Mizzi, the observer – Kevin Cassar

“I was just an observer”, Konrad Mizzi claimed when he appeared before the Public Accounts Committee.

Mizzi was no observer. He signed an open cheque using taxpayers’ money to reassure SOCAR that its deal with Electrogas was secure. For years, Mizzi’s deal was kept secret.

Joseph Muscat and later Robert Abela did everything possible to keep it that way.  For good reason.  That deal jeopardised the entire Maltese economy.

Labour bound the country to pay all Electrogas debts, no matter how much.  This was in addition to another commitment to pay €432 million to Bank of Valletta if Electrogas collapsed

The SOCAR deal was worth  $1 billion. Labour committed the country to buy gas from SOCAR for 18 years at artificially inflated prices, whether we needed it or not.

That deal was so rotten that The Guardian reported that Malta was losing money “hand over fist”.  SOCAR simply bought the gas from Shell but had no involvement in extracting, processing or delivering that gas to Malta.

In one year alone, SOCAR made €40 million from the deal. Yet Konrad Mizzi deceitfully claimed the deal “is saving Malta huge amounts of money”.

In March 2015, one month before he signed that ruinous deal, Mizzi personally directed Enemalta to buy petrol and diesel from SOCAR.  “I know the people at SOCAR,” he bragged.

He ordered Enemalta chairman, former Labour Minister Charles Mangion, to hedge a deal with SOCAR. That deal cost taxpayers another €14.1 million in losses – €8.6 million on crude oil and €5.5 million on petrol and diesel.

A National Audit Office investigation concluded that Konrad Mizzi, the observer, personally intervened in procuring oil and fuel.  But left no paper trail.

“Documentation was incomplete,” the NAO complained, “rendering it impossible for this office to determine the extent of ministerial direction exercised”.  The lack of documentation “detracted from accountability” and was a “shortcoming in terms of governance”.

SOCAR had already gained global notoriety.  The UN Human Rights Council appealed to the Azerbaijani government to make SOCAR more accountable to parliament.

The NGO Global Witness published a report, ‘Azerbaijan Anonymous‘, in December 2013.  It revealed that private companies made billions of dollars purportedly for “handling Azerbaijani oil” even though nobody knew what they did or who owned them.

Mizzi’s SOCAR deal also made international headlines.  In January 2020, Latvian police mounted an investigation described as “relating to money laundering in connection with Malta’s SOCAR agreement concluded in a manner contrary to the interest of the (Maltese) state”.

Some €28 million suspiciously passed between SOCAR and two secretive limited partnerships through Latvian banks. SOCAR mounted a legal challenge to stop the Latvian police from getting banking information related to Malta’s SOCAR agreement.  The Swiss court rejected SOCAR’s request.  Desperate to maintain secrecy, SOCAR appealed, but the court confirmed its judgement.

Konrad Mizzi was the man behind those deals. His name is on that SOCAR agreement, now public thanks to the Daphne Caruana Galizia Foundation and The Shift. No wonder Mizzi was desperate to keep it secret.

Mizzi took his oath of office on 13 March 2013. The very next day, Karl Cini of Nexia BT wrote to Mossack Fonseca to open “companies in Panama”.

One week later, Cini indicated that “no auditing” should be allowed on Mizzi’s company and that it should have “total secrecy and confidentiality”. No information was to be shared with any authority, including Malta.

By October 2013, SOCAR, Gasol and a group of Maltese investors (Electrogas) “won” the contract to develop the new power station.

In December 2014, Joseph Muscat and Konrad Mizzi travelled secretly to Azerbaijan without any journalists, civil servants or diplomats. That seems to be when those deals were hatched.

In February 2015, Muscat changed the ministerial code of ethics.  It was no longer obligatory to list the assets of ministerial spouses.

In March 2015, the NAO revealed that Mizzi’s direct interference in procuring fuel from SOCAR lost the country €14.1million.  In April 2015, Muscat was back in Azerbaijan –  without journalists or civil servants.

On the same day that Gasol sold its Electrogas shares for tens of millions of euro, Mizzi’s Panama company, Hearneville, was transferred to a New Zealand Trust.

By September 2015, Nexia BT was desperately trying to open accounts for Mizzi’s company. On 26 November 2015, Karl Cini emailed Mossack Fonseca, “They (Konrad Mizzi and Keith Schembri) are asking about these million dollars – is this only the opening deposit?”.

By 2 December, the bank, BSI Panama, replied that to open those accounts, “a deposit of 1 million per year is required”. Cini confirmed that Mizzi gave his approval and would meet that requirement to deposit €1 million per year.

In February 2015, BSI Bank was fined US$211 million for helping clients evade US$3 billion in taxes through a maze of fictitious Trusts, shell corporations and anonymous accounts.

The bank allowed clients to open “numbered” accounts, shielding owners’ identities and issuing credit and debit cards without visible names.  The bank also helped clients repatriate cash through a coded system.

Clients would send coded phrases such as “can you download some tunes for us” or “the gas tank is empty” to the bank relationship managers. This would prompt the bankers to add more money to their cards.

“I was never involved in any corruption,” Mizzi protested. Yet Brian Tonna and Karl Cini, who set up his secret financial structures, stand accused of corruption, money laundering and fraud.

Mossack Fonseca, who set up Mizzi’s Panamian company, collapsed after the discovery of its multi-billion-dollar money laundering schemes.

BSI Bank. where Mizzi tried to open an account, was found guilty of serious breaches concerning money laundering.

Mizzi’s SOCAR deal is still being investigated by Latvian authorities. And Mizzi cannot even enter the US because the Justice Department determined that Mizzi was involved in “significant corruption”.

Yet Labour continues to protect and cover up for him – because Mizzi was not alone. Behind him was Muscat.