Law firm Mossack Fonseca used Malta as one of its hubs through which clients could anonymously filter millions using shell companies, Panama Papers e-mails show.
The firm had set up a branch in Malta shortly after the 2013 general election.
While much of the focus has been on offshore jurisdictions like Panama and the British Virgin Islands, the Panama Papers indicate that Malta was seen as an attractive destination for millionaires looking to conceal their riches.
One transaction involved the Orion Trust, in New Zealand, which transferred €1.3 million to a shell company in Malta on behalf of a Mexican client. The use of the Maltese shell company served to conceal the money trail leading back to the client.
Orion Trust served as trustees for Minister without Portfolio Konrad Mizzi and the Prime Minister’s chief of staff, Keith Schembri’s trusts, although the Mexican client’s transaction was in no way related to them or their financial interests.
Another e-mail exchange shows how Ecuadorian clients wishing to “market flowers through a company in the British Virgin Islands” sought a bank account in Malta. The company was to receive monthly payments of $1-1.5 million through the Malta account, though further e-mail exchanges indicate that the Ecuadorian clients did not pursue this option.
Two Russians used Mossack Fonseca in Malta to set up a shell corporation in which their interests were hidden with the purpose of buying property in the UK.
The company was to have a Maltese bank account with an initial deposit of €3.7 million.
This money was earmarked for the “purchase and administration of student
accommodation in Shieffield [sic]”.
The shares for the Malta company were fully owned by another corporation in the BVI.
A Romanian pharmaceuticals company set up a shell company in Malta to filter
funds through it and back to a company in the Isle of Man. The Malta shell company would retain sufficient dividends to cover costs and local taxes while the rest of the dividends be passed on offshore to the ultimate beneficial owner.
A BVI-based property company opened a bank account in Malta through which it
would receive brokerage fees from companies in Cyprus and the Isle of Man. The
company, which had an estimated turnover of €1 million last year, was said to initially be doing business in Hungary.
There is nothing to suggest that any of these activities were illegal, though it does go to show the uphill battle the authorities face in preventing money-laundering activities in Malta.
The head of the government’s financial intelligence agency last week questioned
the lack of police prosecutions involving financial crimes. Manfred Galdes, director
of the Financial Intelligence Analysis Unit, said it was strange the police only seemed to prosecute domestic financial crime when there was a lot of international business flowing through the island.
He noted that the police freezing of assets was “minimal” and the amounts usually low.
The European Union’s fourth anti-money laundering directive will next year set up
central registries in member countries detailing the ultimate owners of companies.
The registries will be open to the tax authorities and other parties with a “legitimate interest”, including investigative journalists
The Panama Papers were made available to Times of Malta through an investigative partnership with the International Consortium of Investigative Journalists and German newspaper Süddeutsche Zeitung.