The government has ordered the Tax Compliance Unit to start an investigation into possible tax evasion by Pierre Sladden and his company Redmap Ltd, as the fallout continues from the Panama Papers.
According to the latest revelations in the Panama documents, officials of auditing firm Nexia BT were last year making arrangements with Mossack Fonseka for Mr Sladden’s construction company to transfer money – nearly $1 million – to another company in the British Virgin Islands which is also claimed to be owed by Mr Sladden.
The transfer was being made through a convoluted structure of invoices for the ‘provision of services’ through another company registered in Cyprus, A2Z Consulta. This company on its part subcontracted the services to Mr Sladden’s BVI Company.
“This arrangement has elements of a classic example of tax evasion and that is why Mr Sladden has now been put under investigation,” a senior government official told Times of Malta.
This arrangement has elements of a classic example of tax evasion
“Investigations are underway to establish the facts, examine the company’s annual accounts and if necessary proceed with action,” said the official, who cannot be named in order to protect his identity.
In accountancy terms, such arrangements are often made by those attempting to “shift profits”, according an expert. This is when a company shows lower profits on its books and pays less tax in Malta. Mr Sladden did not reply to questions sent to him about the matter.
According to the Australian Financial Review, which has access to the Papers, the scheme was being handled for Mr Sladden by Nexia BT’s Karl Cini, one of the partners in the accountancy firm.
Mr Cini, through his lawyers, told this newspaper yesterday that his firm has never advised any of its clients to evade or to attempt to evade tax, nor has it assisted in tax evasion or attempted tax evasion.
Nexia BT is also acting as the independent auditor of Mr Sladden’s Redmap Ltd and other companies he is involved in as shareholder.
According to the Panama Papers, last November Nexia asked Mossack Fonseca’s British Virgin Islands’ office to have the nominee directors certify assignment of debt between companies linked to Mr Sladden.
The documents showed that Redmap Ltd owed Cyprus company A2Z Consulta €900,000 for “the provision of consultancy services in quality checks and negotiation with suppliers”.
On its part, A2Z Consulta – registered in 2012 and owned by Cypriot nominee company Bestserv (Nominees) Ltd – subcontracted the work given to it by Redmap Ltd to Blue Sea Portfolio Ltd in the British Virgin Islands, owed by Mr Sladden.
Earlier this week, Times of Malta revealed that Mr Sladden is closely associated with the Prime Minister’s chief of staff, Keith Schembri: the two are shareholders in two companies, Cinebiss Ltd and Grigal Films Ltd. The latter company, in which former CHOGM head Phyllis Muscat is also a shareholder, is in dissolution.
This newspaper is informed that the Tax Compliance Unit has also started tax investigations into the affairs of other persons whose names have emerged in the Panama leaks.
Apart from Health and Energy Minister Konrad Mizzi, the Prime Minster’s chief of staff Keith Schembri and Mr Sladden, two other Maltese names have surfaced so far.
One of these is Malcolm Scerri, a business associate of Mr Schembri at Kasco Group.
The second name is that of Adrian Hillman, former managing director of Allied Newspapers Ltd.
According to the Panama Papers, Mr Scerri and Mr Hillman have companies in the British Virgin Islands similar to the one held by Mr Schembri.
In all instances, the companies were opened through the financial advice of Nexia BT.
Redmap Ltd was involvedin the building of Progress Press’s new printing facilitiesin Mrieħel.
Kasco Engineering, owned by Mr Schembri and Mr Scerri, supplied all the plant and machinery to the multi-million euro investment after winning a tender.
Mr Sladden is also a partner in Castille Investments Ltd. The company bought a property in Valletta from Allied Newspapers. This property is now being redeveloped.