Disgraced former OPM chief of staff Keith Schembri used taxpayer funds intended for the hospitals’ concession to start new business ventures for himself, including a company set up for medical cannabis research and production, which was fronted by a Russian, investigators concluded.

The inquiry on the hospitals’ deal struck between the Labour government and Vitals Global Healthcare / Steward Healthcare found that Schembri and his associates set up Cannapharm Technologies Malta Ltd in 2018 and traced funds the company received to other companies siphoning taxpayer funds from the concession.

The inquiry states: “It, therefore, appears that Schembri may have used concession funds to start new business ventures for himself and his associates. These appear to include Maltese company Cannapharm.”

Between July 2019 and September 2019, the company received €150,000 from Spring Healthcare Services AG and €50,000 from Accutor AG (all paid into the client account of [VGH auditor] Chris Spiteri).

Investigators concluded that Spring Healthcare Services AG and Accutor each received significant funds from the hospital concession and appeared to be linked to Schembri and his associates, including Shaukat Ali Abdul Ghafoor and his family.

“The discovery of Spring Healthcare Services AG’s funding of Cannapharm puts Mr Schembri’s association with Spring Healthcare Services AG into sharp focus,” the inquiry adds.

Cannapharm was fronted by Russian Denis Orlov, who appeared, on paper until mid-2019, to be the CEO and ultimate beneficial owner of the company.

Excerpt from an investor presentation by Cannapharm.

According to documents seen by The Shift, Cannapharm was involved in applying to Malta Enterprise for a cannabis production licence in Malta as well as seeking to acquire the Cyclotron (cancer facility) from Steward Healthcare.

Malta Enterprise due diligence reports seen by investigators note that “Kazakhstan is where Orlov is based and where he has the majority of his clients, including most problematically state officials. His work for them includes, it would appear, assisting them in moving money that has been siphoned away from state enterprises out of the country. In essence, money laundering.”

Investigators noted that Malta Industrial Park’s Jeremy Dalli (now Head of Secretariat at Miriam Dalli’s energy ministry) shared these due diligence findings on Cannapharm and Orlov with Keith Schembri within the day.

Orlov was registered as living in an apartment in Pendergardens, St Julians owned by FSV Limited, a Kasco group company.

According to corporate filings, Cannapharm’s beneficial ownership later shifted from Orlov to a new “owner,” Bruce Hill Gaston, the company’s CFO.

Cannapharm’s purchase of the Cyclotron would later fall through, but according to its since-deleted website, Cannapharm obtained a letter of intent from Malta Enterprise to commence Medical Cannabis production.

Spring Healthcare

The inquiry found evidence that Swiss company Spring Healthcare “was in effect a partnership between Schembri and Shaukat Ali”. The company paid another of Schembri’s companies – the medical cannabis research company Cannapharm – €150,000.

These transfers were being taken from taxpayer funds intended to finance the concession for the upkeep and maintenance of three of Malta’s public hospitals.

At the start of 2020, Spring Healthcare (managed by Accutor – the company linked to payments to disgraced former prime minister Joseph Muscat) invoiced Steward Malta Management Limited a total of €1 million under the guise of providing consulting services.

Yet the inquiry “did not find any evidence that Spring Healthcare provided a consulting service to Steward”.

The inquiry notes that coinciding with the flow of funds from Steward to Accutor in September 2019, Schembri, Shaukat Ali, Asad Ali (Shaukat’s son), Dr Bhatti, Hamid Chaudhry, and others collaborated in identifying new international projects for Spring Healthcare.

The inquiry found Schembri was sharing the related agreements on a Whatsapp chat. “These included a major IT project in the Philippines and a digital bank in Tunisia. Schembri’s data contains the various agreements that were shared by WhatsApp.”

“In our opinion, Mr Schembri’s possession and control of these documents further demonstrate his involvement with Spring Healthcare and, in particular, the Philippines project.”

The inquiry also notes that “with the advent of the Coronavirus pandemic in March 2020, Spring Healthcare’s international investment projects appear to have been put on hold as it commenced trading in Covid-19-related medical supplies”, specifically Covid-19 testing kits.

Investigators likewise noted that Schembri’s active involvement with the company continued well into the pandemic “as he continued to look for sales opportunities for Spring Healthcare’s coronavirus testing kits” and “organis[ed] the shipping of alcohol hand sanitisers”.

Investigators also note that Spring Healthcare (through lawyer David Meli) was actively involved in negotiations with Technoline to supply Covid-19 tests to Mater Dei.

Orlov’s Pendergardens address

Investigators found other links between Cannapharm, the medical cannabis company that the inquiry concluded belonged to Keith Schembri and Shaukat Ali, and Vitals Global Healthcare / Steward Healthcare.

Orlov was registered as living in an apartment in Pendergardens, St Julians, which is owned by FSV Limited, a Kasco group company.

Curiously, that same apartment was, however, also being leased by Vitals Global Healthcare from FSV Ltd. Investigators found that between November 2018 and December 2019, FSV was paid €36,000 by Steward Malta Management Ltd for leasing the property.

Earlier payments were made from Bluestone Investments Malta Ltd (one of the original so-called investors in VGH) to another company called 3City Designs Limited (owned by Schembri’s wife).

The inquiry found the lease suspicious, first because of the timing and second because the property was also the address of Cannapharm director Denis Orlov.

In addition, investigators noted that the Pendergardens apartment appears to have been leased by VGH and allocated to the Alis, specifically.

The inquiry states this “suggests the property was not used for the benefit of VGH’s operation”.

The inquiry also notes that the apartment creates “a nexus between [Cannapharm], the Ali family and others who used the Pendergardens apartment or provided it as an address, including Mr Schembri.”

Schembri’s alliance with Shaukat Ali

Pakistani Shaukat Ali took millions in taxpayer funds from the deal, press investigations have shown.

The inquiry confirms his and his family’s involvement in dodgy transactions and a web of companies set up to cover their tracks.

He worked with the highest echelons of power in Malta, even helping government members set up bank accounts and companies in Dubai and elsewhere.

Keith Schembri formed a deeper bond with him. The inquiry states, “Where you find Shaukat Ali,  you also find Keith Schembri.”

“We found that the close relationship between Keith Schembri and the Shaukat Ali family was pivotal to the success of the concession movement and that the actions of each party have the hallmarks of corrupt practice and manipulation to achieve it,” according to the inquiry.

The Shift has already reported on the millions Shaukat Ali and his family members received from taxpayer money intended for the hospitals’ concession that went into his account, as well as those of his children and his two wives.

The inquiry notes that “Shaukat himself has a lengthy track record of corrupt involvement with top government officials”.

His family was involved at the highest levels of Colonel Gaddafi’s notoriously corrupt regime in Libya. “His involvement and ownership (of companies related to the deal) were concealed but later rewarded by the payment of huge success and other fees triggered by the orchestrated award of the concession to VGH,” the inquiry confirms.

All those involved have been charged in court but deny any wrongdoing.

This article was brought to you with the support of the Daphne Caruana Galizia Foundation.