Two leading Maltese politicians are facing mounting pressure amid revelations that $1.6m was paid to an anonymous Dubai company identified as one of two “target clients” of their own offshore companies in Panama.
The allegations concern the tourism minister, Konrad Mizzi, and the prime minister’s chief of staff, Keith Schembri, both beneficial owners of offshore firms in Panama set up to exploit an array of business opportunities.
Although no deals or payments between the Dubai company and Panama companies ever took place, a newly discovered email in the Panama Papers reveals there was a plan for a pair of Dubai entities to be “main target clients” of Schembri and Mizzi’s Panama firms.
Furthermore, new research by the Daphne Project suggests the Dubai firms received unexplained payments of $1.6m. The transfers are detailed within a 120-page draft report by the Maltese financial intelligence unit seen by the Guardian.
Owning and operating offshore companies is generally legal. But the disclosure of a plan for a business relationship between the companies has raised new questions for both Mizzi and Schembri, whose offshore companies only came to light thanks to the Panama Papers investigation.
Schembri has denied any knowledge of payments to the Dubai companies, called 17 Black Limited and Macbridge Limited. But he has admitted both firms, which are registered in Dubai, “were included in draft business plans [as] potential clients”.
In a separate statement Mizzi insisted there was no connection “direct or otherwise” between himself and any entity called 17 Black.
Earlier the chair of a European parliament inquiry into the Panama Papers demanded Mizzi and Schembri resign or be sacked.
“Minister Mizzi and Keith Schembri have to step down or be dismissed,” said Sven Giegold, one of a number of MEPs to have expressed concerns about the rule of law in Malta following the murder of investigative journalist Daphne Caruana Galizia.
“The European commission has to overcome its light touch policy on the rule of law problems in Malta and urgently act as the guardian of European values,” said Giegold, who was part of a European parliament inquiry launched following the Panama Papers.
MEPs are understood to be considering whether to ask Mizzi to clarify evidence he gave to the inquiry last year. Mizzi told the inquiry that the offshore structures were “never intended for commercial activities”.
The latest disclosure follows months of research by the Daphne Project, an international alliance of media organisations continuing the work of Caruana Galizia, who was murdered in a car bombing in October.
An email found in the Panama Papers describes how Schembri and Mizzi’s Panamanian companies, Tillgate Inc and Hearnville Inc, were intended to be used for an array of potential business opportunities, including recycling, gaming, infrastructure projects, fishing and tourism.
Both Panama companies would be owned by separate trusts in New Zealand to which a distribution would be made “every now and again” according to an email in the leak. The beneficiaries of the New Zealand trusts were Mizzi and Schembri.
The same email identified the “main target clients” of the Panamanian companies as 17 Black Limited and Macbridge Limited.
Caruana Galizia had hinted that she was investigating 17 Black in two blogposts on her website early last year.
The draft report by the Maltese financial intelligence unit alleges that 17 Black received $1.4m in payments from an offshore company in the Seychelles.
The report claims that transactions relating to 17 Black were flagged by the US financial intelligence unit as possible “shell company activity, suspicious wire transfers and money laundering”.
A separate payment of $200,000 was made to 17 Black by a different company belonging to a local agent for an energy infrastructure project, according to the report.
There is no evidence that any payments were ever ultimately made from 17 Black to either of the Panamanian companies. The Panama Papers suggest that as of December 2015 efforts were being made to open bank accounts for the Panamanian companies in the Bahamas. In February 2016 Caruana Galizia began writing about the offshore structures.
In a statement following a report in the Times of Malta, Schembri confirmed that “17 Black and MacBridge were included in draft business plans for my business group as potential clients”.
He said: “My companies make dozens of business plans such as these. However, it is a fact that neither 17 Black nor MacBridge ever became clients of my business group, and no transactions were ever recorded with these companies, or with me personally.
“I have no knowledge of the transfers referred to, nor any knowledge of the alleged payment.”
Schembri has previously responded to questions about the Panama Papers by saying that he was following advice from professional financial advisers, and that nothing those advisers did was illegal.
In a separate statement, Mizzi said he had no knowledge of the $200,000 payment and that “there is no connection, direct or otherwise, between Dr Mizzi, his company or trust, and any entity called 17 Black”.
He added that “the Panamanian company Hearnville Inc held no bank account and received no money from any source”, and said an international audit firm had found the structure’s financial statements were presented fairly.