The Prime Minister’s chief of staff, Keith Schembri, only declared his overseas trust in New Zealand once the story had become public – and as a result, he is facing fines for breaking income tax laws.
In a statement last Wednesday, Mr Schembri, who is facing increasing calls to resign over the Panama Papers leaks, said that “the trust was immediately declared to the relevant authorities in New Zealand and eventually with the Maltese authorities.”
However, the Times of Malta is informed that Mr Schembri only declared his trust after news about its existence emerged in the media seven months after it was created. Until then, he did not declare the setting up of his overseas financial vehicle – which includes a trading company in Panama – with the local tax authorities as he was obliged to do under Maltese law.
Contacted by this newspaper to confirm that the Income Tax Department had started procedures against Mr Schembri similar to those already started against Minister Konrad Mizzi, a spokesman for the department said: “We cannot deny or confirm anything as the law precludes us from divulging information about taxpayers”.
However, a senior government source at the Finance Ministry confirmed that following the media reports, the department made its enquiries and found that Mr Schembri had not abided by the law.
Consequently, administrative procedures were started against Mr Schembri to regularise his position and impose a fine.
Since becoming the PM’s aide, he was not involved in the management of his companies; they were now managed by the board
According to the provisions of the Income Tax Management Act, he was obliged to declare his overseas trust and other interests within 30 days from the creation of his new financial vehicle.
However, the source said he only started this procedure when news about his overseas financial arrangements started being divulged by the media.
Mr Schembri did not reply to questions about the date he declared his new set-up with the Income Tax Department or whether it was acceptable for a person in his positon to break the law.
Mr Schembri set up Haast Trust in New Zealand on July 22, 2015, after acquiring Tillgate Inc – a shelf company in Panama – from Nexia BT, his financial consultants.
Preparations to acquire the shell company were started by Nexia BT a few days after Labour came to power. The Inland Revenue Department has already started procedures against embattled Energy and Health Minster Konrad Mizzi for breaching the income tax rules for failing to declare his overseas trust.
In his statement last Wednesday, Mr Schembri strongly denied any wrongdoing and said that all he had done was aimed at protecting his private business interests.
He said that since becoming Dr Muscat’s aide, he was not involved in the management of his group of companies, as this was now managed by the group’s board of directors. The MFSA register shows that the only registered director on Mr Schembri’s company, Kasco Holdings, is his father, Alfio Schembri.
According to the audited accounts of his group, prepared by Nexia BT, the last year in which Mr Schembri’s group registered a profit was 2011, ending with less than €20,000 in the black.
In the following years, Kasco Group posted losses of €214,000 in 2012, €132,000 in 2013 and €323,000 in 2014.
ivan.camilleri@timesofmalta.com