PANAMA PAPERS: Michael Del Vecchio, the man who set up secret BVI companies for Keith Schembri and his network

Last Sunday, as the Panama Papers relevations broke globally, the Australian Financial Review reported that Keith Schembri and Adrian Hillman had used a “Spanish adviser” to set up secret offshore companies in the British Virgin Islands, a tax haven, in 2011.

Schembri is the Prime Minister’s close friend and chief of staff, and Adrian Hillman was asked to step down as managing director of Malta’s largest newspaper publishing group, a few weeks ago, after accusations of graft involving Schembri’s printing supplies business.

I was surprised, and so were many readers. Who was this “Spanish adviser” and how exactly does he fit in to this story? Weren’t Brian Tonna of Nexia BT and Mossack Fonseca (Malta) Limited their intermediaries? Well, no, not exactly.

A fiduciary services company which Brian Tonna owns, BT International Ltd, holds the shares of Mossack Fonseca (Malta) in fiduciary trust – that is, BT International is not the owner of those shares but holds them to conceal the identity of the real owners from everybody except the Maltese authorities.

Tonna has also advised Keith Schembri on his interests in Malta, the British Virgin Islands, Panama and elsewhere for very many years. But what happened in this particular case is that Brian Tonna poached the offshore business from the “Spanish adviser” who had first introduced Keith Schembri and Adrian Hillman to Mossack Fonseca. That adviser is called Michael Alfred Del Vecchio and his company is Bald Eagle Services SA. He is not Spanish, but an American of Italian descent, and he has an office in Spain.

He also had and still maintains, as it turns out, an office in Malta. From this Malta office, Del Vecchio collaborated with Mossack Fonseca’s Panama operation to create around 200 offshore companies for clients, not all of them Maltese, who included an American fugitive, people accused of running an illegal online gambling operation, and for Keith Schembri, who was not yet the Prime Minister’s chief of staff because the Labour Party was in Opposition, but who was at the time engaged in working on the Labour Party’s electoral and fund-raising strategy, and who led the party’s so-called Energy Committee.

Documentation among the Panama Papers, which the Miami Herald and McClatchy DC has now reported on, shows that Del Vecchio wrote to Mossack Fonseca in Panama about a competitor in Malta who was poaching his clients. “NEXIA BT is Pouching (sic) companies and clients away from Bald Eagle Services S.A. — one of your most loyal Professional Clients in order to easily build their clientele,” Del Vecchio wrote in an email dated 20th April, 2013, to Mossack Fonseca. “I have copied our Legal Council (sic) in Malta.”

The Labour Party had been elected to government just the previous month, and Brian Tonna of Nexia BT had a desk at the Office of the Prime Minister already. He had seen a good business opportunity here, and his position close to the seat of power would help him make the most of it.

A month after Michael Del Vecchio wrote to Mossack Fonseca in Panama to report on Nexia BT’s hostile actions, he was forced out completely. Mossack Fonseca in Panama will have seen the advantages, in a corrupt system, of being represented in Malta by a man who has a desk at the Office of the Prime Minister.

On 23rd May 2013, less than three months after Joseph Muscat took office as Prime Minister, Mossack Fonseca (Malta) Ltd was registered with the Malta Financial Services Authority, with all of its shares held in fiduciary trust by BT International Ltd. It set up in offices on the same office-building floor as those of Nexia BT.

Read the full story about Michael Del Vecchio here.

Michael Del Vecchio (picture from the Miami Herald)

Brian Tonna of Nexia BT

Adrian Hillman, former managing director of the Allied Newspaper Group and Progress Press Ltd

Keith Schembri, who was on the Labour Party’s Energy Committee and working on the party’s election strategy when Michael Del Vecchio set up a secret company for him in tax haven British Virgin Islands