Police in Malta have arrested Keith Schembri, the former prime minister Joseph Muscat’s chief of staff, as part of an investigation into alleged kickbacks connected to the sale of Maltese passports.
Schembri was arrested shortly after midnight on Tuesday, hours after a court issued a wide-ranging order for all his assets and those of his family and companies to be frozen. Being questioned alongside Schembri is the high-profile Maltese accountant Brian Tonna, and one of his associates, who are also subject to the same freezing order. All three men deny wrongdoing.
Schembri resigned from his position as the prime minister’s top adviser in November, shortly before Muscat announced he too was stepping down.
The resignations followed the arrest and arraignment of Schembri’s close friend Yorgen Fenech, a gambling and property tycoon who is suspected by police of being the mastermind in the 2017 murder of the anti-corruption journalist Daphne Caruana Galizia. Fenech has denied complicity in the killing.
At the request of the attorney general, the freezing order asks hundreds of financial institutions, stockbrokers, asset managers and even mobile phone companies operating in Malta to open their books to police investigators.
Tonna’s firm acted as a Maltese citizenship agent, helping sell passports to non-EU citizens. It was alleged in a 2016 report by a government agency, Malta’s financial intelligence analysis unit, that Tonna had taken payments from three Russians acquiring Maltese passports, and passed €100,000 (£92,000) from these funds to Schembri via a British Virgin Islands screen company belonging to the accountant. Tonna has previously denied all wrongdoing, claiming the transfer was the repayment of a loan from Schembri.
A magisterial inquiry into the allegations was concluded earlier this month. Its outcome was not revealed, but the freezing order, which covers more than 100 companies and individuals was signed by Edwina Grima, the same magistrate who presided over the passports inquiry.
Malta started selling passports to wealthy foreigners in 2014, with strong take-up mostly from rich Russians, Chinese and others in the Gulf. Caruana Galizia, whose blog was among the most read publications in her homeland, had published a number of investigations into Malta’s so-called “golden passports” scheme, and the private companies and public officials appointed to administer it.
Caruana Galizia’s sister Corinne Vella said the open proceedings were long overdue. “A magistrate’s inquest conducted in secret, whose findings remain secret, is no substitute for justice,” she said.
The allegations of kickbacks were first made public three years ago by the then opposition leader Simon Busuttil. He highlighted the 2016 report into Schembri during a fraught general election campaign called after a string of corruption allegations against Muscat’s administration.
In a court application through his lawyers shortly after his arrest, Schembri protested that he had not been made aware of the contents of the magistrate’s report, or been allowed to consult with his lawyers. He demanded full disclosure of any police evidence against him.