The ‘crook’ in the dock

The last article Daphne Caruana Galizia published was titled, “That crook [Keith] Schembri was in court today, pleading that he is not a crook”. 

She was killed minutes later with a massive car bomb just down the road from her home.

The chief of staff of disgraced former prime minister Joseph Muscat was back on the witness stand this week, this time for a grilling by the board of the public inquiry into the journalist’s murder. 

Schembri is seen by many as the mastermind behind the administration’s wholesale descent into corruption, but his testimony left spectators with more questions than answers.

Currently out on police bail following a court order freezing his assets on suspicions of money laundering, he’s been linked to a number of major scandals including selling off three of Malta’s public hospitals to a consortium fronted by a fraudster, allegations of bribes to The Times of Malta former Managing Director Adrian Hillman, and the Electrogas power station project that is mired in allegations of corruption.

The board focused on Yorgen Fenech’s (accused of commissioning the journalist’s murder) formerly-secret Dubai kickback vehicle 17 Black and on emails sent on Schembri’s behalf by accounting firm Nexia BT to Mossack Fonseca, exposed in the Panama Papers.

The two are closely connected.

Nexia opened secret Panama company structures for Schembri and former Energy Minister Konrad Mizzi within 72 hours of the Labour Party’s electoral victory in 2013. They listed 17 Black and Macbridge (another Dubai company) as the main source of incoming funds: some €5,000 daily. 

Schembri claimed he intended to do business with the company “after he left politics”. 

The board pointed out that a related request to open a bank account said, “Company will start operating immediately” and that it was expected to generate “around $2 million within a year”.

“How do you explain that instructions were given for both you and Mizzi to open them on the same day?” asked Judge Said Pullicino.

“It had nothing to do with Dr Mizzi,” Schembri replied, insisting he didn’t have any business with him.

The prime minister’s former right hand man defended his offshore structures, claiming he owned so many he couldn’t keep them all straight. As for the Panama company, he didn’t know why Macbridge was listed as a target client. 

Judge Said Pullicino reminded him to be careful with his answers. 

“So you want us to believe that you gave them a list of clients, and Macbridge was invented by Nexia BT?” asked lawyer Therese Comodini Cachia.

“I didn’t say that,” Schembri replied. “I just know I didn’t give them Macbridge.” 

“You are not credible, I am sorry,” said Judge Said Pullicino.

Schembri had denied knowing who owned 17 Black, but he admitted to the board he had in fact lied to the public. 

Comodini Cachia pointed out that Joseph Muscat had spent three years telling journalists and Opposition MPs he knew nothing about 17 Black and had never asked Schembri about it. 

“You didn’t feel the need to tell him Fenech was the owner?” she asked. 

He claimed he told him, but couldn’t remember when.

“I never did anything behind the prime minister’s back.”

The Dubai kickback vehicle was intimately tied to the Electrogas power station — Labour’s key campaign promise — a project they signed contracts for just six months after the election. 

Judge Said Pullicino pointed out that there seemed to be a specific project planned far in advance of the election — and before official tenders were published. 

“It materialised in a few weeks from nothing,” he said, “with people and specifications.”

Schembri insisted it was the idea of the project and not the project that was pre-planned. He denied speaking to any of the key stakeholders about it before the election. 

An investigation by The Shift revealed that Fenech had tried to replicate that same shady energy deal in Bangladesh. Schembri said this was “common knowledge,” despite Fenech’s partners in the consortium claiming they knew nothing about it. 

He confirmed that Bangladesh also happened to be one of the prospective countries in which he was seeking opportunities, but again denied having business interests with Fenech. Schembri is an unelected businessman with interests in every major sector in Malta whose companies have directly benefitted from government projects and tenders. 

His statement contradicted documents filed for his Panama company that said it would hold shares in businesses active “in the sectors of recycling [and] remote gaming”. Two months after Fenech’s first trip to Bangladesh, that document was amended to add infrastructure projects in the Indian subcontinent. 

The former chief of staff defended his record throughout the sitting, framing his move from business to politics as ‘a personal sacrifice’.

“I look at the economy of this country and I can say that a corrupt country does not create a surplus,” he said.

This would be news to several countries that have large surpluses as well as high levels of corruption.

Judge Said Pullicino shot back. “Your problem is that the funds you had to receive had to come from a shady source.”

Schembri made several other surprising revelations during the gruelling six hour hearing.

He admitted he knew about the leak of a massive file of Electrogas documents months before Daphne’s murder. This is important because Electrogas claimed it only found out in December 2017. 

Daphne was sifting through those documents — and piecing together a puzzle revealing massive corruption — at the time she was killed.

Schembri also admitted the 2017 snap election had nothing to do with articles published by Daphne that claimed Muscat’s wife owned Egrant, the third Panama company set up at the same time as Schembri and Mizzi’s — despite the disgraced former prime minister testifying that it was the reason for his decision.

Schembri said he and Muscat had actually begun planning for an early election in February or March 2017. Yorgen Fenech claims to have known the date in 2016. Testimony from middleman Melvin Theuma revealed the plot to assassinate Daphne was briefly put on hold pending the outcome of the vote.

As for the man accused of commissioning the assassination, Fenech told police under interrogation that Schembri was the true mastermind. 

As the sitting came to a close, Judge Mallia read out a decree to be communicated to Prime Minister Robert Abela that said the board intended to continue its work despite pressure from the government to end the inquiry that same day. 

In view of complaints that continuing puts a burden on the public purse, the board members offered to relinquish their honorarium for the service rendered to the country.

But make no mistake — they would decide when it was over.

The government replied in a brief statement later that day. “The board has taken upon itself the right to extend its deadline indefinitely,” it said. “The board has also decided that it alone has the right to determine the limits of its terms of reference.” 

The final line read like a threat. 

“The board has to assume responsibility for its decisions and its consequences.”

The next hearing will take place in January, when potentially useful data from Europol is expected to be submitted.

The following project is weekly Maltese Roundups prepared by The Shift News (Malta) offering the latest news in Daphne Caruana Galizia case.