Prime Minister’s chief of staff went into business with Allied Newspapers managing director and government contractor AFTER March 2013

Keith Schembri, who at the time was very active in the Opposition Labour Party, his business partner Malcolm Scerri, and Adrian Hillman, managing director of Progress Press and Allied Newspapers, the publishers of the Times of Malta and The Sunday Times, each had an offshore company set up for them in the British Virgin Islands in 2011. The companies were set up by an expatriate called Michael Del Vecchio, who at the time was Mossack Fonseca’s agent in Malta.

Schembri’s company is called Colson Services Ltd, Scerri’s is called Selson Holding Corp Ltd, and Hillman’s is called Lester Holdings Group Ltd. At that stage and until 2013, Schembri, Scerri and Hillman were identifiable as the ultimate beneficial owners of these companies – in the unlikely event of anybody busting through the brick wall of BVI secrecy – because they did not use nominees.

But a few days after the Labour Party was voted into government, in March 2013, Brian Tonna and Karl Cini of Nexia BT, who had taken over representation of Mossack Fonseca the previous month, began the process to hide the identity of the owners of Colson, Selson and Lester behind nominee shareholders and nominee directors.

Those two ‘fraudulent’ HSBC bank Attard branch documents for Schembri and Scerri, both politically exposed persons, which made the news some days ago, were used for that purpose alongside a legitimate-looking one for Hillman issued by the bank’s central office as standard.

Email correspondence in the Panama Papers, published by The Malta Independent and the Times of Malta, which are the International Consortium of Investigative Journalists’ media partners in Malta, shows that Brian Tonna/Karl Cini informed Mossack Fonseca in the British Virgin Islands that the three companies were being restructured behind nominee directors and nominee shareholders (for greater secrecy) to hold shares in a company in Cyprus.

Last Friday, The Malta Independent, following research in Cyprus itself, broke the story which named the company in Cyprus and gave its details. It is A2Z Consulta Ltd, and Scerri’s Selson Trading Corp Ltd is not a shareholder. The three shareholders are the Prime Minister’s chief of staff, through his BVI company, the (now former) Allied Newspapers boss through his BVI company, and a fixer called Pierre Sladden through his BVI company, which is called Blue Sea Portfolio Ltd.

Sladden owns a contracting company called Redmap, registered in Malta, which was one of the main contractors, along with Keith Schembri’s Kasco Group, for the refurbishment and outfitting of Progress Press/Allied Newspapers’ premises in Mriehel when they moved there from Valletta. But Redmap is also a contractor to the government. And it pays a chunk of its contract payments out of the country via invoices raised by A2Z Consulta in Cyprus – invoices for ‘consultancy’. In effect, this means that the Prime Minister’s chief of staff is taking a cut of the money via his secret offshore holdings from government contracts given to Redmap in Malta (and so is Adrian Hillman).

In practical terms, this means that one of the first acts of the Prime Minister’s chief of staff after he got into government was to set up directly in business with the then managing director of the publishers of the Times of Malta and The Sunday Times, setting up a company with him and with a contractor to the government.

Far from distancing himself from his business dealings, the Prime Minister’s chief of staff was actually intensifying them offshore, in ways that are profoundly offensive to those who value the independence of the media, and worse, because here you have a situation in which the Prime Minister’s right-hand man has found a way to take secret cuts off government contracts.

This explosive situation would, in any normal liberal democracy, trigger a scandal of massive proportions leading to resignations. But there has only been one (forced) resignation: that of the newspaper boss, and to the credit of the board of the directors, they forced his resignation and instituted an inquiry immediately the first shards of information emerged. They did not wait around for the monumental scandals that burst from the Panama Papers later.