“Daphne Caruana Galizia is lying outright” Minister Konrad Mizzi’s press statement declared, referring to the investigative journalist’s allegations about his Panama and New Zealand financial structures.
Caruana Galizia’s revelations, threatened to bring the whole edifice down. Mizzi’s and Joseph Muscat’s meticulous roadmap to loot the country was suddenly in jeopardy. With palpable panic they tried to discredit her claims.
So they hatched a plan. An independent audit would be conducted. The “audit” would “prove” Mizzi’s innocence. Muscat bluffed “I will remove Mizzi if the audit finds he lied about trust holdings”. Muscat pretended to know nothing and was ready to take action. Muscat had absolutely no intention of removing Mizzi.
On Dissett, he insisted “If the allegations about Mizzi turn out to be true, I will remove him”. But in his panic he exposed his own falsity: “if not, Simon Busuttil will have to answer for inventing such lies”. He had already decided the “allegations” were “lies”. He knew exactly what that “audit” would conclude.
Two days later Muscat insisted the audit would have “full access to Mizzi’s assets”.
To convince the country, the audit would be conducted by a reputable, international company. “It is independent and, as far as I know, is not based in Malta” Mizzi claimed. “As far as I know” guarantees what follows is false. It was. For months, both refused to divulge the name of the company. There was no reason for the secrecy if the company was so reputable. Secrecy is only necessary for the dishonest.
Even in court, on 6th October 2016, Minister Mizzi adamantly refused to name the company, claiming “it would subject the firm to unnecessary pressure”. “You can ask the Prime minister” he suggested. The following day journalists asked Muscat. He refused to answer. The company would be named when the audit was complete. “The audit is still a work in progress” Muscat lied. In fact it had been signed off two weeks earlier on 21st September 2016.
The audit was kept hidden for months - until 20th February 2017 when it was presented to the PANA committee. Mizzi sought to pull the rug from under the committee’s feet, springing the audit on them at the last minute leaving no time for scrutiny. Mizzi claimed total exoneration. The audit concluded Mizzi’s trust and company held no bank accounts. Mizzi used it as a weapon against the opposition and a tool to absolve himself of all sins. The allegations against him regarding Electrogas were false, he bragged, and the Electrogas contracts were approved by the European Commission. The auditor was finally revealed - Crowe Horwath.
Its record was dubious. A US federal government agency was suing it for over 1 billion dollars for failure to detect fraud that led to Colonial Bank’s collapse, one of the biggest in the US. The US agency found the firm conducted negligent audits and issued an unqualified opinion despite knowing of the bank’s significant deficiencies. Through its alleged “malpractice” the firm allowed the CEO to siphon 1.8 billion dollars. The US government’s audit regulator banned the Hong Kong affiliate of Crowe Horwarth from auditing after it refused to co-operate with investigations. In Malaysia, Crowe Horwarth was sued for negligence and breach of its duty of care allowing 100 million Malaysian rand of financial irregularities. The Securities and Exchange Commission filed charges against it for significant failures in auditing Corporate Resource Services which went bankrupt leaving 100 million dollars in unpaid tax. Crowe agreed to pay a penalty of 1.5 million dollars for violating anti-fraud provisions and improper professional conduct.
The company with “no links to Malta” actually had a base in Malta. Horwarth Malta was the firm which audited Tyre Ltd, registered at John Dalli’s Portomaso address and linked to the alleged defrauding of American evangelical Christians of hundreds of thousands of dollars. Dalli’s two daughters face criminal prosecution for their part in the scam. Horwarth Malta was led by John Abela, Dalli’s canvasser and close associate who worked with Dalli at Mater Dei Hospital. Abela even spoke at Labour’s political events.
Mizzi’s audit was utterly worthless. In May 2018, Suddeutsche Zeitung published leaked e-mails that revealed Crowe Horwarth’s concerns that Mizzi was hiding something. “It is difficult for him (the auditor) to be sure that there are no other transactions or documents he has not been told about”. “To be comfortable that there are no undisclosed transactions” the auditor requested Mizzi to sign representation letters insisting he needed to be satisfied that each statement is true. The veracity of Mizzi’s audit depended entirely on his own word.
While the audit was ongoing, Mizzi was up to no good. An FIAU report found that Mossack Fonseca “backdated” share certificates to Mizzi’s Panama company. The original document showed Hearnville Inc had a share capital of 10,000 dollars. In March 2016, Karl Cini demanded Mossack Fonseca draw up a new certificate showing a share capital of only 100 dollars. That certificate was backdated to July 2015. Mizzi was fraudulently tampering with official documents behind his auditor’s back. The FIAU concluded that the “ease with which the share certificates were backdated was suspicious”.
The Electrogas deal, that Mizzi bragged was approved by the European Commission was described by the Council of Europe as a “highly irregular procedure”. The Electrogas NAO report concluded Mizzi had breached contracts, due diligence checks were insufficient and parameters were changed during the selection process. Another NAO report found collusion between government and Vitals - and laid responsibility squarely on Mizzi. The NAO also cast doubts on the “regularity” of the ITS DB deal. Mizzi was behind that too.
In January 2017, Mizzi promised that another audit, by the Tax Commissioner, would be published soon. Four years later the country still waits with bated breath. Having stitched up billions of euro worth of dodgy contracts, tampered with official documents, hoodwinked his auditors, set up opaque financial structures in secretive jurisdictions, Mizzi still evades justice. Impunity reigns supreme.