This is part of an investigative series by Lovin Malta into the corruption allegations that have rocked the country since last week. You should read Part 1 and Part 2 before you continue. On Thursday we published a series of email exchanges we had with Brian Tonna, the accountant at the centre of the Panama scandal, where we began to unravel the detail of his explanations. Today, we discuss a new document he provided and we widen our questioning to blogger Daphne Caruana Galizia.
Establishing the ultimate beneficiary of Egrant is turning out to be the impossible task it was designed to be. After dozens of questions answered by accountant Brian Tonna, there is still nothing to prove that shares were or were not held for the Prime Minister’s wife Michelle Muscat by two other companies Dubro and Aliator. What we do know today is this: shares didn’t even have to be issued for her or anyone else to have been the beneficiary. Quite a mouthful right? Let’s explain.
Our latest email to Tonna was a request for two key documents:
1. A waiver to prove his claim that Dubro and Aliator rejected the two Egrant shares that were theirs by right of being subscribers
2. A share register dated April 2017, which should contain the entire shareholding history of the company
Almost 24 hours later, we got a reply to both our requests.
1. The ‘waiver’
In Tonna’s words:
“A certified copy of the waiver is attached. The original – which has always been in my hands – is now with the Magistrate. This document proves unequivocally that Dubro and Aliator’s involvement as subscribers ended on 8 July 2013.”
It’s interesting that he says the original was always kept in his hands. There is a reason for this. The document he presented is not a “waiver” as he claims. If you waive your right, that right dies.
In fact, this is an “assignment” of the rights of Dubro and Aliator to “the bearer” to invoke the issuance of two shares, either nominative or to bearer. So the rights were transferred, not waived.
This proves, for the first time, the use of bearer instruments – but not necessarily the actual issuance of bearer shares – in the setting up of Egrant, which suggests it was designed for maximum secrecy and ambiguity. In other words, the document which was published yesterday as evidence that Tonna always owned Egrant is actually a nameless paper which gives the right to anybody holding that piece of paper to suddenly become the controller of Egrant, whether in his own name or through a trustee.
For all we know it could have changed hands hundreds of times.
Tonna denies asking for the company to be set up this way.
“This is not something I asked for and I do not know the full answer to it, as it has to do with how matters are handled in Panama…. You would have to ask them why they do it this way. All I can say is that I asked for a corporation to be formed with myself as ultimate beneficial owner, and I was given the documentation that I have published,” he told us.
It’s important to note at this point that bearer instruments are designed to be as untraceable as possible. One example is bearer shares which are illegal almost all over the world. Even in Panama, regulation is tightening around them. In this case, bearer shares did not even have to be issued. There could have been a trust declared by Dubro and Aliator over their right to subscribe. Tonna denies this, but it is anybody’s word against his – and this is just one of a myriad of options that could have been designed.
Asked about bearer shares in a separate email, Tonna stresses that his own share (held by ATC Administrators) was not a bearer share so he disputed the relevance of the question. But at the very least, he did confirm that “in this day and age, bearer shares should not be used”.
It’s also incorrect for Tonna to say therefore this proves “unequivocally” that Dubro and Aliator’s involvement as subscribers ended on July 8th 2013. This is because Dubro and Aliator could have been given shares at a later stage and, in Panama, there does not need to be any public register of this, except for the internal share register that is dependent on the honesty of the financial practitioners themselves to maintain properly.
In fact, Tonna admits this to us in a subsequent email where he says: “It is theoretically possible, if very unlikely, that Dubro and Aliator acquired share in Egrant after the 8 July 2013.”
He also insists, of course, that they did not.
What is interesting about the document Tonna provides is that he claims to have given the original to Magistrate Aaron Bugeja. This means that if the Magistrate were to use it to invoke his right to the issuance of the shares, he could theoretically become a shareholder in Egrant and get the access he may need to get to the bottom of this case.
“What is interesting about the document Tonna provides is that he claims to have given the original to Magistrate Aaron Bugeja. This means that if the Magistrate were to use it to invoke his right to the issuance of the shares, he could theoretically become a shareholder in Egrant and get the access he may need to get to the bottom of this case.”
2. The share register
In response to our second question, urging Tonna – for the fourth time – to send us a copy of the share register so we can to some extent verify the history of Egrant’s shareholding, Tonna first gave yet another evasive reply referring to the register he had already published which was not dated or signed by a director.
He said: “I believe that you are correct to assume that a shareholder register needs to be kept at all times by a Panamanian company. However, if there are no movements in the shareholding, it follows that there will be no updates that will need to be made and so the register remains static.”
In a subsequent email, we asked him yet again whether he would send us the share register. Although he still has not sent it, he has now committed to doing so:
“I have asked for a share register as at the date of dissolution and I will publish it as soon as I receive it. It will be identical, except for the date of course, to the one I have already published, as ATC Administrators Inc. was the first and only registered shareholder in Egrant Inc., and its share was never transferred,” he said. ATC Administrators is the company of which he is ultimate beneficial owner.
Tonna does not say whether he has passed on an updated share register to the magistrate.
Even though the documents Tonna published so far do not clear Michelle Muscat’s name, it must be said that he has been very forthcoming with Lovin Malta – considerably more than he was with the EU’s Pana Committee to whom he cited “client confidentiality” when he was asked about Egrant and refused to say who the company had even belonged to. Curious that he would be so protective if he was the owner all along.
In his replies to us, however, Tonna makes it a point to stress that while he has presented several documents, no documents have been published which disprove his statements.
“The fact of the matter is that Mrs Caruana Galizia has published no documents. All she has published are words which she claims are transcripts. On the other hand, I have produced all the evidence I have, and it confirms both the above points,” he said.
This is also true. Even if the transcripts were scans instead, tracing all the structures to Michelle Muscat without any reasonable doubt could be impossible.
Lovin Malta sent the following questions to Daphne Caruana Galizia to get a better understanding of her take on the documents being published by Tonna. Her replies are italicised beneath each question.
1. Given that Brian Tonna has produced a document which shows Dubro and Aliator ‘waived’ their rights to be shareholders, do you have any concerns about the veracity of your documents which claims Dubro and Aliator hold shares in Egrant for the beneficiary of Michelle Muscat?
I have no concerns about the veracity of the documents I have seen. I know for a fact that they were in the document-safe in the kitchen at Pilatus Bank in March last year. I do, however, have various concerns about any documents which Brian Tonna produces. To restructure secret companies in the British Virgin Islands – entirely separate from the ones in Panama – for Keith Schembri, his business partner and Adrian Hillman, Tonna made use of HSBC documents bearing the address of a bank branch which had closed down 18 months before the date of the document, and at a time when HSBC had begun to release documents of that nature only from central office and never from bank branches.
2. How do you explain, if at all, the documentation submitted by Brian Tonna? Is there a scenario in which both documents – yours and Tonna’s – can be accurate and not falsified in any way?
I am the journalist who broke this story, and not a participant in the saga. Anything I have to say about the nature of the documents I will report myself – as a journalist.
3. What documentation do you feel, if any, can clear the names of Tonna and/or the Muscats?
No documents can clear their names, because they did it. What we need now is a thorough investigation by the Financial Intelligence Analysis Unit and the Police Anti-Money-Laundering Section, which will lead to arrests, interrogation and a proper trial, to remind us and reassure us that we do not live in Istanbul, but in a European Union member state. Here we are, reading the news from France and how Fillon is being so thoroughly investigated and processed over the gift of a couple of expensive suits from a businessman, while our Prime Minister, his chief of staff and their special minister behave in this outrageous fashion. It’s offensive. We are not less than the French, and we shouldn’t put up with it.
4. Given that Tonna has now produced certified documents, do you feel that it is now pertinent for you to submit more (or more tangible) documentation?
Might I remind you that I am not a protagonist in this scandal, but the person who reported it
5. Can you explain why you would publish transcripts as opposed to actual scanned documents?
That will become apparent in due course.
6. Is your whistleblower at this stage willing to talk to the public/media – or to Lovin Malta on the basis of utmost confidentiality?
I can’t speak for others.
By the time we finished this article, the whistleblower – a woman who worked at Pilatus Bank – went to court to volunteer her testimony to the inquiring magistrate and spent three hours doing so.
Our investigation continues.