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Sent in by Bobbie:

Many trusts are legitimate, but there are also people who use them for illegitimate means, to hide their funds and other assets. When they use a trust to own a company in a blacklisted offshore jurisdiction, this is for ultimate secrecy.

Konrad Mizzi set up a trust in New Zealand and, as the settlor, he detached himself from all his wealth and made his wife and children the trust’s beneficiaries. This way he can legitimately claim that what the trust owns is not his anymore.

But in reality he is in control, because as the founder/settlor he can appoint trustees as he wishes and he can control the trustees’ actions even if “on paper” he should not be doing so. Trustees are supposed to be in control. The trustees are most likely based in New Zealand.

In Panama companies can be formed by offshore trusts. They are not taxed and the Panamanian authorities do not require proof of the source of income. Panama does not share information with the authorities in other countries. Its arm is being twisted by the OECD but it has not signed any treaties. Nor does it cooperate with the EU under the Tax & Savings Directive.

So why did Mizzi set up this structure? If he was truly concerned about wealth protection (for legitimate income) and succession of wealth (inheritance) he could simply have set up a trust with one of the many companies in Malta. The cost ranges from 2,000 to 4,000 euros as a one-time fee and around 1,500 euros per annum, depending on the amount in the trust.

The ONLY reason why he would not want to do this in Malta is total secrecy, and the ONLY reason why he would need total secrecy is because the money the company is taking in is completely illicit – kickbacks, for instance. A kick-back from a deal will be received in the following manner. Mizzi’s Panama company invoices the client paying the kickback – a company or dictatorship with which the Maltese government has done a deal, or a business operator which the Maltese government has chosen for a project like hospital privatisation or a new power station (hypothetically). The receiving bank is either in Panama or in any other jurisdiction that accepts offshore companies, such as St Vincent.

Should that invoice – usually for “consultation services” – be leaked, no one would be able to prove that the company is owned by Konrad Mizzi, because any unlikely leak from Panama will reveal it is owned by a trust in New Zealand.

There would have to be a leak in New Zealand (impossible) to reveal who is behind the trust, i.e. who the settlor or beneficiaries are. Without any doubt whatsoever, the trust name and the company name that Konrad Mizzi has chosen are totally unidentifiable from his own name. This alone is absolute proof that he has something to hide.

There is no doubt in my mind, no doubt whatsoever, that Mizzi set up this structure to launder funds gained illicitly through his position as a Malta government minister.

My hunch is that the Prime Minister is involved too, and that he knows about this. I find it extremely difficult to believe that his henchman is doing all this without his knowledge. The two are operating closely together and all the signs are that they are both taking cuts on the deals to which they are exclusively privy.