It is impossible to audit a complex financial vehicle such as the one formed by Energy and Health Minister Konrad Mizzi, experts in the field of trusts have told the Times of Malta.
Panama is one of the few jurisdictions that still allows the registration of companies holding bearer shares. This is the highest level of secrecy still permitted in the financial world and, according to experts, puts transparency into serious doubt.
“Bearer shares have been outlawed in the EU and only a few jurisdictions in the world still allow it. With the proviso of bearer shares one can never really know what and who is behind a company, whether it has such shares and what assets are being traded,” one expert said.
“This is why whoever wants to be transparent cannot have at the same time such companies in Panama.”
Bearer shares are physical certificates which are owned by whoever has possession of them (or bears them). These are unlike registered shares, which are registered to a person in a registry.
Whoever wants to be transparent cannot have at the same time such companies in Panama
Bearer shares can be traded very quickly and easily, by simply handing over the shares to the new shareholder. This means companies with bearer shares can change owners many times without anyone finding out.
Last week, following revelations by blogger Daphne Caruana Galizia, Minister Konrad Mizzi admitted that he had formed Rotura Trust, administered by Orion Trust of New Zealand.
He said the trust was a means of managing his family’s assets, which consist of two apartments – one in London and the other in Sliema – and some €300,000 in bank deposits.
However, it later transpired that the only asset held by the New Zealand trust is a shell trading company registered in Panama and bought by the minster off the shelf.
Dr Mizzi later said that he would start transferring his assets to the Panama company, Hearnville Inc, which is owned by the trust, but he has not indicated what these assets are.
According to trust experts, the New Zealand trust would be enough for a family to administer assets such as those declared by Dr Mizzi.
“That would have been the most logical thing to do and a straightforward financial vehicle.”
However, the fact that the trust needed a trading company in a not-so-transparent jurisdiction indicated that Panama would be the first port of call for any assets.
The expert said this made the financial vehicle all the more complicated, as it introduced elements of trading, dividends, different taxation jurisdictions and exchanges of financial information between one country and the other.
According to Panamanian law, offshore shareholders do not have to pay any taxes when receiving dividends from trading companies they own. The Panama company is owned by the New Zealand trust, which would eventually receive dividends from it.
A request made yesterday by the Times of Malta for Minister Mizzi to give access to the trust deed – the agreement between the settlor and the trustee – has not yet been accepted.