Businessman Pierre Sladden, who has been implicated in the Panama Papers scandal involving OPM chief of staff Keith Schembri and former Allied Newspapers managing director Adrian Hillman, has refused a request by this newsroom for documents that could substantiate his claims that funds were never transferred between the Cyprus company owned by Sladden himself, Schembri and Hillman and Sladden’s company in the British Virgin Islands.
This newsroom, through the Panama Papers, had uncovered documents showing that his Maltese company was to pay a substantial sum of money to a Cypriot company called A2Z Consulta belonging to Schembri, Sladden and Hillman which, in turn, was to pay Pierre Sladden’s British Virgin Islands company, Blue Sea Portfolio (BSP) through the form of sub-contracting agreements. This newsroom also published three invoices dated between January 2013 and December 2014 sent by BSP to A2Z Consulta amounting to over $900,000. Signed copies of these invoices were found, interestingly enough – given that the last invoice is dated 31 December 2014 – in an email dated 21 November 2014. A separate email sent in November 2015, sent by Nexia BT to Mossack Fonseca, saw the invoices sent back to Mossack Fonseca to be re-signed as they had to revise them so that the actual company number was included in each invoice.
Mr Sladden has said that the agreements never materialised, no funds ever changed hands and the invoices sent by BSP to A2Z Consulta had been reversed. This newsroom approached Mr Sladden for documents that could help to back up his claims of this reversal, but he has failed to provide them.
The Malta Independent is an official partner of the International Consortium of Investigative Journalists and the German newspaper Suddeutsche Zeitung and gained full access to the entire set of Panama Papers.
A Maltese company owned by the Sladdens – Redmap Projects Ltd – has received government work in the past through tenders, including a contract for ‘Excavation Works, Dismantling and Re-Structuring of Walls Using Recycled Rubble Stone at Walls 45-47 at Buskett Woodlands for the EU Life Saving Buskett Project’ during the period between 1July and 31 December 2014. Another agreement was a framework agreement for the construction and maintenance of roads in different localities between 1 January and 31 December 2014.
While it has not yet been established what business A2Z had conducted with Mr Schembri’s company Colson Services Ltd and Mr Hillman’s company Lester Holdings Group Ltd (if any) – both registered in the British Virgin Islands – information garnered from the Panama papers did shed light on how A2Z was used (or was intended to be used according to Sladden’s statement) by Mr Sladden.
According to the Panama Papers, a sub-contracting and working agreement between A2Z Consulta and BSP was drawn up and dated 4 October 2012.
The agreement reads that A2Z was engaged by Redmap Ltd (a company owned by Pierre Sladden in Malta) for the provision of services consisting of quality checks and negotiation with the suppliers of Redmap in connection with the business activities of Redmap.
The agreement read that it was valid for a period of 10 years, unless terminated earlier. It also did not prohibit A2Z from sub-contracting the contract to third parties, “and has identified BSP as a competent person for the provision of the services forming the scope of this engagement”. It read that BSP is willing to provide the services to Redmap in the capacity of sub-contractor of A2Z Consulta.
The agreement between A2Z and BSP shows that it would be valid for three years with the possibility of renewal for further periods.
Adrian Hillman
“In consideration of the due performance of the services provided by BSP, A2Z Consulta shall pay BSP €250,000 yearly, payable upon the raising of an invoice by BSP”.
It was intended that the Cyprus company (A2Z Consulta) would charge the Malta company and the BVI company would charge the Cypriot company.
An email dated October 2015 from Nexia BT’s legal counsel to Karl Cini and later forwarded with a request for signatures to Mossack Fonseca, containing an unsigned copy of the invoices and of the 2012 agreement, read: “Find attached the sub-contracting agreement between A2Z and the BVI Co. I didn’t go into too much detail, since the purpose is to regulate the invoicing structure that has been taking place since 2012, and especially since the agreement between Redmap and A2Z will be terminated – and there is therefore no concern on future legal matters. To be signed by BVI Co director and Bestervus Nominees for A2Z. PS&Sons matters to be regulated by an assignment of receivable agreement”. It must be noted that in a separate 2014 email, this same 2012 contract was found and had been signed by the Mossack Fonseca directors of BSP.
The agreement to assign a receivable dated 31 December 2014 was also found in another email. Here, A2Z Consulta was meant to register a receivable of €900,000 from Redmap Ltd based on the above sub-contracting Redmap - A2Z agreement. It also states that A2Z Consulta appears as a debtor of BSP in the amount of $978,250 (roughly €800,000 at the time). A2Z Consulta however limited the amount assigned to the BSP to €750,000.
As for the remaining €150,000, the document reads: “The Assignor (A2Z Consulta) shall continue to register a receivable from Redmap in the amount of one hundred and fifty thousand Euro (€150,000), unless and until the same is assigned by virtue of an agreement to assign receivables similar to the present agreement,” thus meaning that A2Z Consulta (owned by Sladden, Schembri and Hillman) was to continue registering a receivable of €150,000.
Keith Schembri
Another document – an agreement to assign debt – again dated 31 December 2014 was also found amongst the papers. In this agreement, Redmap owes A2Z Consulta €750,000, “and subsequently due to Blue Sea Portfolio Ltd. The agreement to assign debt and agreement to assign a receivable were sent by a Nexia BT executive to a Mossack Fonseca representative, asking to have them both signed by the BVI company.
However, instead of Redmap owing this sum, essentially, to BSP, the agreement sees the debt transferred to P.S. & Sons Ltd, another Pierre Sladden company in Malta, meaning that P.S. & Sons would owe these funds to A2Z, who would owe the funds to BSP.
Regardless of the documented evidence of Mr Sladden invoicing A2Z Consulta through his BVI company, he still refuses to grant this newsroom access to documents that could help him prove his claims that the agreements never materialised.
A financial advisor who had previously spoken with this newsroom explained that the revenue minus the cost of services (which would include the subcontracted agreement) would be the amount taxed in that country, thus meaning that the funds owed to the Cyprus company might not be taxed in Malta. The same could occur in relation to the net profits of the Cyprus company after the deduction of the charges from the BVI company. The BVI is a tax haven.
When originally contacted prior to the publication of the article revealing the extent of the agreements between his own personal companies, which would have seen the funds effectively end up in the offshore tax haven the British Virgin Islands, Mr Sladden had said: “A2Z Consulta was engaged in 2012 by Redmap to provide various services including quality checks of the business carried out by Redmap. However, the business relationship never materialised and hence no payment was ever effected. Therefore, as per my previous statement, no funds or monies were ever transferred.” A few days ago, this newsroom asked Mr Sladden why he chose to keep the company open for a number of years, given that such a company costs money to keep up-and-running, such as the expense incurred for the services of the nominee directors, etc.
Other questions asked included a request for proof that the invoices shown in the Panama Papers had been reversed; why had he kept his BVI company open for so long if it was never used; where the funds that were going from A2Z Consulta to BSP went and to show proof of this and a request for A2Z Consulta’s annual accounts for the past four years.
In response, Mr Sladden chose not to send a single document to support his claims.
“As explained in my answers to your previous questions, the business never took off, so no monies were transferred between any of the entities mentioned”.
“No funds were transferred to or from A2Z, and the company has never traded to date, and is in the process of being wound up”.
“Therefore all funds were retained in Malta and invested in other business ventures locally”.
“The invoices referred have all been reversed. If your source of information is complete, as claimed and indicated within your various reports, then the mentioned reversals should be contained within the documents in your possession”.
“If this is not the case, then it is evident that you are acting on partial, non-complete data, which raises major concerns regarding its integrity which you should ascertain with your source”.
The source of this information is actually the Panama Papers. This newsroom continued to search through the Panama papers to find the information to which he is referring, however none has been found, which is why the questions were sent in the first place. Mr Sladden has been given the opportunity to show documents to this newsroom, supporting his claims, yet none have been provided.
When the original article was published, Schembri and Hillman were both sent questions. Schembri was asked why he did not come forward as an owner of A2Z when it was first mentioned, for what purposes has he has used the company, what amount of funds he placed in the company, whether he will publish the full accounts and transaction list of the company and whether he is under investigation. In response, Mr Schembri said: “I or any of my companies, local or otherwise, have never received or otherwise transferred any funds from or through A2Z Consulta. Neither have I or any of my companies placed any funds into A2Z Consulta.
This means that, so far, both Schembri and Sladden have refused to share the A2Z Consulta accounts with this newsroom.
Hillman had declined to comment. “As you may be aware, I have refrained from discussing any matters which could be the subject of the enquiry conducted by my employers. On the advice of my lawyers I will retain this position, save to say that I never benefitted, in any way, from A2Z Consulta”.