GUEST POST/The ‘dangerous’ client information at Pilatus Bank includes people other than Keith Schembri, Konrad Mizzi, Joseph Muscat and John Dalli

By R. Cassar

Let’s start from the basics. Panama does not give out information to anyone, not even state authorities, about companies incorporated under its jurisdiction. It protects the owners of those companies and has turned this into an industry.

Panamanian companies are not required to keep transactions for auditing purposes. They serve as a vehicle only. They invoice the entity who will pay the bank account linked to that company.

No one, other than the people directly involved, knows who the ultimate beneficial owners of that company are, because they are hidden. You will only see the nominee and not the identity of the UBO.

The only reason we know that Keith Schembri and Konrad Mizzi own companies in Panama, and that Brian Tonna and Keith Schembri own companies in the British Virgin Islands, is because Mossack Fonseca’s server in Panama was – in a major event that couldn’t possibly have been foresee – drained of millions of documents. There is no way on earth we could have know otherwise.

These Panama company transactions will not be taxed, or taxed at very low rate. So you already have a probable case of tax evasion by a citizen of another country who is obliged at law to pay corporate tax and have hidden the revenue from country of origin.

This becomes even more serious when the individuals involved are in government and acting to defraud the government itself.

The money deposited in bank accounts held by Panama companies can be used to buy anything from property, to services or a thousand other things. It can also be invested in legitimate business. This is called money-laundering, the process by which money from illegal/full-blown criminal sources is ‘washed’ by funnelling it into the licit economy.

So you can buy property in London with profits from the sale of illegal drugs – camouflaged, say, as winnings from online gaming or bloated sales from fake businesses in a cash environment, like restaurants that never seem to have any customers.

The real UBOs are known only to the firm that helped to set up the companies and the money-laundering structures, like Mossack Fonseca in Panama and Nexia BT in Malta. The only way you can give proof of ownership to the bank, when applying to open an account there, is by producing the document of ownership.

This is a bit of a problem, as the safest method is to go directly to the bank yourself to give proof of identity. It would be madness to trust any other form of communication, which might be intercepted.

That is exactly how Brian Tonna’s attempts at opening bank accounts for Konrad Mizzi’s and Keith Schembri’s Panama companies were uncovered: the emails were copied to Mossack Fonseca in Panama and were there in its server when the big event happened.

This background information is essential if you are to understand just how explosive the information might be that was carried out in those bags by Seyed Ali Sadr Hasheminejad, owner of Pilatus Bank, and the bank’s risk manager, Antoniella Gauci, last Thursday night. It is fortuitous that they were caught on camera.

They both took an enormous risk, and under anti-money-laundering laws committed a serious crime, but had no choice as the bank’s clients would have been divulged to the authorities in the following day’s inquiry or any subsequent proper investigation for money-laundering, which will not happen under this government but will have to happen if the current incumbents are voted out of power.

This information almost certainly includes the UBOs – information required by banks under know-your-client (KYC) anti-money-laundering laws – of the companies, incorporated in jurisdictions like Panama, which hold bank accounts at Pilatus Bank.

So now you have some idea of why the Police Commissioner waited several hours to secure evidence from the bank, and only acted upon being notified by the Prime Minister.

This is not just Egrant Inc that was at stake. Imagine if an international scandal of many millions in laundered money, involving – for example – Ilham Aliyev were discovered. What would happen to the owner of Pilatus Bank? What would happen to Malta’s financial services industry – though that will not have been a consideration for Seyed Ali Sadr Hasheminejad, as he carried his document-bags down the dark road to his car.

Then we have those New Zealand trusts. New Zealand’s 12,000-plus offshore trusts pay no New Zealand tax on foreign earnings. Their beneficiaries are not registered, and their accounts are not filed with any public body. New Zealand regulators may demand this information, but it is not disclosed to foreign governments.

So you have another tier of protection when you “populate your assets” in a trust in New Zealand, especially when those assets are held by a Panama company in the first place. No information will be known about the UBO and beneficiaries – or about the company’s transactions, because the accounts are not filed with any public body.

The UBO instructs the trustees who manage the trust, and names the beneficiaries, who have no say in the matter and may be changed at the UBO’s discretion.

So when we hear someone trying to give the impression that you can find an audit trail under these circumstances, you know that it is all lies. As if it were not grave enough that the people who control the Maltese government have set up companies in Panama and trusts in New Zealand, they compound the gravity of the situation by lying through their teeth about it.