Issue link: https://maltatoday.uberflip.com/i/814533
maltatoday, SUNDAY, 23 APRIL 2017 3 THE stakes are very high for all those in- volved including Prime Minister Joseph Muscat, Opposition leader Simon Busuttil and blogger Daphne Caruana Galizia. If the allegations are fabrication based on a narrative linking a series of dots based on plausible conjectures – all aimed at giving credence to the claim that Michelle Muscat is the beneficial owner of Egrant – we are faced with an attempt to distort public opin- ion on the eve of a general election when the opposition is lagging in the polls. The claims have been fully endorsed by the Opposition, which raises the stakes for Simon Busuttil. The PN is not simply call- ing for an investigation to establish the truth but has already concluded that Muscat is Egrant's owner. Although the reproduced text of the alleged declaration of trust has been posted by Caruana Galizia, if this is ex- posed as a fabrication it would be costly for the PN. Moreover if the issue drags on without the presentation of any documented evidence substantiating the claims, Muscat can eas- ily turn the tables accusing Busuttil of being dishonest by using unsubstantiated claims in his bid to win power. But if the allegations are true, the PM – who has repeatedly denied owning Egrant – would have been caught lying. His only way to remain in power is to continue lying and crying frame-up. Unless he resigns. Either way the consequences on democracy will be devastating. It would mean that the 2013 landslide election would have delivered a government of crooks and that the PM had repeatedly lied to the nation. Even more damning is the implication that a company owned by the Prime Minister of a EU coun- try was receiving payments from Azerbaijan, a country known for its caviar diplomacy. In a case where claims may look too big and devastating to be true for some, and too big and devastating for others to be false, much hinges on the credibility of the Prime Minister, which has already suffered a big blow last year when news emerged of Kon- rad Mizzi's secret company. Ironically the greatest problem for Mus- cat and what lends credence to Caruana Galizia's claim is his own track record when facing the Panama Papers revelations in the past year. Why on earth did Muscat decide to retain Mizzi in his cabinet and Keith Schembri as chief of staff after their names surfaced in the Panama Papers? One possible answer is that Muscat could not expect them to resign because he him- self had a finger in the pie. Which is why the claim that Michelle Muscat is the owner of Egrant provides a plausible answer to this question. The PM himself now admits that he initial- ly failed to address speculation on owner- ship of Egrant, which company was formed on the same day as Tillgate and Hearnville in July 2013, but requested for formation in an email from Nexia's Karl Cini just a few days after Labour won power in March 2013. Mizzi's initial attempt to derail the media by revealing his trust in New Zealand before it emerged that he had a Panama company also contributed to a climate of distrust which made the government less credible. Bearing on Muscat's credibility is the in- stitutional failure by police and the FIAU to fully investigate Konrad Mizzi for opening a company whose set-up "looks like money laundering", according to PANA committee chairman Werner Langen. Moreover Nexia BT was never investigated despite the trail of failed attempts to open bank accounts in Dubai. Another factor in this case is the alleged involvement of Leyla Aliyeva, the daughter of Azeri dictator Ilham Aliyev, named as the 'corruption person of the year' in 2014 by the OCCRP. Azerbaijan's ruling dynasty, known for its 'caviar diplomacy' through payments made through shell companies to curry favour with foreign politicians as was recently exposed by payments to Italian politician Luca Volontè, the former chair of the centre-right group in the Council of Eu- rope's parliamentary assembly. Any definitive proof of financial dealings involving Maltese PEPs with Azeri officials would cast a shadow on Malta's energy poli- cy, piloted by Konrad Mizzi. Again it is possible that the Aliyev regime's international notoriety is being used to give credence to the latest claims. But the fact that Nexia BT was also used by Azeri oli- garchs raises questions. So was the failure to investigate Mizzi, Schembri and Nexia a consequence of Mus- cat's involvement in Egrant? Or is Caruana Galizia feeding on the perception brought about by Muscat himself through his reluc- tance to act decisively by removing Mizzi and Schembri? In this sense the publication of documen- tary evidence and proof is needed to resolve an issue, which has a direct bearing on the next election and the state of democracy. But would proving Muscat's involvement bring the case to an end, or will the debate shift to whether such documents have been forged as the PM hinted when claiming that the documents will have to be authenticat- ed. The onus is now on the country's institu- tions, particularly the police, to investigate whether Muscat's wife owns a secret com- pany. Instead of acting on its own steam, the police only intervened after the PM asked them to do so through his lawyers. Proper governance demands immediate not de- layed action, especially after the allegations surfaced on Caruana Galizia's blog. The magisterial inquiry is a step in the right direction but it comes a little too late. By calling on the PM to resign while fac- ing investigations, Busuttil has once again upped the stakes. It would mean that any PM would have to resign whenever faced with a serious but yet unproven allegations. If conducted properly this inquiry can swiftly establish whether a trail exists for suspicious transactions linking the Azeri ruling family to the Pilatus bank and the Muscat family. Indeed Muscat's most solid defence is that any suspicious banking trans- actions through Pilatus bank can be traced, although this may not suffice to establish the identity of PEPs mentioned in hard copies of fiduciary agreements. It is arguable that Muscat is only infuri- ated now by the alleged lie that his wife owns Egrant, which is why he should imme- diately sack Schembri and Mizzi. Last year he was placid about the sheer act of opening secret companies. Now the claim is devas- tating. Closure on Panama can only happen by removing the people in his Cabinet who opened an offshore company. In this high stakes game, it may well serve the Opposition to keep Panama alive in the general election campaign and not burn all its ammunition now. Muscat will want to clear his name before the election. What is sure is that for the first time Muscat seems to have lost the initiative to Busuttil in deter- mining the best timing for the general elec- tion. Entering the campaign with the sword of Damocles hanging on his head, could be his biggest risk. News Crunch time on Egrant JAMES DEBONO Crunch time on Egrant DEBONO Michelle Muscat (top left) was alleged to have benefited from a loan transfer paid from a Dubai company owned by the Aliyevs (bottom left), rulers of Azerbaijan, whose state owned oil company SOCAR will provide gas for the 200MW gas plant pioneered by Konrad Mizzi (top right), himself having opened a Panama company. Muscat (right with Busuttil) never took action on Mizzi and Keith Schembri MATTHEW VELLA IN January 2015, the audit firm Nexia BT – the agents for Mossack Fonseca in Malta who serviced the Prime Minister's chief of staff and energy minister to open offshore companies in Panama – enrolled a host of new companies. They belonged to a man called Manuchehr Ahadpur Khangah (pictured), an Azerbaijani national who hails from Iran, with address in Dubai. MaltaToday had already written about the businessman: the polo enthusiast and poker player, 63, was the chairman of the AZ Group of Companies, which has interests in the food, plastics, wood, and construction industries. Khangah is a millionaire who is close to the Aliyev family, the ruling dynasty of Azerbaijan. Particularly close is his relation to the powerful Azerbaijani min- ister for emergency situations Ka- maladdin Heydarov, according to US embassy cables published in Wikileaks. According to these same cables, in which the US embassy in Baku profiled the most powerful fami- lies in Azerbaijan back in 2010, Khangah was said to be in business with the children of Heydarov. The US cable claimed that Khangah was the CEO or "front man" of a substantial portion of the Hey- darov family conglomerate. The cable states that in one ex- ample, Kamaladdin Heydarov's two sons Nijat and Tale wanted to buy two Gulfstream jets, valued at $20 million each. Ownership of the Gulfstreams was to be shared be- tween a Dubai-registered company Shams al Sahra, owned by the Hey- darovs, and Khangah. The company Shams al Sahra has a familiar ring: Daphne Caruana Galizia claims the Al Sahra FZCO of Dubai was used in a money transfer from Leyla Aliyeva to Egrant; and the questions from the Times that the PM's chief of staff Keith Schembri published on Fa- cebook last week, referred to "Hey- darov's front man" – which Schem- bri claimed he did not know, when asked whether he had introduced him to Nexia BT. The activities of Khangah in Mal- ta, gleaned from MFSA records, no doubt raise questions. In January 2015, Nexia BT opened up Mulsanne Investments for Khangah, together with six subsidi- aries under a familiar musical no- menclature – the Bach, Beethoven, Mozart, Puccini, Verdi, and Vivaldi investment holding companies. All of them are registered in Malta. Their company-in-formation ac- count was opened at Pilatus Bank, as public MFSA records show. Additionally, the companies opened in January 2015 and closed down officially on 15 December, exactly short of the 12 months that would have required the compa- nies to present a statutory audit. Instead, all that was required were just liquidation accounts. Mul- sanne Investments recorded no cash at bank or in hand, but accu- mulated losses of €627,198, which were offset by a shareholders' loan from Khangah of a roughly equal amount of €627,717. These accounts do not break down the expenses incurred, ex- cept for the declaration of solvency for Mulsanne Investments listed the total liabilities as being mainly the accumulated loss of €627,198. Mulsanne's six subsidiaries each incurred accumulated losses of €8,273 – roughly the expenses in- curred in setup and incorporation fees for the year – and also paid off by a shareholders' loan. When MaltaToday asked Brian Tonna about the fact that Khangah, named in the US embassy cables as being a front man for Kamaladdin Heydarov, had been his client and whether he would explain the ex- penses incurred for these compa- nies, Tonna said he could not give information about his clients. "This includes providing infor- mation about who may or may not be a client, so please do not take this as a confirmation that any of the persons mentioned [Khangah and Heydarov] are clients. To be clear, we do not confirm or deny anything. We simply do not answer because we are legally bound so to do," Tonna said. MaltaToday cannot suggest there is a smoking gun of impropriety, although the presence of Azerbai- jani oligarchs opening and closing a company in under a year, that strikes off "accumulated losses" with a shareholder's loan, raises questions on the Maltese world of finance. It is not know whether Khangah is himself a lover of classical music, enough to have named Mulsanne's subsidiaries after the composers Bach, Beethoven, Mozart, Puccini, Verdi and Vivaldi. But his association with Ka- maladdin Heydarov does bring to attention the fact that the Azerbai- jani minister for emergency situa- tions happens to be a composer of some famous hits in Azerbaijan, with songs performed by famous singers of his country. mvella@mediatoday.com.mt Azerbaijan in Malta: the business links