Keith Schembri dodges questions on company accounts

The Prime Minister’s Chief of Staff, Keith Schembri, has avoided questions raised by financial experts for the past week on Kasco Holding’s 2015 audited accounts submitted to the Malta Financial Services Authority.

Kasco’s declared profit is less than one per cent of turnover (sales) – a situation experts described as “incredulous” considering the millions involved in operations.

“There is no point in setting up a company, with the risks involved, to get a return that is less than what the bank would give you if you just deposit your money into a savings account,” an auditor said.

The accounts for Kasco Holdings Ltd submitted in November 2016, for the previous year of operations, are a consolidation of the group of companies. The last sentence of the audit makes it clear that the Group is controlled by Schembri, who retains the major shareholding.

The assets run into millions: Group assets are reported as €9.34m, company assets €2.3m.

There are substantial banking facilities provided to the Group: the group’s loans and overdraft stands at over €5m in 2015.

The profit registered at group level is €381,000. Once the necessary deductions are made, such as deferred tax, profits stand at about €200,000.

Moreover, a substantial part of the profit is clearly not derived from the large operations of the Group, which brings down the profits from the main operations of the Group to much less than one per cent of turnover (sales).

When the accounts were put to financial experts for their assessment, they raised the same question: How can the bank expose itself to that kind of loan with a turnover of less than one per cent?

“Nobody manages these vast amounts for less than one per cent profit,” financial experts told The Shift, while pointing out that the less profit registered, the less tax paid.

“Any company asking for such loans based on such turnover would be immediately rejected by the bank in normal circumstances.  My clients ask for much smaller loans and are often rejected. I really can’t see how, with all the banking legislation, this company is still standing,” said another financial expert.

Others stressed that the bank also needs to look at liquidity – the ability of current assets to meet current liabilities. Banks are usually entitled to have the option of calling in overdrafts within a year. With the scenario presented for Kasco Holdings, it is not clear this can be achieved.

Despite numerous allegations of money laundering activities involving Schembri, the Group recorded a loss in 2014.

The audited accounts are still signed by Nexia BT, which has been at the centre of accusations on money-laundering since the release of the Panama Papers.

Its Head, Brian Tonna, has refused to meet visiting MEPs investigating the rule of law in Malta this week, saying he could only answer questions by email.

Tonna and Nexia BT’s Karl Cini have recently also resigned from the Malta Institute of Accountants due to the disciplinary proceedings that were initiated against them after their involvement in the Panama Papers scandal.

The Shift asked Schembri:

  • In Kasco’s latest audited accounts, the registered profit is less than 1% of turnover. How do you address comments by financial experts that this is unrealistic considering the financial resources involved?
  • How do you address questions raised on the low margin of profits, when the Group’s loans and overdraft stand at over €5m, group assets €34m, company assets €2.3m?

The Prime Minister’s Chief of Staff has not acknowledged questions sent on November 24.

 

 

 

 

 

                           

Sign up to our newsletter

Stay in the know

Get special updates directly in your inbox
Don't worry we do not spam
                           
                               
Subscribe
Notify of
guest

0 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments

Related Stories

Opinion: Spin dictators
The era of fear dictators is almost over.  We’ve
Government subsidising illegal use of car park by Christian Borg in St Lucija
The government, through its agency SportMalta, is subsidising a

Our Awards and Media Partners

Award logo Award logo Award logo