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Special Report Money trail from Daphne murder probe stretches to China Reuters

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3/29/2021
Special Report: Money trail from Daphne murder probe stretches to China | Reuters
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CHINA
MARCH 2 9, 2021 / 4:13 PM / UPDATED 4 HOURS AGO
Special Report: Money trail from Daphne murder probe stretches to China
By Reuters Staff
VALLETTA/SHANGHAI, March 29 (Reuters) - By Stephen Grey, Engen Tham, Jacob Borg and Christoph Giesen
FILE PHOTO: People gather at the Great Siege Square calling for the resignation of Joseph Muscat following the
arrest of one of the country's most prominent businessmen as part of the investigation into the murder of
journalist Daphne Caruana Galizia, in Valletta, Malta November 20, 2019.
A widening investigation into allegations of high-level corruption on the island of Malta, first levelled by murdered journalist Daphne Carua
and a $400 million investment into Europe by a Chinese state power company, Reuters has found.
Caruana Galizia was murdered in October 2017 as she investigated a web of companies that she believed were funneling bribes to Maltese p
Now, Reuters and a consortium of journalists have traced two firms involved in that web to relatives of a senior Chinese executive for Accen
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firm. The executive, 43-year-old Chen Cheng from Shanghai, negotiated investments on behalf of China’s state-owned Shanghai Electric Pow
small European state, Montenegro, over the past decade, according to Maltese officials and official records.
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The revelation of a Chinese connection potentially adds a new international dimension to a scandal that has rocked Malta’s government and
resignation of the prime minister. It also could figure in a series of Maltese official investigations into the events leading up to Caruana Galiz
Backed by Malta’s government, the investments by Shanghai Electric Power were portrayed by Maltese and Chinese political leaders as one
trillion dollar Belt and Road initiative to pour money into economic infrastructure in central Asia and Europe.
In 2016, a year before she was murdered in a car bombing, Caruana Galizia identified Chen’s key role in the transactions on her blog.
A total of six people in Malta have been charged with Caruana Galizia’s killing and await trial. There is no suggestion that Accenture, Chen o
individual is linked with that crime.
Caruana Galizia reported that Chen created a company in the British Virgin Islands in 2014, for an unknown purpose. In the same year, Che
negotiations and due diligence for Shanghai Electric Power to invest 380 million euros ($400 million) in buying a share of Malta’s state pow
Caruana Galizia did not specify any wrongdoing by Chen. Chen and Accenture did not respond to Caruana Galizia’s report at the time.
Now, reporters at Reuters, the Times of Malta, the Organized Crime and Corruption Reporting Project and the Süddeutsche Zeitung, have d
set up two further companies in Hong Kong, both with business links to Malta.
Contacted for this article, Chen and Shanghai Electric Power didn’t comment. Accenture said in a statement it is taking the matter very seri
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 hav
deviation from those standards.” Enemalta declined to answer questions about Chen.
The office of the spokesperson of China’s foreign ministry said, “China’s exchanges and cooperation with other countries are all open and tr
The first of the companies set up by the Chen family, known as Macbridge, planned to pay up to $2 million to Panama firms controlled by tw
has previously reported. The second, called Dow’s Media Company, received one million euros ($1.2 million) from a business owned by one
Yorgen Fenech, according to financial records seen by Reuters. Fenech is in jail, awaiting trial on a charge of masterminding Caruana Galizia
guilty.
According to international legal requests seen by Reuters, Maltese law enforcement officials suspect that Macbridge and Dow’s Media were p
involving some participants in the China-Malta deals, to make payments to politicians in Malta and siphon off profits for themselves. Reuter
independently determine whether or not that suspicion is correct. Chen has not responded to Reuters’ questions on the matter.
Fenech’s lawyers declined to comment about any links between their client and Chen.
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DAPHNE’S MYSTERY
Caruana Galizia first picked up on the money trail that would eventually lead to China in 2016 when, according to her family and records of
started to investigate two mystery businesses that she suspected were being used to pay bribes to politicians.
The journalist had few details of the two companies beyond their names, 17 Black Ltd and Macbridge Ltd, and a tip-off from an official sourc
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scheme to pay “kickbacks” – undeclared profits from government schemes - to some senior politicians. Caruana Galizia texted her son Matt
heard the two companies were “crucial to unravelling the web.”
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The tip-off followed the discovery by Maltese officials of an email written in December 2015 by accountants for two senior figures – Konrad
and Keith Schembri, chief of staff and close friend of the prime minister at the time, Joseph Muscat. That email named 17 Black and Macbrid
would pay an estimated $2 million into then-secret Panama companies owned by Schembri and Mizzi.
When news of the email was published in local and international media in April 2018, six months after Caruana Galizia’s murder, Schembri
unrealised “draft business plans” with Macbridge and 17 Black but denied any wrongdoing. Last December, he told a public inquiry into the
Macbridge had been included in the December 2015 e-mail “by mistake.”
Earlier this month, Schembri was charged with money laundering, forgery and corruption in an unrelated matter. He denies the charges and
court hearings. He didn’t comment for this article.
Mizzi said he had no knowledge of Macbridge or 17 Black, nor any knowledge of the email. Mizzi has not been charged in any criminal case.
to Reuters that he rejects any suggestion he had business plans with Macbridge or a personal interest in any public project. Mizzi said he kne
assisting Shanghai Electric Power, “and my interactions with him were in that official context.”
When Caruana Galizia was killed, she was still following the 17 Black-Macbridge tip, which she believed held the key to understanding why M
their Panama firms.
“Working out the truth of those two companies was really at the centre of her work. She was determined to get to the bottom of that myster
Galizia, her son, who was first on the scene of the car bomb.
A year after the assassination, Reuters and the Times of Malta traced 17 Black Ltd to a bank in Dubai and identified its owner as Fenech, the
A year later, in Nov. 2019, Fenech was arrested at sea as he attempted to leave Malta in his luxury yacht. He was charged a few days later with
journalist’s assassination, an accusation he denies.
The mystery of Macbridge remained.
TRAIL FROM A BUSINESS CARD
When police searched Fenech’s flat, they found a business card for the Accenture consultant Chen.
As detectives questioned Fenech, the accused tycoon added another piece to the puzzle. According to records of the interview, reviewed by
had information about Macbridge, which he said stood for “Malta China Bridge.” He gave no further details. It isn’t clear if he was asked abo
After learning of Fenech’s disclosure, Reuters searched records in China and found a company called Macbridge International Development
registered in Hong Kong on Sept. 30, 2014.
Hong Kong’s company register doesn’t disclose who owns Macbridge. The sole director was named as a 65-year-old Chinese citizen, a woma
Further records found in the Panama Papers, the trove of 11.5 million documents about offshore companies obtained by the Süddeutsche Z
via a company in the Indian Ocean island of Seychelles, was also the ultimate owner of Macbridge.
But who was Tang? The Panama Papers contained only a grainy photocopy of her passport; there was no address or telephone number.
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AMATEUR PHOTOGRAPHER
Her name was a rare one, however, and other company databases led reporters to the Chinese city of Shanghai. There, a review of social med
amateur photographer, a former manager in a car plant and former manager with Yum China, which operates the Kentucky Fried Chicken (K
recent years, she had registered small investments in several local companies.
By tracing her posts on the social media platform Weibo, reporters made a discovery. Tang identified herself as the mother-in-law of the Acc
referring to herself as “Granny” to Chen’s children. A family member later confirmed the Tang-Chen relationship to Reuters.
Tang could not be reached for comment. Questions delivered to a major outdoor advertising company where she is currently listed in corpo
shareholder were not answered.
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A subsequent trip by a Reuters reporter to the city of Nanjing, 180 miles from Shanghai, proved more useful. The purpose was to visit a cate
corporate records showed Tang co-owns. That company’s headquarters turned out to be a KFC franchise, located in a shopping complex and
with a Chinese twist: fried chicken meals for around 40 yuan ($6) and gelatinous durian fruit balls.
The visit revealed a new connection with Chen, the Accenture executive, and with Malta. A staff member at another nearby KFC, run by the
Tang co-owns, said she had no knowledge of Tang Zhaomin but she did know another co-owner, a woman called Wang Rui. Wang is the boss
staffer said, but rarely visits the KFC outlets.
Wang Rui, records showed, is the director of a Hong Kong firm called Dow’s Media Company that was set up in 2014 within a fortnight of M
records, seen by Reuters, Yorgen Fenech’s 17 Black paid one million euros to Dow’s Media in 2016.
With a number supplied by KFC staff, Wang Rui was contacted by phone. She told Reuters she is a cousin of Tang Zhaomin and Tang is Chen
she set up Dow’s Media at Chen’s request and for his purposes, and knew nothing about the million euros or the firm’s activities.
“He asked me to set up the company and I thought there wasn’t any problem in doing so,” Wang said of Chen. “He told me that it would do
that Chen at the time had told her he could not set the company up himself because of his connection to a state-owned enterprise. Wang did
otherwise elaborate.
Maltese investigators are also on the trail of Dow’s Media and Macbridge. In international legal requests, reviewed by Reuters, they have sou
firms’ business activities, their money flows and their ultimate owners. In one such request, via Interpol in 2018, Malta’s police asked China
one million euros the firm received from Fenech’s 17 Black in 2016. The sum may have involved “illicit funds” linked to “possible corruption
Malta’s police said. There was no record of a reply from China, a Maltese official said. The office of the spokesperson of China’s foreign mini
the matter.
Malta made other legal requests for information to the United Arab Emirates related to the potential payments by Macbridge to the Maltese
Mizzi. These requests also cite possible corruption and money laundering. The UAE told Malta that it found no trace of Macbridge.
PAYMENTS
In June 2020, Reuters and the Times of Malta revealed that Fenech’s 17 Black took a secret $5 million profit from a Montenegro wind farm p
Electric and Malta’s state power firm Enemalta. Chen had promoted the project in a presentation to Enemalta’s board, according to an inter
In 2016, 17 Black received its $5 million profit from the wind farm. Two weeks before that payday, in May of that year, Fenech’s firm made t
Dow’s Media, according to bank records seen by Reuters and the Interpol request to China by Maltese investigators. The payments, totalling
completed two months later.
The disclosure of Chen’s private businesses may pose a problem for him at Accenture, where he has been employed as a managing director o
firm’s ethics handbook suggests. Accenture does not outright prohibit its employees from having private business interests, but it warns aga
interest, including the use of Accenture information or its position “for personal gain (or that of family members or close friends).”
Asked about Chen’s links to Macbridge and Dow’s Media and his relationship via these firms with Maltese business and political figures, Acc
reviewing the allegations. Shanghai Electric Power didn’t respond to questions about Chen’s role. A spokesman for Enemalta said that follow
wind farm deal “the report was passed on to the Police to assist in any investigations. Any further comments at this stage would be imprude
BURGEONING INVESTIGATION
In Malta, the uncovering of the China connection could play into a series of official corruption investigations. There is a public inquiry into t
Caruana Galizia’s death, a judicial investigation into 17 Black, a judicial inquiry into the Montenegro wind farm deal, and an ongoing investig
financial crimes unit into 17 Black, Macbridge and wider corruption claims.
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In Montenegro, the exposure by Reuters last year of 17 Black’s role in financing the wind farm deal has prompted a judicial inquiry. The sam
expulsion of Konrad Mizzi, the former energy minister, from Malta’s Labour Party. Joseph Muscat, the former Maltese prime minister, has s
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any business dealings by Mizzi and Schembri.
Stephen Grey reported for Reuters from Valletta and London; Jacob Borg reported from Valletta for the Times of Malta; Engen Tham reported for Reuters in
Giesen reported from Beijing and Shanghai for the Süddeutsche Zeitung. Additional reporting and research by staff from the Organized Crime and Corruption
reporting for Reuters by Clare Baldwin in Hong Kong and the Shanghai newsroom; edited by Janet McBride
Our Standards: The Thomson Reuters Trust Principles.
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