by Carlo Bonini
One of the authors of this book, Manuel Delia blogged in early April 2018 that correspondence showed that Kälin asked SCL to introduce him to Joseph Muscat in June 2011 – two years before the election that the PL won big. Muscat’s success in 2013 is partly due to the electoral cycle; voters thought it was time for a change and local businesses were happy to donate to the likely winner. But the PL had been virtually bankrupt in 2008 and five years later its campaign was awash with money. The scale of their wealth is very hard to explain purely from local resources alone. At the time political parties were under no legal obligation to declare the source of their wealth. However, under Maltese law any party funding from outside the country is illegal.
Kälin also visited the PN in Malta in 2011 and made his passport-selling ‘consultancy’ pitch. The then governing party was not interested and they heard nothing more from him. But his other half, as it were, Alexander Nix, rocked up on the island in November 2012.
Co-author Manuel Delia blogged that the information in the correspondence between Henley & Partners and SCL, originally unearthed by Freddy Gray in The Spectator, confirmed that the two organisations have consistently worked hand-in-hand in several jurisdictions and there were indications that they had also done so in Malta since 2011, before PL announced its new policy to sell passports.
The MPs on the UK House of Commons media select committee read Manuel Delia’s blog and cited it as a source in their interim report. As soon as it was published in 2018, the government of Malta and a dodgy PR outfit called Chelgate fired back. Both Malta’s High Commissioner to the UK and the Chelgate PR company wrote to the committee, denying statements in the Interim Report that Malta’s Labour Party had had dealings with the SCL Group ‘for several years before the 2013 elections’.
The final report by the British MPs retorted that:
We understand, however, that SCL certainly had meetings in Malta, that Christian Kälin of Henley & Partners was introduced by SCL to Joseph Muscat in 2011, and that Christian Kälin met with both political parties before 2013.
So the MPs told the government of Malta and Chelgate to stick it up their jumper. That halo of smugness you see is from co-author Manuel Delia. Joking aside, he was spot on.
It is something of a mystery why Chelgate PR should jump to the defence of Malta’s government and its dealings with the Passport King and, perhaps his one-time pal, Mr Nix. Chelgate’s boss is a character called Terence Fane-Saunders. Its website boasts that TFS is ‘widely regarded as one of the leaders of the international public relations profession’. He once worked for Burson-Marsteller, a PR company that lied about the Dirty War in Argentina while its client the Fascist junta there was torturing and murdering people. In 2017 Chelgate hit the headlines in The Sun: ‘Company behind Grenfell Tower “death trap” cladding hired a PR firm “before fire had been put out”.’ The Sun reported: “Harley Facades, who were paid £2.6 million for cladding, reportedly appointed Chelgate to manage the fallout as the death toll rapidly rose.’
There has been no admission by the government of Malta that it hired Chelgate to wash its dirty linen. But that is what Chelgate did.
There is one other point worth weighing up in relation to the assertion made by the Maltese government that it had had no dealings with the SCL group or Cambridge Analytica.
In 2015, before the Cambridge Analytica scandal hit the news, Malta placed one of the shareholders of SCL, Jonathan Peter Marland, on its annual Republic Day honours list. He was made honorary officer of the national order of merit and President Marie Louise Coleiro Preca stuck a medal on his chest.
Jonathan Marland owned shares directly in SCL Group Limited and, through JP Marland & Sons Limited which he fully owns, he controlled further shares in the SCL Group.
Marland is also a member of the House of Lords as Lord Marland of Odstock since 2006.
In the months leading to his decoration by Malta he was closely active with Adrian Hillman – a character that will feature again later in this story – with whom he coordinated the Commonwealth Business Forum on the fringes of the Commonwealth heads of government meeting held in Malta in 2015.
He also operated in close association with Phyllis Muscat, close personal friend and travelling companion of prime minister Joseph Muscat. In 2015 Jonathan Marland employed Phyllis Muscat’s daughter in the Commonwealth unit he ran.
Daphne Caruana Galizia reported at the time how Phyllis Muscat used her relationship with Jonathan Marland to secure lucrative employment for her daughter while studying in the UK.
The Times (of London) identified Jonathan Marland, formerly a trade envoy for David Cameron’s government, as one of the high-profile connections that SCL exploited for its business. The Times said about Jonathan Marland and others that ‘the men who run Cambridge Analytica are no strangers to scandal and intrigue and have social and business links to the heart of the Conservative Party, royalty, and the British military’.
The Guardian reported in 2015 that Jonathan Marland denied he interfered in SCL’s business. Marland said he had not been involved in running the company and had refused a request to introduce it to Conservative Party HQ.
I have had very little engagement with the company and in fact am fairly sure I have only met (Cambridge Analytica former CEO Alexander) Nix once, he said. I also know very little of their operations as my initial investment was over 10 years ago. As such I had no idea of their Facebook data and am naturally concerned about current events.
As well as Jonathan Marland, all concerned deny any wrongdoing.
Who, exactly, are the beneficiaries of the Passport King’s cunning wheeze? Daphne chased up a number of Christian Kälin’s clients.
Step forward, for example, Vietnamese MP Nguyen Thi Nguyet Huong. In July 2016, she was found to have violated Vietnamese law by holding dual citizenship, which the country does not permit. She had secretly acquired Maltese citizenship and was kicked out of parliament for breaking the law. Daphne blogged:
Sources in Malta have informed me that she paid for her Maltese citizenship under the Maltese government’s ‘sale of citizenship’ scheme, euphemistically known officially as the International Investor Programme (IIP). The Muscat government, which introduced the scheme three years ago, touted it as being a way to ‘attract talent to Malta’, and said that those who ‘invested’ in Maltese citizenship would have to live in Malta for part of the year. It is unclear how a Vietnamese member of parliament fits these requirements. Malta’s sale of citizenship to individuals from countries which do not allow their citizens to hold dual nationality also raises questions about Malta’s diplomatic negligence – to say nothing about all the questions this particular case raises about the careful due diligence scrutiny to which candidates for the purchase of Maltese citizenship are supposed to be subjected (as we were told).
There are several other newly minted Maltese citizens thanks to Henley & Partners who made the world headlines and these are a few examples:
Pavel Menlikov:Russian-born and owner of a Maltese passport since 2015. Menlikov lives in Finland. He chaired the Airiston Helmi real estate firm which was raided by Finnish financial police in September 2018 on suspicion that it was a front for a giant money laundering operation;
Mustafa Abdel Wadood:Egyptian-born and owner of a Maltese passport listed on Malta’s government gazette in 2018. Four months later he was charged with fraud and conspiracy by the US government. He awaits trial and his citizenship is being withdrawn;
Liu Zhongtian:Chinese-born and owner of a Maltese passport since 2016. He is the owner of a huge Chinese aluminium conglomerate and indicted in 2019 by a US grand jury for smuggling aluminium into the US and dodging $1.8 billion in taxes. Daphne had reported Liu’s acquisition of a Maltese passport in May 2016;
Arkady Volozh (founder of Russian search engine Yandex), Boris Mints (owner of the major investment company O1), and Alexander Nesis (founder of equity group ICT): The three are Russian-born holders of Maltese passports a
nd shortlisted by the United States treasury in a ‘Kremlin Report’ targeting oligarchs close to Vladimir Putin for potential sanctions.
All concerned deny any wrongdoing.
The Malta passport scheme is particularly popular with Russian applicants. It is estimated that the largest contingent of ‘new’ Maltese citizens is originally from Russia. That’s more than 600 which, given that this is a roll call of billionaires, is a large number indeed.
You cannot be a billionaire in Russia or anything like it without getting along with Vladimir Putin. Conversely, it is not viable to be or to remain a billionaire in Russia without some form of toehold in the West.
Henley & Passports’ scheme in Malta, though by no means exclusively of interest to Russians, provides for the Russian oligarchy a way of bridging the apparently contradictory aspirations of being both close to the Kremlin and far away from Russia at the same time.
Consider, for example, the case of Grigory Anikiyev, a Russian parliamentarian whose son, Artem, acquired a Maltese passport on his 17th birthday. In a video blog, Artem bragged about his 24 hours in Malta, flying in and out on a private jet to collect his passport and enjoy a spot of shopping while his father exhorts young Russians to be good patriots and love their country.
The access given by passports sales schemes in Malta and elsewhere raise security concerns in the West, not least because of the back door that is opened to the Russian oligarchy and to Chinese nationals who break the laws of their own country seeking citizenship of another.
US-based financial crime consultant Kenneth Rijock blogged in April 2018 that his sources in contact with government officials in the US, Canada, and the EU ‘engaged in joint preparations to create regulations that will effectively combat the threats posed by criminal elements who have obtained citizenship by investment passports from five East Caribbean countries’. Most of those countries used Henley & Partners to promote their passports, including Saint Kitts where Pilatus Bank owner Ali Sadr Hashemi Nejad obtained his.
Rijock reported that these countries ‘have intentionally engaged in activities designed to conceal the actual true identity of their dodgy clients’ such as minimal but real changes to the legal name of the client or altering their place or date of birth. So, by way of example, co-author Manuel Delia could get a new passport as Emmanuel Delie with a slightly different date of birth – and that way the US and other law enforcement authorities would not pick up the real identity of the holder of the freshly minted passport.
In the meantime, Henley & Partners have expanded and are now selling the passports of Kazakhstan and Moldova. The ‘Passport Index’ which ranks passports according to how ‘powerful’ they are because of the number of countries in the world that permit their holders to enter them without needing a visa, ranks Kazakhstan’s passport the 53rd most powerful in the world. Moldova ranks 42nd.
Those rankings are unlikely to be attractive to buyers from the nationalities that typically purchase passports from other countries. Russia’s passport ranks 40th and South Africa’s 44th, to name two. A passport from Kazakhstan and Moldova is hardly an upgrade.
Analysts have suggested that Moldovan and Kazakhstani citizenship could help their buyers acquire citizenship from countries with much more powerful passports who would not accept them if they did a background check on them.
So if you are a Russian crook and your name is Ivan Killalotov, even the due diligence process of Malta, such as it is, might refuse you a passport given your history. However, if Mr Killalotov buys a passport from an interim country under a slightly different name, say Ivor Kyllotov, then he would become a different person altogether and his history would be wiped clean. This process could even fox the FBI, at least for a time.
‘Interim’ passports from Kazakhstan or Moldova open the door for dodgy customers that could have a problem securing a Saint Vincent passport (23rd most powerful in the world) or a Saint Kitts passport (22nd). Or a Maltese passport, 5th most powerful in the world. By the way, all of these ratings are supplied by Henley & Partners who, of course, are paid by these countries to flog their citizenships.
Although the 2014 agreement between Malta and the European Commission allowing the passports scheme obliged the government to regularly publish the names of ‘citizens by investment’, the Maltese authorities have found a crafty way of dodging that bullet.
Maltese law already required the government to publish in the gazette the list of people who are naturalised as Maltese citizens, that is people who are not born Maltese but become so by proving Maltese ancestry, say, or by showing they have become eligible having lived in Malta for a long time or having been married to a Maltese citizen for a number of years.
Since 2014, the government has added citizens who have acquired citizenship through the Henley & Partners scheme to this list. There is no distinction between, say, people who marry Maltese citizens and people who buy passports. When someone marries a Maltese, that’s an individual. But Ivan Killalotov is likely to buy a passport for Mrs Sveta Killalotova and their children, Nasty and Nastya and Nastieryet as a package. That could be five Killalotovs popping up on the new citizens list and they would immediately look like they paid for the privilege.
The government has therefore changed the A-Z rules on the published list, listing, exceptionally for a Maltese official record, the names of the new citizens in alphabetical order by their first given name, instead of by their surname so that billionaires and Maltese-Australian third generation migrants are shuffled together like an enormous deck of cards. So, in our example, Mr Killalotov and Mrs Killalotova will feature on different pages of the very long list under the letter I for Ivan and S for Sveta, rather than K. You can work out their connection but it has been made deliberately difficult because in Malta opacity rules.
Transparency International Russia has been documenting the identity of Russians acquiring Maltese citizenship for the past five years. But it is no easy task.
To add to this obscurity, the addresses indicated by the applicants for Maltese citizenship (where they are required to have lived for a year before applying, according to Malta’s commitments with the European Commission) are kept secret.
A few addresses have, however, leaked, most of them by administrative error, when around 80 ‘new’ citizens were listed by mistake on the electoral register which necessarily contains the voters’ addresses to identify them with a constituency. Before they were removed from the list, reporters went out knocking on doors to look for billionaires.
Co-author Manuel Delia found new passport owners ‘living in’ boarded up basements, uninhabitable garages, or modest homes clearly inhabited by other people. None of the addresses were places you would expect ‘high net worth’ individuals or families to choose to live.
Although there is no way for journalists to verify all the addresses since these are kept secret, it is safe to say that people who purchase a passport under the Henley & Partners scheme and choose to live in Malta are rare.
Consider, for example, the case of 62 Saudi nationals belonging to two of the richest families of that country who were named on the 2018 citizenship list as Maltese citizens. There’s no other way of saying it: if 62 oil rich Saudis lived in a small place like Malta for an entire year, someone would notice them.
Of course, just because they were not in Malta does not mean that someone somewhere on the island was not delighted to cash monthly cheques from oil sheiks they have never met.
Maybe that is one reason why not many people wanted to hear of Daphne Caruana Galizia’s concerns about the scheme.
Writing in November 2016 she observed that:
a report published by the regulator for the sale of Maltese citizenship has found that selling EU passports and the property/rental spin-offs therefrom now account for almost 3% of GDP. Because it is unsustainable, it follows that this is insane. The government is now caught in a trap where it has to keep selling EU passports – good luck with the consequences of that – to
keep up the GDP figure, or stop selling them and watch GDP shrink by 3%. The alternative – finding a sustainable and properly productive way to grow the economy – is apparently beyond the people whose main concern now is entering into deals which will grow their assets and ‘populate’ their companies in Panama and the British Virgin Islands (and those are just the ones we know about).
Inevitably that sort of dependence breeds corruption.
Daphne also closely followed revelations by Malta’s then leader of the opposition, Simon Busuttil, in April 2017 that someone close to Prime Minister Muscat got nice bungs from three Russians in return for passports. A leaked report by Malta’s Financial Intelligence Analysis Unit on the passport wheeze details three Russians who became Maltese citizens in 2016: Irina Orlova, Evgeny Filobokov, and Viktor Vashkevich. Investigators believe that the three ultimately paid bribes totalling €166,832 ($206,725) to Willerby Trade Inc., an offshore company directed by Muscat’s associate Brian Tonna. Around €100,000 of that money was moved to a Pilatus Bank account controlled by Keith Schembri, the prime minister’s chief of staff.
All concerned deny any wrongdoing.
Keith Schembri has admitted receiving the funds paid by Willerby into a Pilatus Bank account but he claimed Brian Tonna was settling a personal loan Keith Schembri had advanced him when Tonna was going through an expensive divorce. A private agreement between Tonna and Schembri was presented to ‘prove’ this was the case.
Loan agreements are classic money laundering tools used to cover illicit payments which Tonna and Schembri deny this was.
Brian Tonna served as the auditor for Keith Schembri’s personal business interests. The code of ethics for auditors prevents them from borrowing from or lending money to their clients.
Brian Tonna and his junior partner Karl Cini resigned from the voluntary professional Institute of Accountants to preempt any disciplinary proceedings against them.