Muscat knew about Rotorua, Hearnville before media reported it, Konrad Mizzi tells Magistrate

Prime Minister Joseph Muscat knew about Konrad Mizzi’s offshore trust and company before the media had reported it, Mizzi told then-Magistrate Aaron Bugeja while testifying during the Egrant inquiry.

Mizzi was answering questions from Bugeja about his offshore structure which he had admitted to owning in February 2016. Mizzi owned a trust in New Zealand called Rotorua and a company in Panama called Hearnville, which was later acquired by Rotorua. Daphne Caruana Galizia had been the first to indicate the existence of this structure, before Mizzi admitted it and included it in his declaration of assets.

Muscat had defended Mizzi – who back then was energy minister – because the Panama company was owned by the trust and because he had declared the structure.

Hearnville was one of three companies set up in the space of a week right after the Labour Party won the March 2013 general election. Tillgate – which belonged to former OPM chief of staff Keith Schembri – and Egrant – the subject of Bugeja’s inquiry – were the other two.

Mizzi testified in front of Magistrate Bugeja on 22 April 2017, with his offshore structure being the subject of significant questions from the magistrate.

Asked to explain what the structure that he had made consisted of, what advice he had received, and the justification behind that advice, Mizzi said that he had sat down with his advisers to see what options there were for family estate planning.

He said that given that his wife lives “on the other side of the world” in China, that they have lived in England, own a house abroad, and that his career is an international one, meaning that he “might do other things after politics as well,” he and his family felt that they needed a structure which reflected their needs.

Mizzi said that he had sat down with an exhibitee who had suggested that a trust would be the best way to “protect” his assets and investments over time, which is the advice that ultimately led to a trust being set up in New Zealand. This was in 2015, Mizzi told Bugeja in his testimony.

He said that as part of the structure, he was given advice that said that he needed an “underlying company” which he then acquired in 2015 from the service provider – Nexia BT –which was then within a few days settled into the trust.

Hearnville is that underlying company. Mizzi told Bugeja how this company would have held his assets, and spoke of his family’s intention to use it for his future investments and for a property in London which was being rented out.

Bugeja writes in the report that Nexia BT had given Mizzi the advice, and that Mizzi had said that he had spoken to Karl Cini.

The magistrate writes that when Mizzi was asked why he had not chosen to open a trust in Malta, the then-minister replied that there were few companies which engage in such services, and that he worked regularly, as part of his job, with those which did. Mizzi also noted that he had an “international family” and that this structure was agreed upon with his wife, Sai Mizzi Liang.

In fact, Mizzi told Bugeja that Nexia had suggested the idea of setting up a company in Panama, and noted that Hearnville was a shelf company which they already had. This is a remark which Bugeja sought clarification on – Mizzi first said that it was Nexia’s then, when asked again, said that he was not entirely sure, but that as far as he knew it was held by Nexia.

Bugeja asked Mizzi whether the trust or the company ever had a bank account with Pilatus Bank in Malta or outside Malta and whether there were any financial transactions in connection with the two, a question to which Mizzi replied that neither had ever had any bank account anywhere, and neither had made or received any financial transactions.

This effectively means that neither Hearnville nor Rotorua had ever held a bank account.

Asked whether he had any banking relationship or bank account with Pilatus Bank in Malta or outside of Malta, Mizzi answered in the negative both for him and for his family, the report reads.

Bugeja, however, then asked about attempts which had been made to set up bank accounts for the abovementioned company and trust, to which Mizzi replied that it was Nexia BT’s mandate to make enquiries with banks for both the trust and the company, but that he had never signed any bank opening forms or given the go ahead to open the accounts.

He confirmed that Nexia BT had made enquiries for a bank account to be opened for this structure, but noted that it had done nothing more than that and he had not signed off on the creation of any such account himself.

Asked about his later decision to liquidate the company, Mizzi said that he had made it publicly clear that he had done nothing illegal but admitted that, politically speaking, he should not have made the decision to open the offshore trust.

He noted that he had declared all this in his declaration of assets, and that even the prime minister “knew that there was a trust and an underlying company, and I had explained the reasons to him before it emerged in the media and before all this happened.”

He continued, however, that when he saw the public sentiment towards it, he figured that he had been working day and night and “delivering for the country” and did not want to let anything undermine the future credibility of the country and government, which is why he requested an independent audit into the company and trust before liquidation.