The kingpin has been arrested

Former chief of staff Keith Schembri had his assets frozen by the court following the finalisation of a magisterial inquiry into whether he received €100,000 in kickbacks from the sale of Maltese (EU) passports. 

The asset freeze included Schembri’s family members and his company Kasco’s top employees, as well as senior people at Brian Tonna’s accounting firm Nexia BT, Tonna’s family members, and a long list of related companies associated with both men.

Tonna was the one who set up the Panama companies for the government’s top brass. And he’s been operating without sanction since the Panama Papers exposé in 2016 and sealing new deals at the cost of taxpayers.

The court ordered all financial institutions listed to provide the Attorney General with details of the source of the funds through which the suspects acquired their property and other assets within 24 hours. Any transfer of these assets to third parties is prohibited.

Schembri was arrested in the middle of the night and held for police interrogation for some 20 hours before being released on bail until mid-October. 

Keith Schembri with Melvin Theuma – the intermediary turned State witness in Daphne case

His lawyers filed an urgent application requesting access to the conclusion of the magisterial inquiry, as well as “material” related to the case, before Schembri participates in the police interrogation. 

Schembri’s lawyers are trying to get access to as much of the evidence in the possession of the police as possible, but they attempted to spin nondisclosure as some sort of injustice. Legal sources have told The Shift that Schembri or his lawyers have no right at law to demand any part of the report of the inquiry. 

In Malta, a magisterial inquiry is designed to preserve evidence of potential crime, collecting evidence and testimonies that are forwarded to the police for further investigation. It does not decide whether a person is guilty or otherwise.

The result of the inquiry — a long document called a procès verbal — is then sent to the Attorney General. It’s up to the Attorney General whether to divulge any part of the procès-verbal, at whatever stage.

Magisterial inquiries were used as a stalling mechanism throughout the Muscat administration, a means of avoiding political responsibility by placing those accused of serious corruption in a grey zone where they’re neither innocent nor guilty. Meanwhile, they could trumpet the line “you have no proof” every time journalists revealed new findings. 

Politicians clung to office under clouds of suspicion, insisting everyone must “wait for the outcome”. And as the public inquiry into the assassination of Daphne Caurana Galizia has revealed, even when a magisterial inquiry finally did wrap up, former Attorney General Peter Grech chose not to pass the file on to the police. He even warned them not to dig too deep to avoid trouble in the country. 

But Peter Grech resigned last month, and his successor, Victoria Buttigieg, directed police to act on this one.

The move strikes many as too little, too late. Daphne Caruana Galizia exposed the kickbacks that passed between Tonna and Schembri — naming the amounts and the offshore companies involved — on 24 April 2017.

Had the institutions in Malta acted on that story, and on documented evidence revealed in the Panama Papers leaks, she would be alive today. 

Schembri’s legal problems are expected to get more complicated in the coming weeks as another inquiry, this one on alleged money laundering and graft activities involving the former Managing Director of the Times of Malta Adrian Hillman, is about to be concluded.

As for Nexia BT, the accounting company at the centre of seemingly every corrupt deal since Muscat’s 2013 election, finally had its license to sell European Union passports “suspended”.   

The Malta Financial Services Authority (MFSA) creaked into action, too, issuing enforcement notices against two companies owned by Nexia BT, saying that the companies are “not in a position to continue servicing clients whileadhering to the applicable legal requirements”.

This sudden activity occurred after years of allegations surrounding Nexia BT and criticism that no action had been taken against the company that set up offshore tax avoidance structures in Panama for Schembri and former Minister Konrad Mizzi.

Signs of action from institutions that have been paralysed by political interference — many believe fatally — came as a surprise in a country where law enforcement has been known to sit on high profile corruption files for years.

But is this sudden flurry of activity an indication that Malta’s rusty wheels of justice have finally begun to turn? 

Or is it just window dressing, a desperate attempt to appease MONEYVAL in hopes of avoiding greylisting before the looming October deadline?

It’s still too early to tell.

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