28/09/20

MALTA: Police arrest former PM's chief of staff in golden passports scandal.

As published on internationalinvestment.net, Friday 25 September, 2020.

Malta police arrested Keith Schembri, who was the chief of staff of former Prime Minister Joseph Muscat, early on Tuesday as part of an investigation into money laundering of funds derived from kickbacks on sales of Maltese passports.

Schembri was arrested shortly after midnight on Tuesday, hours after a court issued a wide-ranging order for all his assets and those of his family and companies to be frozen. Being questioned alongside Schembri is the high-profile Maltese accountant Brian Tonna, and one of his associates, who are also subject to the same freezing order. All three men deny wrongdoing.

Malta started selling passports to wealthy foreigners in 2014, with strong take-up mostly from rich Russians, Chinese and others in the Arab gulf.

Schembri resigned from his position as the prime minister's top adviser in November, shortly before Muscat announced he too was stepping down.

It was alleged in a 2016 report by a government agency, Malta's financial intelligence analysis unit, that Tonna had taken payments from three Russians acquiring Maltese passports, and passed €100,000 from these funds to Schembri via a British Virgin Islands screen company belonging to the accountant. Tonna has previously denied all wrongdoing, claiming the transfer was the repayment of a loan from Schembri.

"Finally, things are moving in the fight against corruption in Malta," said German MEP Sven Giegold, from the European Green Party.

However, he added that "impunity for money laundering and corruption is systemic. Malta needs fundamental institutional reforms to strengthen the rule of law".

European Commission President Ursula von der Leyen recently declared that the practice of "golden passports" was against EU values.

For years, Maltese investigative journalists including the late Daphne Caruana Galizia who was assassinated by car bomb in 2017, have been publishing details of Schembri's alleged kickbacks. They reported that he took some €100,000 on passport sales facilitated through his auditor Brian Tonna who has also been arrested.

The former chief of staff has also been implicated in the murder of Caruana Galizia. He was arrested in connection with the case but then released. Police say he is still a "person of interest".

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