Nexia BT is at the heart of an alleged kickbacks scheme off Malta’s citizenship-by-investment scheme with Brian Tonna and Karl Cini currently locked-up in the police headquarters.
It’s been almost 48 hours since they were first detained, while former Prime Minister’s chief of staff Keith Schembri is out on police bail.
The case is exposing the murky relationship with the top-levels of government, with the company playing a crucial figure in a web of offshore companies.
Nexia BT is still a shady figure, with their latest claims that they hived off their assets to a separate company being rubbished by those involved.
From millions in direct orders to government jobs and curious positions on the power station’s selection committee, the firm’s fingers are also far-reaching in Malta’s political system…and it could just be the tip of the iceberg.
Here’s everything you need to know:
1. Who is Nexia BT?
Nexia BT is a corporate and private client advisory, audit, accounting and tax firm providing a full range of services. It forms part of Nexia International, a leading firm present in over 110 countries.
Nexia BT in Malta also previously served as the Mossack Fonseca agents in the country, the Panamanian firm at the heart of the Panama Papers scandal.
The firm, through managing director Brian Tonna and partner Karl Cini, set up the offshore structures of Keith Schembri, Konrad Mizzi, Adrian Hillman (Allied Newspapers/Progress Press), and Cheng Chen (Shanghai Electric) among others.
According to one e-mail found in the Panama Papers, Schembri and Mizzi were set to receive payments of up to $2 million from 17 Black, the UAE company owned by Yorgen Fenech, who stands accused of conspiring to assassinate journalist Daphne Caruana Galizia.
Having set up the Egrant account, the men are also the only two individuals who know for sure the mysterious identity of its owner.
The firm, who still has a license to operate as accountants, is subject to several on-going inquiries, including the Panama Papers scandal.
2. Keith Schembri’s €100,000 loan to Brian Tonna
Here’s what the arrests of Cini and Tonna could all be about, with a magisterial inquiry into the issues only being concluded recently.
According to a leaked report by the Financial Intelligence Analysis Unit (FIAU), Tonna transferred two €50,000 payments through Pilatus Bank to Schembri in what is believed to have been part of a passport kickbacks scheme.
Both men have denied any wrongdoing and said the €100,000 was the repayment of a personal loan given to Tonna by Schembri while the former underwent separation proceedings.
The loan was repaid through Willerby Trading, a British Virgin Islands shell company secretly owned by Tonna.
The same FIAU report also raised suspicions of the loan document presented to the bank to justify the payments after finding no trace of the original loan payment by Schembri to Tonna
3. What happened in the build-up to their arrest?
On Monday, a court issued a freezing and garnishee order on all assets belonging to Nexia BT, Brian Tonna, Karl Cini, Manuel Castagna, their family members, and their business partners.
Just two days before its assets were frozen, Nexia BT revealed that would no longer offer advisory, accounting and audit services, and that rival firm Reanda Malta would take over several areas of the company.
However, Reanda Malta has outright denied this. It remains to be seen whether any company took over the assets.
“Reanda Malta Limited has not received business from Messrs Nexia BT and will not be receiving any such business. Consequently, there is no ‘hive off’ and or transfer of any business taking place,” it said.
Reanda Malta is owned by auditor Robert Borg who sat on the evaluation committee which awarded a hospitals’ concession to Vitals Global Healthcare.
4. Direct Orders
An analysis by The Shift News uncovered that within four years, Nexia BT had been awarded over €2.4 million in direct orders, tenders and contracts, either directly or through its owner Brian Tonna.
Between 2013 and 2017, the contracts awarded to Tonna, his company Nexia BT and its subsidiaries totalled €2.4 million. They covered a broad range of services supplied to government, from advising the Prime Minister to consulting on public toilets.
Close to 85% of these contracts were in direct orders. Usually, any payment over €10,000 should be issued through a tendering process. However, there are rules for the Minister responsible to bypass the procedure, but this should not exceed a €135,000 limit.
In one year alone, 2015, Tonna pocketed some €840,000 in direct orders.
5. Government Employment
A report by The Times of Malta also uncovered that Tonna was given a full-time role at Owen Bonnici’s Justice Ministry between August 2014 to August 2016, and a part-time position until August 2017.
Through his advisory role, Tonna was able to earn close to €55,000 (excluding a €7,400 expense allowance), roughly the same salary as Malta’s Prime Minister.
6. Sitting on the Electrogas committee
Nexia BT also played a role in selecting the operator for Malta’s new gas-fired power station, the Electrogas consortium of which Yorgen Fenech forms part.
A freedom of information request by the Times of Malta revealed that Tonna sat on the Enemalta selection committee, along with three other staff members from the same financial services firm.
Despite Electrogas and the government both insisting that the deal followed all the necessary procurement procedure, critics have long asserted that sale was pre-ordained before March 2013.
7. Setting up Egrant and a web of offshore companies
The firm has played a central figure in the Egrant saga, having set up the account, with Tonna and Cini the only two people who know the owner’s identity. The pair also set up the offshore structures of Schembri and Mizzi.
On 27th April 2017, Tonna published a certified copy of the waiver claiming that the Panamanian companies that incorporated Egrant had assigned their two subscriber shares to a bearer share certificate, which he held.
However, the Egrant inquiry rubbished the claim, saying that there was “no evidence that Mr Brian Tonna or anybody else is the ultimate beneficial owner of shares as no evidence of bearer transfers could be identified”.
The inquiry also suggested that Cini may have committed perjury over the number of offshore companies he set up and the failure to disclose a package he received from Keith Schembri’s British Virgin Island account.
The Police Commissioner was ordered to investigate, with Cini insisting that discrepancies were simply misunderstandings.
It seems things stopped there. However, with a police investigation running for close to four years, who knows what else the police could have found.
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