Trail of Murdered Journalist’s Reporting Leads from Malta to China

Michael and Rose Vella, par­ents of anti-cor­rup­tion jour­nal­ist Daphne Caruana Galizia, join a protest mark­ing eigh­teen months since her assas­si­na­tion, out­side the office of Prime Minister Joseph Muscat in Valletta, Malta, in April 2019. Credit: Reuters/Darrin Zammit Lupi (via Alamy)

Daphne Caruana Galizia’s work uncov­er­ing cor­rup­tion in Malta delved into visa-for-sale schemes, ener­gy deals, and Caribbean off­shore com­pa­nies set up for Maltese politi­cians. Now, an inves­ti­ga­tion has found that all these sto­ries come togeth­er — in China.

For a tiny coun­try, the Mediterranean island nation of Malta has spawned a huge num­ber of cor­rup­tion scan­dals — and Maltese inves­tiga­tive jour­nal­ist Daphne Caruana Galizia cov­ered most of them on her cru­sad­ing blog, Running Commentary.

She was one of the first to report on 17 Black, a mys­te­ri­ous Dubai com­pa­ny that she believed was linked to senior Maltese offi­cials. She also dug into dubi­ous cir­cum­stances sur­round­ing a 2014 agree­ment to sell a major stake in Malta’s only elec­tric­i­ty com­pa­ny to a Chinese state-owned firm, and a sus­pi­cious sub­se­quent invest­ment in a Montenegro wind farm. And in 2016, she seized on a Chinese media report claim­ing that Malta would be sell­ing res­i­den­cy visas to wealthy Chinese cit­i­zens — with no ques­tions asked about the source of appli­cants’ funds.

But Caruana Galizia didn’t live to see the end of these sto­ries, even as her work caused them to emerge as hot-but­ton polit­i­cal issues in Malta, lead­ing to mul­ti­ple cor­rup­tion cas­es and even crim­i­nal charges against mem­bers of the country’s polit­i­cal elite.

In October 2017, just a few hours after pub­lish­ing a final blog post — “There are crooks every­where you look now,” it warned — Caruana Galizia was killed by a car bomb. Her assas­si­na­tion trig­gered a scan­dal that exposed cor­rup­tion at the heart of Malta’s gov­ern­ment, top­pled its prime min­is­ter, and sent shock waves through­out the European Union.

Three peo­ple have since been impris­oned in con­nec­tion with the mur­der. In a Valletta court this month, one of them, a hired hit­man, said Caruana Galizia had been killed because she was about to pub­lish “some details” on an unspec­i­fied top­ic. The alleged mas­ter­mind of the bomb­ing, the Maltese tycoon Yorgen Fenech, is in jail await­ing trial.

Now jour­nal­ists from OCCRP and part­ners have fol­lowed a trail of clues unearthed by Caruana Galizia from Malta to China, where they dis­cov­ered two fig­ures who tie togeth­er these sto­ries she had been fol­low­ing — the 17 Black cor­rup­tion scan­dal, the dubi­ous ener­gy deals, and the res­i­den­cy visa-for-sale program.

What has become clear through these scan­dals is that they always end up lead­ing back to the involve­ment of the same sets of peo­ple,” her son Matthew Caruana Galizia told OCCRP after review­ing the find­ings of the new investigation.

It’s a clear indi­ca­tion of how, in a very short time span, a few indi­vid­u­als were able to take over the entire state appa­ra­tus of an EU coun­try and turn it into a pirate ship for their own per­son­al benefit.”

Credit: REUTERS/Darrin Zammit Lupi Activists from Occupy Justice Malta hold up plac­ards read­ing “Who Owns Macbridge?” out­side the office of Prime Minister Joseph Muscat in Valletta, Malta, on December 16, 2018.

Two Mysterious Companies: 17 Black and Macbridge

After Caruana Galizia was killed, jour­nal­ists around the world raced to look into the top­ics she had been cov­er­ing, includ­ing 17 Black. She’d post­ed repeat­ed­ly about the com­pa­ny and sug­gest­ed it was tied to top politi­cians, but nev­er man­aged to prove the claim.

Yorgen Fenech, the tycoon accused of mas­ter­mind­ing Daphne Caruana Galizia’s mur­der, appears in court.

In 2018, Reuters and the Times of Malta revealed that 17 Black was owned by Fenech, a flashy local busi­ness­man with an alleged taste for cocaine and race­hors­es. He was close to some of Malta’s most pow­er­ful polit­i­cal fig­ures — includ­ing Prime Minister Joseph Muscat and his chief of staff, Keith Schembri — and helmed a con­glom­er­ate that was part of a con­sor­tium that in 2013 won a major con­ces­sion to build a 450-mil­lion-euro pow­er station.

Fenech was appar­ent­ly using 17 Black to fun­nel bribes to politi­cians. The sto­ry cit­ed a crit­i­cal piece of evi­dence: a leaked 2015 email sent by Maltese account­ing firm Nexia BT, say­ing that 17 Black was expect­ed to send up to $2 mil­lion to shell com­pa­nies set up in Panama by two senior Maltese politi­cians: Schembri and Energy Minister Konrad Mizzi.

But what wasn’t wide­ly report­ed was that anoth­er mys­te­ri­ous com­pa­ny was also named in the email as a source of funds for Mizzi and Schembri’s com­pa­nies. It was referred to in the press only as “Macbridge.”

Caruana Galizia had also been qui­et­ly dig­ging into the com­pa­ny, after learn­ing of the same email in 2016 and hear­ing from a source that Macbridge and 17 Black were “cru­cial to unrav­el­ling the web,” accord­ing to her son and records of her work seen by reporters.

But Macbridge proved hard­er to trace than 17 Black and Maltese offi­cials have refused to answer ques­tions about the company’s exis­tence. When then-Finance Minister Edward Scicluna was asked by a reporter last year who owned Macbridge, he retort­ed: “Look, if you want to be sen­sa­tion­al, con­tin­ue.” Journalists believed it to be a United Arab Emirates com­pa­ny, like 17 Black, but no trace of it was ever found there.

That’s because the company’s roots are actu­al­ly halfway across the world, in Hong Kong, OCCRP and its report­ing part­ners have dis­cov­ered. The com­pa­ny is reg­is­tered there as “Macbridge International Development Co Ltd,” along with a Chinese name that com­bines the char­ac­ters for “Malta” and “China.”

Reporters also found that in mid-2016, 17 Black sent 1 mil­lion euros to anoth­er Hong Kong com­pa­ny, Dow’s Media Co Ltd, that shares a very sim­i­lar set-up and struc­ture to Macbridge.

Dow’s Media was incor­po­rat­ed in October 2014, just weeks after Macbridge, using the same Hong Kong-based for­ma­tions agent and the same reg­is­tered address­es in Hong Kong and Shanghai. Both com­pa­nies were dis­solved with­in a week of each oth­er in January 2019.

Investigators in Malta sought details about both com­pa­nies from Hong Kong and China in 2018 as part of an inves­ti­ga­tion into “pos­si­ble cor­rup­tion and mon­ey laundering.”

Macbridge and Dow’s Media are set up in ways that make it dif­fi­cult to deter­mine who actu­al­ly owns them, con­trolled through shell com­pa­nies in the Seychelles and the Marshall Islands, respectively.

But reporters found they are both direct­ed by prox­ies with fam­i­ly ties to one man: a Chinese con­sul­tant at the cen­ter of major deals involv­ing Malta’s gov­ern­ment-backed ener­gy util­i­ty, Enemalta.

The Chen Cheng Connection

Caruana Galizia had been writ­ing exten­sive­ly about this man, Chen Cheng, a man­ag­ing direc­tor of the Chinese ener­gy divi­sion of glob­al con­sult­ing firm Accenture. Chen emerged as a key play­er in nego­ti­a­tions for a 2014 deal for China’s state-owned Shanghai Electric Power to buy a third of Enemalta.

Credit: Chen Cheng, a con­sul­tant with Accenture.

The deal was worth 320 mil­lion euros, the largest ever for­eign invest­ment in the coun­try, but drew crit­i­cism in Malta — and on Caruana Galizia’s blog — for grant­i­ng the Chinese com­pa­ny over­ly favor­able terms.

Accenture advised Shanghai Electric Power on the deal, and Chen tout­ed it in Chinese media as a land­mark Belt-and-Road project endorsed by Chinese Premier Li Keqiang.

Caruana Galizia report­ed that a source told her Chen was “par­tic­u­lar­ly close to Energy Minister Konrad Mizzi,” who over­saw nego­ti­a­tions on the Maltese side. (A sub­se­quent inquiry unearthed emails between Chen, Mizzi, and oth­ers about a plan to set up an agency in China that same year to pro­mote invest­ment in Malta.)

She also revealed a key detail about Chen: When the account­ing firm Nexia BT helped Schembri and Mizzi reg­is­ter secret com­pa­nies in Panama, it also cre­at­ed a com­pa­ny for Chen in the British Virgin Islands.

But what Daphne didn’t know was that Chen was also con­nect­ed to the off­shore com­pa­nies at the heart of the kick­backs scan­dal she was untan­gling — and the res­i­den­cy visa schemes she’d long har­bored sus­pi­cions about.

Credit: Tang Zhaomin.

Macbridge and Dow’s Media were both set up in Hong Kong around the same time Chen was work­ing on the Enemalta deal, by two of his fam­i­ly mem­bers: Tang Zhaomin, his 65-year-old moth­er-in-law, and Wang Rui, his mother-in-law’s cousin.

Reporters tracked Wang to the east­ern Chinese city of Nanjing, where she and Tang own a com­pa­ny that oper­ates local branch­es of the fast food chain KFC.

She said in a phone inter­view that Chen had asked her to open Dow’s Media, because its con­nec­tion to a Chinese state-owned enter­prise made it “incon­ve­nient” for him to do so him­self. She said she knew noth­ing about its busi­ness activ­i­ties or its receipt of 1 mil­lion euros from 17 Black.

Tang could not be reached for com­ment. However, the new evi­dence link­ing the com­pa­ny she directs, Macbridge, to her fam­i­ly mem­ber, Chen, sug­gests that the Chinese busi­ness­man played a role in chan­nel­ing mon­ey to the secret Panama com­pa­nies of Schembri and Mizzi.

Money from what? It’s unclear, but fol­low­ing the suc­cess­ful Shanghai Electric Power invest­ment in Enemalta, Chen became a key pro­mot­er of a sub­se­quent 2015 Enemalta invest­ment in the Mozura wind farm project in Montenegro.

According to an inter­nal Enemalta inves­ti­ga­tion, Accenture advised on this invest­ment in December 2014, with Chen pitch­ing the idea to Enemalta in a PowerPoint presentation.

The inves­ti­ga­tion raised seri­ous con­cerns about the deal, in which Fenech also played a role.

His 17 Black secret­ly helped fund the December 2015 pur­chase by Enemalta of a con­trol­ling stake in the project for 2.9 mil­lion euros, via a loan to a Seychelles inter­me­di­ary called Cifidex Limited. That com­pa­ny, which Chen had brought into the deal, sub­se­quent­ly sold its shares in the project to Enemalta for 10.3 mil­lion euros just two weeks lat­er, reap­ing a huge profit.

Cifidex then repaid the loan to 17 Black along with 4.6 mil­lion euros in prof­it from the deal. 17 Black, in turn, sent 1 mil­lion euros to Dow’s Media around the same time, from May to July 2016.

Although OCCRP has not uncov­ered defin­i­tive proof that this was the same mon­ey, the new evi­dence sug­gests that Chen was not only involved in facil­i­tat­ing secret mon­ey flows for top Maltese politi­cians, but also ben­e­fit­ed him­self from the 17 Black pipeline.

A spokesper­son for Enemalta said by email that the inter­nal report on the Montenegro-Mozura deal “was passed on to the Police to assist in any inves­ti­ga­tions. Any fur­ther com­ments at this stage would be imprudent.”

Questioned on Chen’s alleged activ­i­ties sur­round­ing the ener­gy deals and off­shore com­pa­nies, and about his appar­ent con­flicts of inter­est, Accenture said in a state­ment: “We are tak­ing this mat­ter very seri­ous­ly and are care­ful­ly review­ing these alle­ga­tions as they relate to one of our peo­ple. We adhere to the high­est eth­i­cal stan­dards in every mar­ket in which we oper­ate and have zero tol­er­ance for any devi­a­tion from those stan­dards.” Chen him­self did not respond to requests for comment.

Mizzi said by email that he had “no infor­ma­tion” about Macbridge or any­body con­nect­ed to it, adding that he has “con­sis­tent­ly reject­ed the asser­tion that there is a con­nec­tion, direct or oth­er­wise,” between his com­pa­ny and Macbridge.

I also reject the sug­ges­tion that I had busi­ness plans with Macbridge, or a per­son­al inter­est in any pub­lic project,” he said. “I know Chen Cheng as a con­sul­tant assist­ing [Shanghai Electric Power] in mul­ti­ple ini­tia­tives, and my inter­ac­tions with him were in that offi­cial context.”

Schembri did not respond to a request for com­ment. In recent days, Maltese pros­e­cu­tors have charged him, his father, and nine busi­ness asso­ciates, includ­ing Nexia BT employ­ees, with fraud and mon­ey laun­der­ing over an unre­lat­ed case.

A ‘Nose for a Story’ Leads to Shanghai

Chen and his moth­er-in-law aren’t just involved in off­shore com­pa­nies and ener­gy deals. Reporters found they also have ties to one of Malta’s biggest busi­ness­es: sell­ing cit­i­zen­ship and res­i­den­cy visas to wealthy for­eign­ers, who can use the island as a back­door into the European Union.

These ties run through a Shanghai busi­ness­man who effec­tive­ly con­trols the sale of Maltese res­i­den­cy visas in China — through the same com­pa­ny Caruana Galizia high­light­ed in her 2016 blog post.

At the time, she had lit­tle more to go on than a sin­gle media report and a pho­to­graph show­ing a sign­ing cer­e­mo­ny for the launch of the Malta Residence and Visa Programme in China, presided over by Konrad Mizzi’s wife, Sai Mizzi Liang. But “instinct, expe­ri­ence and the nose for a sto­ry” told her there was more to the situation.

The next step that needs to be tak­en here — please, oth­er jour­nal­ists get on board with this one — is to find some way of check­ing out the share­hold­ing and involve­ments of that com­pa­ny in China, which is going to be very dif­fi­cult but nec­es­sary,” she wrote.

Caruana Galizia was right that it’s dif­fi­cult to track down com­pa­nies in China. Although the coun­try does have a busi­ness reg­istry sys­tem, the infor­ma­tion with­in is often unstruc­tured or incom­plete, and it can only be nav­i­gat­ed by some­one flu­ent in Chinese.

But after months of research, reporters found that Shanghai Overseas Exit-Entry Services Co Ltd, which holds the offi­cial con­ces­sion to sell Maltese res­i­den­cy visas in China, is run by a busi­ness­man named Mao Haibin, also known as Kevin Mao.

Chinese records show that Mao has ties to both Chen and his moth­er-in-law — the woman who directs Macbridge.

Mao and Chen were part­ners in at least two com­pa­nies, includ­ing Shanghai Visabao Network Technology Co Ltd, which oper­ates in sev­er­al major Chinese cities and helps Chinese cit­i­zens pro­cure visas abroad.

Chen’s moth­er-in-law is a man­ag­er and share­hold­er at a Shanghai adver­tis­ing agency con­trolled by Mao, which in turn was a major spon­sor of Malta Residence and Visa Programme events in China.

Mao, who did not respond to requests for com­ment, has mul­ti­ple oth­er busi­ness inter­ests relat­ed to facil­i­tat­ing Chinese invest­ment abroad — and in Malta specifically.

Over the past few years, he has played a major role in Malta’s efforts to attract wealthy Chinese nation­als to its visa-sale pro­gram. He appeared at mul­ti­ple events in Shanghai to pro­mote the pro­gram, along­side senior Maltese offi­cials like John Aquilina, Malta’s ambas­sador to China and Aldo Cutajar, Malta’s for­mer con­sul gen­er­al to Shanghai.

Some of these events fea­tured lav­ish ban­quets attend­ed by top Maltese diplo­mats, with plen­ty of warm tes­ti­monies to Malta’s sta­tus as a “key node” in China’s “Maritime Silk Road.”

But Malta’s cit­i­zen­ship-for-sale indus­try has been plagued by con­tro­ver­sy. In August 2020, Aldo Cutajar was arrest­ed by Maltese author­i­ties and charged with ille­gal­ly prof­it­ing from visa sales in China, and laun­der­ing the pro­ceeds. During a search of his home, they found more than 540,000 euros in cash and four Rolex watch­es. The fol­low­ing month, Schembri was also arrest­ed for alleged­ly tak­ing kick­backs from sell­ing Maltese pass­ports to wealthy Russians.

Malta has reaped huge prof­its since it began sell­ing res­i­den­cy visas and pass­ports to the world’s wealthy in 2014 — but at a price.

The Individual Investor Programme, which grants full Maltese cit­i­zen­ship to appli­cants who invest more than 1 mil­lion euros in the coun­try, gen­er­at­ed just under 845 mil­lion euros in just five years, pulling Malta’s econ­o­my from deficit to surplus.

The scheme is also attract­ing grow­ing inter­est from Asia. In 2015, 8.6 per­cent of appli­cants came from the con­ti­nent, but by 2019 that had grown to 32.8 per­cent, accord­ing to a gov­ern­ment report.

Less is known about the Malta Residency and Visa Programme, in which Mao Haibin plays a crit­i­cal role. The pro­gram grants res­i­den­cy visas to appli­cants who invest 250,000 euros in gov­ern­ment stock, and buy or rent a Maltese prop­er­ty of sig­nif­i­cant val­ue. As of 2018 there had been 140 suc­cess­ful appli­cants, of whom 80 per­cent were from China. Although there are no offi­cial sta­tis­tics on how much it has gen­er­at­ed, these fig­ures sug­gest the num­ber is at least 35 mil­lion euros, not includ­ing real estate investments.

Critics say the prac­tice of sell­ing Maltese visas and pass­ports, which give access to the EU’s Schengen Zone, is ripe for abuse.

In March 2020, a report by Global Witness high­light­ed sev­er­al con­tro­ver­sies sur­round­ing the Individual Investor Programme, includ­ing reports of Maltese “gold­en pass­port hold­ers” being accused of mon­ey laun­der­ing, fraud, and tax avoid­ance around the world.

Maira Martini, a pol­i­cy expert on cor­rup­tion at Transparency International, said Malta’s gov­ern­ment has not been open about what it has done with the pro­ceeds of its visa schemes.

Funds from this pro­gram are not always man­aged by the Maltese gov­ern­ment in a ful­ly trans­par­ent man­ner. In 2018, we showed how mon­ey from this pro­gram was used to bail out a bank, for exam­ple,” she said.

The gov­ern­ment intro­duced new leg­is­la­tion for these two pro­grams in 2020 and 2021, in part due to grow­ing pres­sure from the European Commission, but “in prac­tice not much has changed,” said Martini.More

Mao has sev­er­al oth­er visa and real estate ven­tures that tar­get wealthy Chinese cit­i­zens look­ing to invest over­seas, some of which over­lap with his work to sell Maltese res­i­den­cy per­mits. These include Shanghai Bangyi, a visa and immi­gra­tion ser­vices com­pa­ny, and Grandstone Investment, which offers wealth man­age­ment ser­vices for Chinese nation­als look­ing to move mon­ey abroad. Its web­site pro­vides a por­tal for direct appli­ca­tions to the Malta Residence and Visa Programme.

He even co-owns a Maltese com­pa­ny, Asiatica Corporate Services Ltd, togeth­er with Mizzi’s per­son­al lawyer, Aron Mifsud Bonnici, who also played a role in nego­ti­at­ing Enemalta’s wind farm investment.

Responding to ques­tions, Mifsud Bonnici said he knew Mao “in his capac­i­ty as CEO of Shanghai Overseas Exit Entry Services,” and said he had processed visa appli­ca­tions, via offi­cial immi­gra­tion schemes, in his role as a lawyer.

Mifsud Bonnici said Asiatica was opened to pro­vide cor­po­rate ser­vices to visa appli­cants, but nev­er gen­er­at­ed any busi­ness. “Hence it nev­er oper­at­ed and is now pend­ing liq­ui­da­tion,” he said. He said he knew Chen as an advis­er to Shanghai Electric Power, and met him “some time into my tenure as Enemalta board secretary.”

In 2019, Mao’s younger broth­er, Mao Haichun, co-found­ed two Maltese com­pa­nies with Roderick Cutajar, the for­mer head of the Malta Residence Visa Agency, which over­sees res­i­den­cy visa sales around the world. One of their joint ven­tures sells res­i­den­cy in Malta and oth­er European coun­tries to Chinese and inter­na­tion­al buy­ers; the oth­er is a relat­ed real estate company.

Roderick Cutajar told reporters that the visa firm, immVest, is not linked to Mao Haibin’s Shanghai Overseas Entry Exit Service Ltd. “My rela­tion­ship is strict­ly with immVest International,” he said. “Furthermore, rest assured that I have no rela­tion­ship, per­son­al or busi­ness, with either Aldo Cutajar, Chen Cheng or Macbridge.”

In a speech post­ed on Chinese video blogs in January this year, Roderick Cutajar waxed lyri­cal about Malta’s bid to con­tin­ue attract­ing Chinese cap­i­tal — and new cit­i­zens. He claimed to have vis­it­ed China over 40 times and said busi­ness was booming.

Matthew Caruana Galizia stands in front of a pho­to of his moth­er at an event in April 2019. Credit: Zuma Press, Inc. via Alamy

Our inten­tion is to con­tin­ue to grow,” he said.

Meanwhile, a world away from China, Caruana Galizia’s fam­i­ly is still griev­ing her loss, and seek­ing justice.

Matthew Caruana Galizia said his moth­er would have been grat­i­fied by the new infor­ma­tion about the nest of com­pa­nies she had been investigating.

The new rev­e­la­tions con­firm what she knew and had tried to make oth­ers see – that the crim­i­nal entan­gle­ment of polit­i­cal and busi­ness inter­ests is a major defin­ing prob­lem of our time. Corruption costs lives, just as it cost my moth­er hers,” he said.

I think that if she were alive to see this, she would feel a sense of relief that her work is being vin­di­cat­ed and that she isn’t alone in her fight.”

by  Martin Young (OCCRP) 

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