Opinion: Keith Schembri is still at it

Aqra din l-opinjoni bil-Malti.

On 12 December 2021, Sam Bankman Fried, crypto’s golden boy, faced charges ranging from conspiracy to commit fraud to money laundering using his Caribbean company.

Less than a year later, on 2 November 2022, the jury took just four hours to find him guilty on all charges. He now waits anxiously for the 24 March when he’ll be sentenced, facing a maximum of 110 years imprisonment. 

He was once feted as a genius and philanthropist, gracing the front pages of Forbes Magazine and Fortune with a company worth over $32 billion.

But the seemingly frugal entrepreneur, who wore shorts and dishevelled hair to meetings, drained billions of his customers’ deposits to cover personal expenses, private jet travel and property purchases – including a $35 million Caribbean penthouse he called home.

Despite the case’s complexity, the US Justice Department managed to extradite him to the US, charge him and convict him in just 11 months. 

Another man with a Caribbean company was also indicted for similar charges: fraud, criminal conspiracy, money laundering, corruption, false testimony and falsification. The prosecution alleged that he offered bribes, fabricated documents, made false statements to public authorities and took false oaths when testifying before the inquiring magistrate.

That was 20 March 2021, almost three years ago, yet Keith Schembri remains a free man with no sign of any conviction.  

In the meantime, Schembri continues to do business.  More galling is that government entities are still awarding his companies direct orders worth tens of thousands of euro. The real slap in the face is that Judge Lawrence Mintoff awarded him financial compensation after concluding that Schembri’s right to enjoyment of his property was breached when another court imposed freezing orders. 

Mintoff decided “it was not reasonable” for a person with an anti-money laundering garnishee to cease functioning commercially for a year. 

The Judge ruled that “the garnishee order caused negative consequences to the applicant” and decided Schembri should receive financial compensation and that three-quarters of court expenses should be covered by the Attorney General, the State Advocate and the Police Commissioner.  They didn’t pay that money out of their own pockets. We did.

While Schembri’s case lingers in the courts for years, swift judgment has been delivered by the US State Department. Schembri is designated ineligible to enter the US because of his involvement in significant corruption.

The State Department found “credible information” that Schembri used his official power for personal benefit. He was involved in a corrupt scheme that entailed the award of a government contract for constructing a power plant in exchange for kickbacks and bribes, and his “actions undermined the rule of law”. 

The US State Department reached those conclusions over two years ago, but here in Malta, Schembri hasn’t even been indicted over those allegations.

The charges brought against him in March 2021 relate to alleged graft over Allied Newspapers group’s purchase of printing machines. Schembri allegedly passed over €650,000 to Adrian Hillman in over 30 “suspicious transactions”.

It is suspected that Hillman received over €1 million in unexplained payments through offshore companies.  Schembri also allegedly paid backhanders to his business partner Malcolm Scerri and another Allied Newspaper director, Vince Buhagiar.

But more serious allegations about Schembri’s and his wife’s activities haven’t reached the courts. His alleged receipt of kickbacks through the Electrogas project is one of them, but there are plenty more.

One of Schembri’s companies, 3City Design, received tens of thousands of euro from Vitals and Steward.  Prosecutors alleged that his interior design company was “used as part of a complex money laundering scheme”.

When Vitals was on the brink of collapse, it still paid tens of thousands to Schembri to provide “plans for a multi-storey car park in Pieta”.

That car park had been devolved to Pieta’s local council, so there was no apparent reason why Vitals was paying Schembri for such plans. 

Another company, FSV Ltd, owned by Schembri’s wife Josette, received thousands more from Vitals. 

A lease agreement worth €28,800 annually for a property in Pendergardens was signed with Vitals in September 2017, barely weeks before Steward took over.  That takeover didn’t change things; Steward simply took over the lease and paid Josette Schembri tens of thousands more, with payments only stopping in October 2018.  

When Steward was challenged, it refused to comment.

Josette Schembri was charged with money laundering in September 2021, and prosecutors alleged that she laundered over €1.5 million through her company. She, too, is banned from entering the US.

Those financial transactions are even more suspicious considering Keith Schembri’s key role in negotiations with Steward. 

Armin Ernst, formerly Vitals CEO and later Steward Healthcare president, communicated secretly with Schembri behind Health Minister Chris Fearne’s back. Ernst used his personal, not his official Steward email, and wrote to Schembri’s personal email, not to his government address:

“Keith, Chris has called me asking for an update.  Haven’t said anything but need to get back to him. Comments?”

“The alleged crimes are extremely serious,” the Court declared when Keith Schembri was indicted almost three years ago.

Schembri’s defence lawyer, Edward Gatt, waved the charges in the air, shouting, “I will have a field day ripping these apart”.  By the looks of things, he won’t have to. 

As years drag on, life and death gnaw at Schembri, his fading memory and those of prosecutors and potential witnesses, making a conviction most unlikely.

In the case of Bankman-Fried, as the guilty verdict was announced, AG Merrick Garland declared: “Sam Bankman-Fried thought that he was above the law. Today’s verdict proves he was wrong”.

Meanwhile, Keith Schembri continues with his life, business, and direct orders. He thought he was above the law.  He was right.