whether he was aware of the fact that during a long Cabinet meeting in November last year people were saying that the PM was betrayed.
15:21 Schembri: “I was in business before politics. I didn’t need this. This was all extra. There are moments when I see what we managed to do for the country and say the efforts and suffering we passed through as a family, were worth it. I had resigned of my own accord, not because Joseph Muscat told me to. I tendered the resignation at Joseph Muscat’s house the night before my arrest.”
15:19 How many times had he offered Joseph Muscat his resignation?
15:18 Comodini Cachia asks him about the billboard with Daphne’s face. “It was a decision he took with the campaign team, which didn’t include Muscat,” he replies.
15:17 However, he denies any knowledge of who started the conversation or when.
15:17 Schembri: “When the police sent for me, I was precluded from speaking because there were investigations on third parties.”
15:16 Comodini Cachia asks about a WhatsApp chat group he had with Joseph Muscat and Yorgen Fenech. Lawyer Edward Gatt stands up and reminds the board that there is a pending investigation on this.
15:15 Schembri refers to the testimony of Joseph Muscat when he said that he had approached him to tell Fenech not to leave the country. “I called him up and he told me that a lawyer said he should leave for three days to rest his mind. I said ‘it’s not a good idea to leave now’. I spent a long time trying to convince him. The next day I heard he was arrested.”
15:14 Schembri: “In order to solve this homicide the spending went over the budget. They’d say we need to beef up resources and I’d say no problem and give what was necessary. The PM had given a carte blanche. Within minutes of the identification of the murder victim, I was on the phone with Mark Schapiro from the American embassy. Hearing of Yorgen’s involvement was a shock. It was terrifying. We had to pretend that nothing was amiss, on the other hand he was a friend of mine and it was uncomfortable. I spent a year having trouble sleeping, worrying about this and so on.”
15:11 He hastens to add that he could continue to testify about this in private because of ongoing compilation of evidence proceedings and the involvement of third parties.
15:11 Schembri is asked about his security service briefings. “There could have been two meetings without my attendance,” he says but is unable to say how close this was to the raid on Yorgen Fenech.
15:10 Asked about his relationship with Daphne Caruana Galizia, Schembri takes a deep breath. “She was beneficial to the Labour Party. Every time she attacked us, our gap in the polls grew. I have two hats: Keith Schembri and my family, and the other as campaign manager for the PL. When she attacked the PL I had no issue. I didn’t like it when she attacked me personally.”
15:08 He denies any involvement with Taste Your Own Medicine, an anonymous blog that targeted Caruana Galizia in particular.
15:06 Schembri: “I can tell you one thing. Never was there insulting words directed at Daphne Caruana Galizia as much as from the PN in the last seven months of when she was writing.”
15:05 Said Pullicino refers to Daphne Caruana Galizia’s blog where she said she had been subject to a campaign to silence her.
15:04 On Glenn Beddingfield’s blog, Schembri says he didn’t necessarily agree with what he wrote. “If it is ethical or not I can’t say. I believe that everyone has freedom of expression,” he says.
15:03 Schembri: “Saviour Balzan. It is not the first time he came here asking for programmes and other things. I expect to see more about this on Sunday now, but it didn’t happen once, it was normal.”
15:02 Comodini Cachia asks which journalists he is referring to regarding the lobbying, insisting it is unfair to tar them all with the same brush.
15:01 Schembri: “Lobbying and pressure. You know that the following Sunday, he has a pen in his hand…”
15:01 “Lobbying or demand,” asks the panel.
15:01 He wants to make a point on journalists. “Journalists and editors need to understand the difference between journalists and lobbyists. Certain journalists lobby about TV programmes. I think it is highly unethical. That you come to my office and demand things…”
15:00 Schembri: “Yes. Like everything else.”
14:59 Comodini Cachia asks him about his relationship with journalists. “Where you closer to some journalists than others?”
14:58 Schembri had replied ‘good move’. He now explains: “I had felt that Kalin was doing nothing wrong by defending his interests.”
14:57 Reference is made to the emails between Schembri, Muscat, Kalin and Owen Bonnici about suing Daphne Caruana Galizia.
14:57 He says he met him several times in Malta and had met him the first time not to discuss the IIP citizenship programme but the citizenship scheme introduced by the previous PN government.
14:56 Comodini Cachia asks Schembri about his relationship with Christian Kalin from Henley and Partners.
14:55 Schembri says he is certain the allegations were “invented by Efimova as were other things”. He says Sadr was a banker with investment in Malta. “I have a relationship with him like others,” he says, confirming that he had gone to the Sadrs wedding in Italy. “I was invited as the PM’s chief of staff,” he says.
14:53 Comodini Cachia quotes Daphne Caruana Galizia’s blog about his phone call to Sadr the day after he was filmed leaving the bank at night.
14:53 Questioning moves on to Pilatus Bank owner Ali Sadr Hasheminejad. Schembri says he met Ali Sadr in 2013 at a Deloitte event. He had one account at Pilatus Bank “and everyone knows what’s in it thanks to the inquiry”.
14:50 Schembri: “There was constant name dropping.”
14:50 Said Pullicino says that Chen had namedropped him (żeffnek fin-nofs).
14:49 Schembri: “I never discussed these things with Chen.”
14:49 Comodini Cachia points out that although he doesn’t have access to his devices, he might have saved the data in the cloud. He says he hadn’t.
14:48 Schembri: “That meeting never happened. I never answered that email.”
14:48 Comodini Cachia quotes from the Egrant magisterial inquiry report, which cites an email from Konrad Mizzi to Keith Schembri, which makes reference to an email from Chen to Mizzi. The email was calling for a meeting ‘to finalise business model, energy related topic, tourism, Malta as offshore investment hub for Chinese’.
14:46 Schembri: “Definitely not me.”
14:46 Comodini Cachia says Torbridge was set up in BVI for Chen at the same time that Schembri had opened the Panama company and the New Zealand trust. Who introduced him to Nexia BT?
14:45 He is asked whether he has commercial ties with Cheng Chen. “No, I do not,” he replies.
14:44 Schembri says he met Cheng Chen once, in a meeting with around 30 people. Cheng Chen was an official of the Shanghai Electric Power, a Chinese company that bought shareholding in Enemalta.
14:43 Answering a question from Said Pullicino, Schembri says: “As I said before. I don’t see any relationship between 17 Black and Electrogas.”
14:42 Schembri insists, the Electrogas project was completed and on time.
14:41 Comodini Cachia notes that in the email in which Schembri was copied, it was stated in no uncertain terms that the project was not bankable and no loan would be given. “Why didn’t you reply to him?”
14:39 Chief justice emeritus Joseph Said Pullicino suggests that Camilleri had said that there were problems with the Electrogas government guarantee. Schembri says he wasn’t aware.
14:38 He is asked about the permanent secretary in the Finance Ministry, veteran public service official, Alfred Camilleri. “Alfred Camilleri was always a help to every government,” Schembri says.
14:37 He flatly denies suggesting Konrad Mizzi use Nexia BT’s services, or having any business dealings with him.
14:36 Schembri says Mizzi had discussed the viability of the power station project with him only in the presence of other members of Cabinet.
14:36 Schembri says he had met him at a Labour event and was introduced by Joseph Muscat as a future candidate.
14:35 He is asked whether he knew Konrad Mizzi from before.
14:35 Mizzi had come to him for advice, suggests TCC. “There are things that I can solve, but others which are much larger than me,” replies Schembri.
14:34 Schembri: “There’s a fine line between being a friend and a business colleague. Just because you’re a friend of someone doesn’t mean you’re going to help his business.”
14:34 She asks why he hadn’t contradicted him.
14:31 Schembri: “I didn’t answer him. OPM is copied into everything. I don’t get involved in the nitty gritty, ma tarax.”
14:30 Comodini Cachia asks Schembri to explain an email from Electrogas to him and others which states the project “is not bankable on a project finance basis”. Why was he copied in this email?
14:29 Schembri: “I don’t want to contradict him but I’m saying what I know.”
14:28 Schembri denies that the government entered into the deal without consulting the finance ministry. “He [Edward Scicluna] was involved from day one. He always participated in Cabinet meetings. He was a focal point,” Schembri says.
14:26 Journalists are allowed back inside.
14:11 We are told that Schembri’s testimony is continuing behind closed doors for the time being.
13:40 We are taking a break. The inquiry will resume shortly.
13:39 Schembri: “Cabinet was split into three groups. Ministers who were interested in everything happening in government, others interested only in their remit and others who needed to be pushed. My role made me tread on toes, sometimes. My management experience says that if everyone loves you, you aren’t succeeding. However, they all mean well.”
13:37 He wants to speak about the ‘kitchen cabinet’. “This never existed,” he says.
13:37 Schembri says that to a certain extent, the OPM was a “glorified project manager”.
13:35 “I wasn’t working there at that point in time,” he answers, only to be corrected by the lawyer, who shows him that he was in fact working at the OPM.
13:35 Comodini Cachia asks if he knew whether the NAO had asked for a copy of the Vitals MOU.
13:34 “Once an agreement is signed, the entity which signed it keeps a copy, not the OPM and not Cabinet,” Schembri explains.
13:30 Comodini Cachia says this contradicts what was reported by the National Audit Office, which concluded there was collusion between the government and the Vitals shareholders.
13:28 Schembri says that it was the Health Ministry that dealt with the Vitals tender and it had nothing to do with the MOU [signed between some of the Vitals investors and Malta Enterprise months before the government issued its request for proposals].
13:24 Schembri insists that Cabinet approval is required.
13:23 Chief justice emeritus Joseph Said Pullicino tells the witness that Prof. Edward Scicluna had said the Vitals hospitals concession was not approved by Cabinet.
13:21 He presents an affidavit in which he denies any involvement in Vitals other than providing a room in Castille for the signing of a document.
13:21 He is being asked about government projects. “Cabinet is consulted and decides whether to approve it or not. When approved, people are entrusted with carrying it out. I was one of these people… Every chief of staff attends Cabinet,” Schembri says.
13:20 Comodini Cachia asks him whether the reason for his distrust of Maltese banks was just the leak. “The leak was the reason,” Schembri replies, confirming that he managed to open bank accounts with other Maltese banks.
13:18 Had he informed BOV that he intended to transfer his assets to New Zealand? He says he didn’t need to and repeats that he didn’t trust them. He adds that none of his assets were transferred and were all still in Malta.
13:18 He says he was given the documents but wanted to double check. “I’m a little bit OCD,” he says and keeps records of everything.
13:17 Comodini Cachia: “So, you didn’t ask your auditors of 30 years?”
13:16 She asks why he had contacted Mossack Fonseca directly for all the documents. Schembri says he wanted to do double checking after the Panama leaks and so contacted them directly.
13:15 Comodini Cachia takes over questioning.
13:15 The lawyer hands the witness the deed and Schembri confirms that his father’s name is on it, but insists he does not know about it.
13:14 Azzopardi says that Schembri said he never did business with Yorgen Fenech. “What about a 2017 deed concerning a sale of land in Mellieħa involving Alfio Schembri and Yorgen Fenech?”
13:12 Schembri also denies giving Muscat any documents to take with him to Dubai.
13:11 Schembri says Yorgen Fenech had communicated about the fact that a friend had been given a high position in Bangladesh and that the Maltese businessman had informed him that he had travelled there but this had nothing to do with the Electrogas energy deal.
13:10 He is asked whether he had travelled to Bangladesh or had business interests there.
13:10 Schembri: “Definitely not.”
13:10 He is asked whether he chased after Borg or anyone else?
13:09 Schembri: “He’s chased after me a few times!”
13:09 Schembri is asked whether he knows Jacob Borg, a TOM journalist.
13:04 Schembri: “I lost my trust in Maltese banks… l’m going to say something personal. My ID card number was blocked for a time on the hospital system. They couldn’t access my documents. I lost trust.”
13:03 Azzopardi quotes an article by Times of Malta journalist Jacob Borg, which said that Schembri didn’t want Maltese banks to be alerted.
13:02 Schembri says he had always been transparent. “This was one of the problems I had. I had taken the BOV leak to heart and was conversing with Konrad Mizzi and told him about it,” he says
13:00 Schembri: “It is not easy at all to change accountants.”
12:59 Azzopardi reads from a published email from Karl Cini to Mossack Fonseca requesting documents about Tillgate and Hearnville. Asked why he hadn’t fired his accountant at that point, Schembri says he had sent for Karl Cini and told him to stop these dealings.
12:57 He is asked why he felt the need to open an offshore company in Panama when he already had companies in the UK and Cyprus. Schembri says the advice he was given was that he couldn’t use his UK and Cyprus companies but had to open others in Panama.
12:55 Schembri: “Not at all.”
12:55 Azzopardi points out there were €800,000 in direct orders. “Was there an obligation towards Nexia BT?”
12:54 Azzopardi asks why the government continued to give direct orders to Nexia BT despite the fallout they had brought on to Malta. “I cannot answer for other ministries,” he says.
12:53 Schembri: “I wasn’t asked and didn’t feel the need to point this out to the PM. I downplayed it… maybe I made a mistake.”
12:52 Had the prime minister asked about this?
12:51 Schembri: “Yes, I knew.”
12:51 Lawyer Jason Azzopardi asks if Schembri already knew who the owner of 17 Black was in February 2017 when Daphne Caruana Galizia published a story that flagged the name ’17 Black – Dubai’ alongside photos of Joseph Muscat, John Dalli, Keith Schembri and Konrad Mizzi.
12:49 We’re back inside.
12:22 The board will take a short break.
12:22 Asked why choose Panama to set up a company, he insists: “I didn’t need a company in Panama. My forma mentis was ‘get that trust out of Malta quickly’.”
12:21 Schembri justifies the creation of offshore companies. He is talking about the tax discrepancies between Maltese companies and foreign companies in Malta and how much of a disadvantage it is for the Maltese companies. This is why offshore companies are created.
12:19 He hints that his signatures could be forged.
12:18 Schembri says he wasn’t involved in the drafting of that document. “I didn’t enter into agreements with foreign legal structures, I entered into agreements with my accountants,” he adds.
12:17 Questioning moves on. Comodini Cachia reads out a Mossack Fonseca application form for Tillgate. The company was to be used for brokerage too, she reads.
12:16 Schembri says he had taken over €400,000 in contracts from the OPM. “These were printing tenders. I think I earned more from the PN governments than Labour.”
12:16 Crane Currency opened a money-making plant in Malta and then prime minister Joseph Muscat had indicated Schembri as the person who made it happen. Schembri’s personal company had the local franchise for servicing the printers used by Crane Currency.
12:13 Schembri says he was involved in bringing over Crane Currency to Malta and is very proud of it.
12:12 Daphne’s family insist that Schillings’ letters to ICIJ & Mossack Fonseca are not on Daphne’s blog. “They’re not in the public domain at all,” the family say.
12:11 Schembri says he “thinks” the BVI company Colson Services might be his.
12:06 The other letter by Mizzi to ICIJ possibly mentions Daphne Caruana Galizia’s blog, Schembri says. He says the letters are “open source”.
12:05 The board reprimands him.
12:05 Surprised, she asks him how he knows. Schembri says it is her duty to find the other correspondence.
12:04 Schembri: “If I’m not mistaken, there is another letter for Mizzi.”
12:04 Comodini Cachia asks him why he and Konrad Mizzi had asked Schillings to do the exact same thing, in the light of the fact that the Panama structures are also the same. She hands the witness copies of the two letters to compare them.
12:00 Schembri: “The assets are in the trust, not the company, a company has no assets… I sent two letters from Schillings, reputation managers, to Mossack Fonseca and to ICIJ asking them for more documents. They declined, quoting an American law.”
11:59 Comodini Cachia reads out the documents setting up Tillgate. “No assets were in it. Did you not just say that you parked your assets in it?”
11:58 Schembri says the statement said the companies “were included” in the business plans but did not say by whom. He says Macbridge was not his idea. “They were included in business plans but not by me. I swear this is the truth,” he insists.
11:56 Comodini Cachia notes that the Prime Minister had stopped the board from asking about Swiss Leaks and the names of Maltese indicated in that international investigation. She moves on to question Schembri about the press release issued by the Department of Information in March 2018 when the target clients 17 Black and Macbridge had been outed. In that release, Schembri acknowledged the two companies were target clients but denied any knowledge of them while admitting they were part of draft business plans.
11:52 Schembri also refers to Caruana Galizia’s writings on former Nationalist ministers Michael Falzon and Ninu Zammit, who had been indicated in Swiss Leaks as having money stashed in Swiss accounts that were eventually repatriated through a government amnesty. “Impunity covers everything,” Schembri insists.
11:50 He expresses his surprise as to how former PN leader Adrian Delia, who Daphne Caruana Galizia had linked to prostitution, and the Times had revealed was subject to a money laundering investigation, “the 8th most powerful person on the island”, had not been summoned to testify.
11:48 Schembri: “It’s easy to throw mud… I sold them a printing press that was €2 million cheaper. In four years of writing no proof of kickbacks had emerged. Shouldn’t this emerge in this inquiry?”
11:47 Schembri says that the internal inquiry carried out by Allied Newspapers, publishers of Times of Malta, on its former managing director Adrian Hillman was never published. The inquiry was launched after Caruana Galizia alleged that Hillman received kickbacks from Schembri over the sale of a printing machines for the new press in Mrieħel.
11:45 Schembri: “We went into office on the premise of wanting to work with everyone and helping everyone. I had told Zaren Vassallo (a businessman with close links to the PN) to keep on working and dreaming – this office is always open to you. The greed we saw was mind boggling. Give people an inch and they’d take a mile…”
11:42 He says that many people had said things about him in the inquiry and found it easy because he had said nothing. But now he has a lot to say to the board, he says. Had it not summoned him, he would have asked to testify himself, Schembri adds.
11:40 Schembri denies he intended going into business with Fenech while he was chief of staff.
11:38 Schembri says that in relation to Bangladesh Fenech and himself had spoken about infrastructural projects.
11:37 Mallia tells him to answer the question.
11:37 Schembri: “You don’t know how business plans work… I’m proud of my country and I don’t go abroad giving it a bad name…”
11:36 Comodini Cachia asks about Bangladesh. “What was the business you had with Yorgen Fenech or the plan to use his contacts in Bangladesh?”
11:36 Schembri says Yorgen Fenech was a friend. “I have a lot of friends,” he adds.
11:35 Schembri explains that Bangladesh was an opportunity. “I knew Yorgen Fenech had plans for Bangladesh. One of the reasons was to exploit his contacts there. Can’t I do business? Did my life end because I’m a chief of staff now?”
11:34 Schembri is asked about a reference in the Panama company documents to doing business in Bangladesh.
11:27 Schembri: “I just told them what the main scope was to be. It was to be a very temporary company… They asked for the scope of business. This was the international business I planned on doing after stepping down as chief of staff. I never imagined that I would stay on for so long… Sometimes I ask myself if it was all worth it, but then I look at the surpluses we got. All this talk of corruption, corruption, corruption, but a corrupt government does not generate those surpluses for four years in a row. But there was a lot of worry for me, my family, my parents.”
11:26 Comodini Cachia reads out from a document which indicated that his company would be changing its scope of trading. Did Schembri tell Nexia to change the scope?
11:20 Schembri’s lawyer, Edward Gatt points out: “Others came here and didn’t testify.”
11:19 The board observes that Nexia partners Karl Cini and Brian Tonna had not answered any questions when they appeared in front of them. “I have nothing to hide,” Schembri says.
11:18 About his cancer, Schembri says he wanted to pack up and go home. This was towards the end of 2016 and Daphne Caruana Galizia had written a blog about his medical state, insinuating that Schembri only had a couple more months to live. However, Schembri says that in December there was the Afriqiyah Airways hijack and was asked by Muscat to assist. “I started to involve myself again,” Schembri says.
11:16 Said Pullicino remarks that the situation doesn’t make sense to him.
11:15 Schembri: “Rest assured I did nothing behind the PM’s back.”
11:15 She asks Schembri whether he told the former PM that he was Yorgen Fenech’s friend.
11:14 Comodini Cachia points out that Joseph Muscat spent two or three years saying he didn’t know about 17 Black and that he hadn’t spoken to you about it.
11:13 The former chief of staff cannot recall whether the conversation with Muscat on 17 Black was around the time when it was revealed by journalists as being a target client – March 2018 – or when Reuters eventually found out that it belonged to Yorgen Fenech – November 2018.
11:11 Schembri: “I don’t know.”
11:10 He is asked about his conversation with Joseph Muscat in which he informed him that 17 Black belonged to Yorgen Fenech and how far away it was from the publication of Panama Papers.
11:09 Schembri: “Yes, I had informed him.”
11:07 Did he inform Joseph Muscat of the ultimate beneficial owner of 17 Black and was this after the media revelations?
11:07 Schembri says he felt he did not feel the need to give the prime minister information about structures that didn’t deal with Malta.
11:06 Schembri: “He asked me for an explanation and I gave it to him. It was after the Panama Papers [in 2016].”
11:05 When had Jospeh Muscat known about the offshore structures in Panama and New Zealand?
11:05 Schembri: “I see nothing wrong with businessmen having offshore structures.”
11:04 Schembri is answering to questions about Colson Services Ltd but his lawyer Edward Gatt stops the questioning. He says the questioning is going to continue about the ongoing criminal investigation. The question is skipped.
11:02 Schembri: “I had companies in Cyprus and the UK. We had stores in Ashford in Kent and a Cyprus company to service it. I had BVI accounts before 2013… I don’t know the names of all my companies. The operational ones in Malta, I know but the others, not all.”
10:57 Schembri insists the plan was to move the BOV holding company under the New Zealand trust. “It was an immediate decision prompted by what happened [the BOV leakage]. I never had to inform the Maltese tax authorities unless I was moving them into Malta. This never happened,” he insists.
10:53 Schembri says he was not copied in or made aware of the issues that cropped up. “I gave Nexia a carte blanche to open a trust in New Zealand and populate it with assets.”
10:50 Schembri says he chose Panama to create an asset company as it was the fastest route. “It was a temporary measure. In fact, when I saw the problems at opening accounts and so on, I had gone to Nexia and told them to stop,” he says.
10:48 It is pointed out that his mobile was not taken. He is warned by the board to be careful about his answers as he could incriminate himself.
10:48 Schembri: “They took my mobile, my laptop…”
10:48 Could he perhaps look for a mandate he may have given?
10:47 He is asked about how he gave instructions to Nexia to open a Panama company. Schembri says he did this verbally.
10:46 After twice questioning the relevance of the question, Schembri says he hadn’t.
10:45 Comodini Cachia asks whether he had tried to find other auditors.
10:45 His accountants he had kept since he was 17, he says. “Now, Nexia had closed down, and they had been his auditors till the end. Do you know how hard it is to get on board a new auditor as a PEP?”
10:44 Schembri: “Do you think I was happy with what happened?”
10:43 Schembri reiterates his plan was to transfer his companies to the New Zealand trust and to close the Panama company. “It was a temporary structure,” he says.
10:42 Judge Mallia notes that Tillgate was supposed to start functioning immediately.
10:41 Schembri: “My character is different. I gave them the benefit of the doubt. I’m not going to judge my auditors.”
10:40 Judge Abigail Lofaro: “Why didn’t you fire your auditors? They were doing a lousy job. Do you keep negligent people on your payroll? You built an empire alone and you keep negligent people with you!”
10:38 Schembri has no explanation for why Macbridge ended up as a main client of his Panama company. His auditors could not find it anywhere in their records.
10:38 Schembri: “I’m not saying that. I gave them some four other names, I don’t remember. I can’t check which they were.”
10:37 Comodini Cachia: “Did Nexia BT invent Macbridge?”
10:37 Schembri: “I don’t know who Macbridge belongs to – I told the auditors that I never gave them that name. 17 Black, I indicated myself, but Macbridge I did not.”
10:33 He is asked how MacBridge and 17 Black were mentioned as target clients if he didn’t know who they belonged to.
10:32 Schembri: “It wasn’t the job of the auditors to see the source of the funds.”
10:32 Lawyer Therese Comodini Cachia asks about how Nexia BT determined the amounts, which his Panama company would be receiving. “Did you say from whom they would be coming?”
10:31 On Tillgate, he says he had been chief of staff when it opened.
10:30 He is asked whether he knew who Egrant belonged to. “I was always told that it was one of the shell companies set up by Brian Tonna and was never used,” Schembri says.
10:30 He says that he never took decisions with Konrad Mizzi. “We don’t think the same way,” he adds.
10:29 Schembri says this happened at the time of the Panama Papers scandal in 2016.
10:29 Asked about whether he had told Joseph Muscat about the offshore structures, Schembri says his sojourn in politics was temporary. “I made a plan with several potential clients after I would leave politics. Joseph Muscat had accepted the explanation,” he says.
10:27 Schembri says the shock for him was the reaction. Coming from a business background, he says, there was nothing out of this world for someone in business to open an offshore structure. “Maybe I was naive to keep on thinking as a businessman. I was tempted to leave politics and go back to business,” he adds.
10:26 He says that he had closed down his other structures. “I had no reason to discuss it with anyone. I come from a business background,” he says.
10:25 Schembri says that more than three companies were opened. The date of the instructions was not the date of their opening, he says.
10:24 The board remarks that it is unlikely that accountants or auditors would do this.
10:24 Schembri: “Mossack Fonseca told them [Nexia] the easiest way was to open a temporary account in Panama. My auditors had given a fictitious amount on cash flow.”
10:23 QUICK REMINDER: Schembri’s accountants and auditors were Nexia BT. The company represented the Malta branch of Panamanian firm Mossack Fonseca. Nexia had acquired the shell companies Tillgate and Hearnville for Schembri and Konrad Mizzi respectively. A third company, Egrant, was acquired at the same time but its beneficial owner was only communicated via Skype. Nexia’s Brian Tonna has always claimed that Egrant was attested to him and remained so until it was dissolved.
10:20 Schembri says that the big four accounting firms have 10 shell companies each set up abroad just in case they need one at short notice. “This happens regularly. The fact that they are set up doesn’t mean that they have plans to use them,” he says.
10:17 Schembri: “In 2013, when I started in politics, I already had offshore structures. Three quarters of Malta’s businesses had them. I opened a trust with BOV where I put all my assets. Some years later, two people told me that the Nationalist Party knew what assets I had with the bank. I was told by the BOV chairman that he couldn’t preclude any leaks. I had a choice, either sue the bank… but a chief of staff suing a bank with government shareholding would have been ugly. I had approached Joseph Muscat and both of us decided to let it go. I then looked at Commonwealth jurisdictions where to park my assets. After taking advice from my accountants, I was given a choice of either Singapore or New Zealand.”
10:14 QUICK REMINDER: Following the passports inquiry, the police initiated an investigation into money laundering and asked for a wide-ranging freezing order on Schembri’s personal, family and business assets.
10:13 Schembri says his children were unable to withdraw their stipend because of the investigations into him.
10:10 Schembri says he had asked the police for disclosure on the passport allegations. “There was not a single line in the inquiry that says I took a kickback on the passports,” he says.
10:09 Schembri: “Throughout the whole inquiry I’ve had people coming and inventing stories about me.”
10:08 Asked about the Electrogas tender, Schembri says he had no details on who the discussions involved. “My job is to bang heads together and get the job done. Usually inter-ministerial projects involve lots of blame shifting,” he explains.
10:06 He denies ever meeting the Gasans, the Fenechs and Apap Bolognas. “On energy, I never met these people,” he insists. He strenuously denies ever lunching with these people at Portomaso before the 2013 general election.
10:03 Asked whether he had a conflict of interest, Schembri says the only conflict he had was in his thoughts. “I could never accept the inefficiencies of government departments and we had revolutionised their hours and conditions. The change from the private to public sector was a culture shock,” he says.
10:00 Schembri says it was a baseline established after viewing the possibilities. “We wanted the best economy in Europe and it was the fastest growing economy in the EU for seven years,” Schembri adds.
09:59 Mallia says that there seemed to be a plan ready at the time of the election with timelines for implementation.
09:58 Schembri says his question was how such a project never happened before.
09:57 Schembri: “The idea was floated before, but not the project per se. We wanted to stop using heavy fuel oil… could we do this without an idea?”
09:56 In the campaign, the PL had promised to reduce electricity tariffs. “Every day without reducing the cost of electricity production would be money out of the government’s pockets,” Schembri says.
09:55 The country could never rely on the interconnector alone, he adds.
09:55 Said Pullicino says that there were presentations about a project proposed by some of the partners in Electrogas. But Schembri replies: “I’ll be honest, these proposals we took with a pinch of salt. You have to be in government to see what is feasible.”
09:54 Schembri: “No, never.”
09:53 Said Pullicino asks about Electrogas. “Was it discussed before the election?”
09:53 Schembri: “Everyone, including businesses, was complaining about the water and electricity bills. So, it was made a priority.”
09:52 Said Pullicino: “Were there concrete proposals from business before the election?”
09:51 Schembri continues his testimony, explaining that at the Labour Party headquarters’ 4th floor, no businessmen ever visited. “But contact with businessmen, lawyers and other professionals there was a lot. Business people would approach the party, saying the country needed change and what the change should be,” he says.
09:49 Chief justice emeritus Joseph Said Pullicino asks what role he had in public contracts.
09:49 Schembri: “I held meetings with people in many business sectors and tried to understand how to make their lives better. We always believed that to distribute wealth you had to create it first.”
09:48 Schembri says that after resigning his directorships, he gave his word to the prime minister that he would not touch new government projects.
09:46 Schembri says he was campaign manager for the 2013 election.
09:45 Schembri: “After the 2013 election victory I was asked to become chief of staff in the Office of the Prime Minister. At that moment, I stepped down from my directorships.”
09:44 He says that after the Labour Party lost the 2008 general election by some 1,700 votes, he had gone to Joseph Muscat’s house and was told that he was needed by the party.
09:43 Schembri says he worked at Bank of Valletta and then opened his own business.
09:43 He says he decided to answer all questions. “I was at St Aloysius College 6th Form with Joseph Muscat. Law course didn’t open so I did foundation course and worked at Super One. I got Muscat a place at Super One after speaking to Evarist Bartolo. We were two of seven people who started the newspaper Kullħadd.”
09:41 The board asks him on his role in politics.
09:41 Asked if he is a person of interest in the Caruana Galizia murder, Schembri says he was released from questioning and had not been summoned again.
09:40 Schembri says he is being investigated on the magisterial inquiry into commissions on passport sales and on chats between Yorgen Fenech and himself.
09:38 Mallia: “You have the right not to answer if you feel your answer could incriminate yourself.”
09:38 Judge emeritus Michael Mallia gives him the caution and asks Schembri if he is on police bail. “Yes,” he replies.
09:37 Keith Schembri, son of Alfio and Josephine nee Gauci, born in St Julians and living in Mellieħa, is administered the oath.
09:37 Schembri walks in carrying a thick binder.
09:35 A knock on the door to the chambers and the three judges emerge. The messenger calls Schembri in.
09:28 We’re all set for the sitting to start. Lawyers Edward Gatt and Mark Vassallo will be assisting Schembri.
09:19 Joseph Muscat’s chief of staff, Keith Schembri, is expected to testify. He served in his government role within the Office of the Prime Minister between March 2013 and November 2019 when he resigned in the wake of Yorgen Fenech’s arrest.
09:15 Good morning. Today’s sitting is expected to kick-off at around 09:30.
Top Photo: Mike Camilleri