Two court-appointed auditors from Deloitte, tasked with administering disgraced former OPM chief of Staff Keith Schembri’s companies, have renounced their brief after being frozen out by Schembri, who seems to have ignored court orders and continued to run his businesses in breach of the law, The Shift has learned.
Although, officially, the auditors cited ‘lack of time to carry out the arduous task,’ as their reason for quitting, The Shift is informed that the two found it impossible to carry out their assignment.
Deloitte’s Raphael Aloisio and Paul Darmanin were appointed in November to act as administrators to manage all Schembri’s assets.
However, in a court decree issued a few days ago, Magistrate Donatella Frendo Dimech revoked the task given to the two auditors and instead appointed Hector J Spiteri as Kasco Group’s new administrator.
No official reason was given by the court for this unusual decision.
According to industry sources familiar with the situation, Kasco Group’s companies had adopted a business-as-usual mode, with accused financial criminal Schembri breaching court orders and taking all new business decisions himself. The administrators were only informed of deals after they were concluded, in order to gain their official rubber stamp.
This isn’t the first time questions have been raised on whether Schembri had honoured a pledge to step away from the management of his companies; when he assumed the role of Prime Minister’s chief of staff in 2013, he pledged to retreat from his commercial interests. However, court testimony in March revealed his father, Alfio Schembri – also accused of money-laundering and fraud – had been taking his salary and then “donating” it back to Schembri.
According to The Shift’s sources, while the law, on paper, gives executive powers to the administrators of frozen assets and companies, the execution of such authority is “easier said than done”.
“It is clear that the two auditors were finding it impossible to determine what was going on in the Kasco companies, bearing in mind that the former OPM chief, who still has a lot of influence on those in power, is directly involved,” the sources said.
“Kasco’s companies continued to operate normally as if no administrators were in command,” they told The Shift, adding that the job was simply too big for just two auditors to carry out.“This made the task for Aloisio and Darmanin impossible, while also very convenient for them to find a good reason to get out of this uncomfortable task,” the sources said.
Like other large audit firms, Deloitte depends heavily on government contracts and direct orders. Just a few years ago, Aloisio was tasked by the government to establish the value of the former ITS land later controversially passed on to the DB Group at a price far below market value.
Following an attachment order issued by the court, and which had led to the arrest and prosecution of former Prime Minister Joseph Muscat’s right-hand man and his associates, the court imposed a freezing order on all the assets belonging to the accused, including their personal possessions as well as the business empire run under the Kasco Group brand. The judge then appointed the two Deloitte auditors to run the businesses in the interim.
Asked for an explanation for the change in administrators, the Assets Recovery Bureau – the state’s agency responsible for the administration of such freezing orders – said that it had been informed about the decision but does not know the reason behind it.
“The Asset Recovery Bureau was not informed about the reason for such a change in administrators. The ARB is only notified about the change and then proceeds to issue the variation order,” a spokesman told The Shift.
Deloitte’s Aloisio confirmed he’s stepped down from his task, but claimed he had notified the Court at the time of his appointment that time constraints would not permit him to continue in the role beyond the time required to deliver what the Court had specifically requested.
“Once I delivered what was requested, I requested the sitting Magistrate to relinquish me of the duties, as had been agreed with the Judge who appointed me in the first instance,” Aloisio claimed.
Despite the official explanation, both Aloisio and Darmanin had already reportedly complained in court that they were not able to fully perform their task, because Kasco Group continued to operate as normal.
Aloisio told the Magistrate that while the nature of Kasco Group’s activities was not complex, they had no executive power.
He complained that while the board of directors continued to function normally and take decisions, they were only approached when business developments were concluded, and only for their authorization of the transactions. He made it clear that he would not take responsibility for these dealings.
The asset freeze
Apart from Keith Schembri, the court’s asset freeze order was issued against his father, Alfio, and his business associates, Malcolm Scerri and Robert Zammit.
The assets of Kasco Holdings Limited, Kasco Limited, Kasco Engineering Limited, GSV Company Limited, Holdforth Limited, Malmos Limited, It’s Good Limited, Colson Services Limited, Selson Holding Corporation, Tehkne Industrial Limited, Berner Malta Limited and Thoughtoone Limited, were also put under administration through the freezing order.
While most of the companies are registered in Malta, some have been incorporated in foreign jurisdictions, including the British Virgin Islands, known as tax evasion centres.