The Malta Independent 18 April 2024, Thursday
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'I left politics a poorer man', Keith Schembri tells PAC during Electrogas agreement grilling

Tuesday, 28 March 2023, 14:12 Last update: about 2 years ago

Keith Schembri told MPs who form part of the Public Accounts Committee that he left politics poorer than when he entered, while being grilled over the Electrogas power station agreement.

Schembri, who was former Prime Minister Joseph Muscat's chief of staff, testified before the Public Accounts Committee, during its examination of the Auditor General's report relating to the contracts awarded to Electrogas by the Enemalta Corporation.


His session before the committee saw him respond to questions about his now closed Panama company, Electrogas as well as 17 Black. Among other things, it emerged that Schembri had advised former energy minister Konrad Mizzi to go to Nexia BT, while he was answering questions related to the Panama companies.

During his testimony, Schembri said he had no say or influence in the choice of Electrogas as the consortium that won the government tender. 

After this, PAC Chairman Darren Carabott made reference to the Public Inquiry into the assassination of journalist Daphne Caruana Galizia, asking Schembri whether he agreed with a particular statement within it which he read out. Carabott read: "... What is relevant is whether that style of governance reached such a level that allowed a small clique of people abuse of the power given to them to enrich themselves to the detriment of the country which they were obliged to serve." He further read: "From the evidence it is established that this concentration of power in the hands of a selected few to implement the major investment projects in the country which were to boost the economy according to the guidelines drafted in the 2013 Electoral Programme, was determined from the very beginning, probably well before that election." Carabott clarified his understanding of the term 'enrich themselves' to mean that there be an agreement before the 2013 election for the tender to be won. 

Schembri said that he doesn't agree with the inquiry's statement. "From all the people you called here, I was the only person taken to court. They revealed all my bank accounts in Malta and abroad, police went over everything and found nothing. I tell you that I left politics poorer than when I started." He said that whenever he wins a tender "it appears in newspapers, so that they would not give me tenders."



When answering questions related to Electrogas, Schembri also said that he was not approached by any Ultimate Beneficial Owners of Electrogas during the tendering process - that includes SOCAR, Siemens, Gasol, and Mark Gasan, Paul Apap Bologna, Yorgen Fenech and Ray Fenech. He says none of them spoke to him. "I knew Yorgen from the age of 9, but I only resumed contact with him after the Electrogas tender."

Schembri also says that he did not know who the winning bidders were before they were announced. He says that a German ambassador had approached him at the United Nations in 2013, when he was in New York with the Prime Minister, in which the ambassador had called for fairness in the tender since Siemens, a German company, was tendering for the gas contract.

During his grilling before the PAC, it also emerged while he was being asked about his Panama company that Keith Schembri had advised former Energy Minister Konrad Mizzi to use Nexia BT.

Both Keith Schembri and Mizzi were at the heart of a major scandal when news of their Panama companies broke in 2016. Both Schembri and Mizzi had used Nexia BT for the setting up of their companies.

Schembri, when answering questions about their offshore setups, said that Konrad Mizzi had approached him and told him "I want to do what you do, as everything you touch turns to gold."

Responding to questions regarding Nexia BT, Schembri clarified that he hadn't told Mizzi to set up a Panama company. Schembri said: "Nexia BT were my auditors and also the Prime Minister's auditors, so it was obvious that he was going to go to Nexia BT. I suggested that he go to Nexia BT, but I didn't tell him what to open."

He also said that it was a 'coincidence' that his and Mizzi's companies were opened at similar times.

Schembri told the PAC that he knew Brian Tonna since they were young, whilst adding that Nexia BT were also Muscat's auditors when he was an MEP.

Schembri said that he had decided to set up his trust in New Zealand when the former Chairman of BOV had written an email to him saying that he could not exclude that leaks about Schembri's local trust had come from the bank. The Panama company, he said, was opened after the Labour Party came into government. He said that his New Zealand trust was the owner of the Panama company.

Schembri said that his Panama company has been closed. Asked when it was opened, he said: "I had so many offshore companies before I entered politics. I explained this (...) in the public inquiry." He said that it made no difference to him that he had opened an offshore company. "It was run of the mill."

Asked whether, when it came to opening his Panama company, he knew that Nexia BT people were involved in the power station evaluation committees, he said that he didn't remember.

Schembri during his testimony also denied knowing who the owner of another Panama company, Egrant, was.

During his two hour testimony, Keith Schembri also denied that there was a connection between his now closed Panama company, Electrogas and 17 Black.

But Schembri did say that there was planned business between his Panama company and 17 Black, which belongs to Yorgen Fenech. According to leaked emails years ago, 17 Black was to be a target client for Schembri's Panama company. Asked if there was any projected business to occur between 17 Black and his Panama company, he said "after I would have finished from politics."

Asked about this projected business, Schembri mentioned recycling 'for sure', adding that he doesn't remember more, but said that it had been published in the media.

No transactions were planned between 17 Black and Tillgate in 2016, Schembri said, when asked directly.

As for whether he knew who 17 Black belonged to, Schembri said that he did. "So you knew 17 Black belonged to Yorgen Fenech and that after exiting politics, you were going to go into business with Fenech", PAC Chairman Darren Carabott asked. "Something everyone wanted to do", Schembri replied.



15.55 Schembri says he does not know who is the owner of the company Egrant, the third company to be opened in Panama along with those belonging to Schembri and Mizzi.

15:46 There is no connection between Electrogas, 17 Black and the Panama company Tillgate, Schembri says in reply to a Carabott question. No transactions were planned between 17 Black and Tillgate in 2016, Schembri said. Schembri said that he knew that 17 Black belonged to Yorgen Fenech. The intention was to use the company after his exit from politics. One sector that was going to be used was recycling.

15:40 Schmebri says: Konrad Mizzi had told Schembri that he (Mizzi) wanted to do like him (Schembri) because all that he (Schembri) touched turned into gold. So Schembri told Mizzi to go to Nexia BT.

15:37 Schembri said it was a “coincidence” that both his and Konrad Mizzi’s offshore companies were opened in Panama at the same time. It was also a coincidence that Nexia BT opened them. Nexia BT partners were consultants on the Electrogas gas plant tender selection.

15.34 Schembri admitted to having a company in Panama. He said it made no difference that he had an offshore company. It was "run of the mill", he said.

15.33 Schembri said he had received only one invitation to attend a wedding abroad, that of Pilatus' Ali Sadr.

15.32 Schembri says he was invited to an Electrogas party, but he did not attend the party.

15:20 Schembri denies that he had ever met Yorgen Fenech to discuss the 360million euro guarantee that the government had given for the power station. He only discussed the issue at Cabinet level. Carabott mentions an email from Electrogas' CEO, in which he refers to "your meeting with one of our directors, Yorgen Fenech". Schembri was among the email recipients. Schembri says he does not recall receiving such an email. 

15.18 Schembri says he met Electrogas owners to discuss the power station project only once in a meeting during nwhich he did not speak. They never spoke to him about it. 

“I think they were well served by the minister (Konrad Mizzi),” he said. 

15:10 Schembri says that before the 2013 election the Fenech family (Tumas) had never mentioned any interest in a power plant. Schembri said his personal opinion was that the late George Fenech was not really into the project.

15:06 Schembri says he was not approached by UBOs from Electrogas during the tendering process – that includes SOCAR, Siemens, Gasol, and Mark Gasan, Paul Apap Bologna, Yorgen Fenech and Ray Fenech. He says none of them spoke to him. “I knew Yorgen from the age of 9, but I only resumed contact with him after the Electrogas tender. Never.”

15:04 Schembri says he did not know who the winning bidders were before they were announced. He says that a German ambassador approached him at the United Nations in 2013, when he was in New York with the Prime Minister, in which the ambassador called for fairness in the tender since Siemens, a German company, was tendering for the gas contract. It is normal that this happens. The Maltese government lobbies on behalf of its companies with foreign ministers too.

14:59 Schembri tells the PAC that he has known Nexia BT partners Brian Tonna and Karl Cini, his auditors, since he was 17.

14.58: Schembri protested his treatment at the PAC, saying his business is followed by the press, that his affairs are publicised widely when he tenders for government contracts, and that he is frequently attacked by The Times.

14.52: "I left politics a poorer man than I entered it," Schembri said.

14:51 Schembri disagrees with the way he was described in the Caruana Galizia public inquiry. Carabott had said that the public inquiry described Schembri as having “a free hand” in taking certain decisions on government affairs, which “concentration of power in the hands of the few on major economic decisions… was determined from the very start, pretty much from before 2013.”

14:49 Schembri said that he did not have any information related to the tender, and denies that he exerted any influence on the selection. He does not know if this was in the hands of the energy minister. He said the Cabinet was regularly informed of the developments but not on the technical details related to the tendering.

14:44 Schembri said that apart from Cabinet meetings regarding the subject, during which Konrad Mizzi updated ministers about the project, he had attended one meeting with Enemalta representatives on the gas plant project. Schembri said that he just followed the proceedings, adding he can exclude he had taken part in other non-Cabinet meetings related to the subject. Konrad Mizzi, former deputy PM Louis Grech and principal permanent secretary Mario Cutajar used to accompany the PM.

14:39: He said that it was Joseph Muscat who had introduced him to Konrad Mizzi.

14:30: Schembri says that he has passed from severe health problems since he testified in the Caruana Galizia public inquiry. This has has an impact on his memory. He says he has to write things down to remember.

PN members are requesting him to give the names of people involved in Labour's pre-electoral decision to go for a gas power station.  But Schembri cannot remember. "It's been a long time," he said. They mention Energy World, but he has no recollection.

14:27 The idea for a gas power plant was presented on the first day of the 2013 election campaign. There was a choice between the existing HFO, LNG and nuclear… whoever took part in the tendering process chose gas.

14:25 In 2008 Schembri said he was the chair of Labour’s energy working group. It met only twice. “He said it was focused on small things that could reduce energy bills. We had just lost the election then. We never had any presentations on energy proposals then.” He said that he is not a technical person and it was experts who had suggested the use of gas to the party.

14:24 Konrad Mizzi was not part of the drawing up of the Labour Party manifesto that put the use of gas to produce energy as a top priority. We worked backwards. We saw what the people were asking for and worked in that direction.

14:23 Schembri says Labour’s strategy for the 2013 election was based on the country’s top concerns as shown in surveys that were being carried out. 

14:21 Schembri says Muscat always wanted him to work hard to implement Labour policy to reduce energy bills by 25% as the party had promised.

Konrad Mizzi had led the party’s campaign on energy in the run-up to the election and, after Labour had won the election, he was “rightfully selected” by Muscat’s inner circle of some five or six people to be Cabinet minister.

The LNG plant was part of the Labour manifesto. He said polls the PL had conducted showed that the top concern was energy prices.

14:18 Keith Schembri says that he had encouraged Joseph Muscat to run for Labour leader, helping him get elected in 2013, and then was asked to work as his right hand man, chief of staff… “And the rest is history”, he says.

14:16 Keith Schembri is assisted by both Edward Gatt and Mark Vassallo as lawyers.




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