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FILE PHOTO: A boat sails past the medieval Fort Saint Angelo in Vittoriosa in Valletta's Grand Harbour June 17, 2012. The fort, which served as the headquarters of the Knights of St John during the 1565 Great Siege, is undergoing extensive restoration with the European Regional Development Fund providing 13.4 million euro for the project, expected to be completed by mid-2015, according to government officials. REUTERS/Darrin Zammit Lupi

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By Stephen Grey and Tom Arnold

VALLETTA/DUBAI (Reuters) - In February 2017, the Maltese investigative journalist Daphne Caruana Galizia wrote in her blog about a mystery company in Dubai called 17 Black Limited. She alleged it was connected to Maltese politicians, but offered no evidence.

She was unable to discover who owned the company, and it remained unclear whether 17 Black had any significance.

Eight months later Caruana Galizia was killed by a car bomb, prompting an international outcry. No evidence has emerged that connects her death to any of her journalism. But her killing did renew interest in her many different claims, leading to media reports about such subjects as banking regulation and Malta's sale of passports. Now Reuters and other media have begun to unravel another mystery, that of 17 Black.

Two people familiar with the subject in Malta said a report by Malta's anti-money laundering watchdog had identified Yorgen Fenech, the chief executive of a Maltese property developer, as the owner of 17 Black. A third person familiar with the subject in the United Arab Emirates (UAE) said account records at a bank in Dubai identified Fenech as the owner of 17 Black. Reuters last month reviewed UAE banking correspondence that described Fenech as the owner and signatory of a 17 Black account at Noor Bank in Dubai.

Fenech is a director and co-owner of a business group that won a large energy concession from the Maltese state. In 2013, that group was granted the right by the Maltese government to build a 450 million euro (£397.2 million) gas power station on the island.

When asked to comment, Fenech declined to say whether he owns 17 Black.

The ownership of the company is significant because of another document, an email written in December 2015 by accountants for two senior figures in Malta's government. That email was discovered by Maltese financial regulators among documents obtained from the accountants' firm, according to a person briefed on the investigation. Its existence has been reported before and its authenticity has not been challenged.

The two senior political figures concerned are Konrad Mizzi, who was Malta's energy minister from 2013 to 2016, and Keith Schembri, the prime minister's chief of staff. Mizzi conceived and promoted the idea of offering the power station concession.

According to the December 2015 email, Panama companies owned by Mizzi and Schembri stood to receive payments from 17 Black for services that were unspecified. The email said the Panama companies expected 17 Black to be a "main target client," with payments of up to $2 million expected within a year. The email made no reference to the gas power station energy scheme and there is no evidence the payments went ahead.

It remains unclear why the Panama companies owned by two senior political figures expected to receive money from 17 Black.

The December 2015 email was first published in April by the Daphne Project, a collaboration of news organisations, including Reuters, that has been carrying on the work of the murdered journalist. In a response at the time, Schembri said that firms he owned had a business plan to earn money from 17 Black but that those plans did not go ahead. He did not elaborate. Mizzi denied all knowledge of 17 Black.

Schembri and Mizzi both told Reuters in October they had no knowledge of any connection between 17 Black and Fenech, or of any plan to receive payments connected to Fenech or the energy project. Fenech denied making any plans to pay any politician or any person or entity connected to them.

The Maltese firm of accountants that sent the December 2015 email, NexiaBT, said it could not comment because of client confidentiality.

There is no suggestion that anyone connected with 17 Black was involved in Caruana Galizia's death. Three people have been charged with planting the bomb that killed her; they deny the charges. No evidence has emerged publicly about who ordered the assassination.

Mizzi, who is now Malta's tourism minister, issued a statement through a spokesman saying he "reiterates that there is no connection, direct or otherwise, between him, the company or trust he held, and any entity called 17 Black. Furthermore, he has no information relating to 17 Black."

In a statement to Reuters, Schembri said he had not heard that Fenech owned 17 Black. He said he was not involved in the power station project and, asked if he had intended to profit from the project, said: "The answer is a categorical 'No'."

Fenech said he and his companies "never had (or intended to have) any untoward business relation" with any politicians or politically affiliated individuals or entities. "We have always and consistently run our operations in compliant, transparent and above-board fashion," he said.

Financial records identifying the owner of 17 Black were first discovered earlier this year by Malta's anti-money laundering watchdog, the Financial Intelligence and Analysis Unit (FIAU), according to two sources briefed on its findings.

Reuters reviewed UAE banking correspondence that summarised 17 Black's banking activity in Dubai. The documents stated that when 17 Black opened an account in June 2015 at Noor Bank in Dubai, the company declared it was 100 percent owned by a Maltese citizen called Yorgen Fenech. The correspondence also said Fenech is the account's sole signatory.

The only "Yorgen Fenech" listed on Malta's electoral roll and company register is the power station developer.

In the spring of this year, the FIAU passed Fenech's name to Malta Police's Economic Crime Unit as part of a wider examination of energy deals conducted by the government.

Malta Police said it was prevented by law from confirming whether it had received any information from the FIAU and whether any investigation was under way. In a statement, the FIAU declined to comment on 17 Black because of "secrecy obligations" under Maltese law.

A UAE government official, who was unwilling to be named, said UAE financial and law enforcement authorities were examining 17 Black's activities after a request for assistance from Maltese authorities. The official declined to elaborate.

In July 2017, more than a year after Caruana Galizia had mentioned the Panama companies owned by Mizzi and Schembri in her blog, a Malta magistrate ordered a judicial inquiry into whether the companies involved any illicit activity. Opposition politicians in Malta and members of the European Parliament called for Mizzi and Schembri to be suspended from office while that inquiry was conducted. The island's prime minister, Joseph Muscat, declined to do so.

In May this year, another magistrate ordered that 17 Black's activities should also be examined as part of the same probe. The inquiry is currently stalled, pending a legal challenge made on procedural grounds by Mizzi, Schembri and others. Both Mizzi and Schembri have said they would welcome testifying and disproving any allegations made against them before any inquiry.

In a statement to Reuters this month, referring to the judicial probes, Kurt Farrugia, the prime minister's spokesman, said that as the activities of 17 Black were under investigation, Muscat would "await the conclusion of this process and act accordingly. He has been consistent on this point." The prime minister, Farrugia said, did not know who owned 17 Black.

OLD FRIENDS IN POWER

Before he became a government minister, Mizzi worked as a management consultant. In September 2012, he became energy spokesman for Muscat's Labour Party. In January 2013, at the start of a general election campaign, Mizzi proposed an ambitious plan to reform Malta's energy sector.

Mizzi said the proposals, which counted on private investment to build a gas power station, would cut the country's bill for energy generation by 187 million euros a year. Muscat said he would implement the plan.

Labour won the March 2013 election. Muscat became prime minister and appointed Mizzi energy minister.

Mizzi and the government proceeded with the energy plan, and several deals were struck by October that year. One deal granted a concession to a private business group, selected from several bidders, to build and run the new gas power station. Under the selection procedure, Mizzi played no direct role in choosing the winner.

The winning group - which included Maltese investors, Azerbaijan's state oil company SOCAR, and the German company Siemens – was set up in 2013 and called Electrogas Malta. Fenech, the Maltese property developer, was a director and an investor. The 450-million-euro Delimara power station was completed in 2017.

Siemens declined to comment on whether Fenech owned 17 Black, or about Mizzi and Schembri's potential business connection, saying "Siemens is not in a business relationship with the company." SOCAR Trading, the subsidiary of SOCAR involved in the power station project, said it "has no knowledge of the company 17 Black."

In July 2015, Mizzi bought a shell company in Panama called Hearnville Inc, registering his ownership via an anonymous trust in New Zealand, according to corporate records and public statements later made by Mizzi. At the same time, Schembri acquired a Panama company, called Tillgate, also via a New Zealand trust.

Schembri, a businessman, had known Muscat, Malta's prime minister, since they were at school together in the 1990s. Schembri became Muscat's chief of staff in 2013. When he did so, he resigned his directorships of his Maltese printing and stationery business, but remained the owner. Schembri said his position in the prime minister's office gave him "no involvement" in the power station project.

When Hearnville and Tillgate, the two Panama companies, sought to open bank accounts, they were asked to list their likely sources of revenue. Accountants acting for Mizzi and Schembri sent an email on Dec. 17, 2015, to a Panamanian law firm that was assisting the search for a suitable bank. The email named 17 Black Limited and another company, Macbridge Limited, as the "main target clients" from whom banks could expect payments to Hearnville and Tillgate.

Mizzi and Schembri were asked this month by Reuters if they had knowledge of the email before it was sent. Schembri replied "No", without elaborating either about the email or what he knew of 17 Black. Mizzi replied that he "did not see the alleged email you are referring to prior to its publication."

Asked about Hearnville and Tillgate, Fenech told Reuters that "neither I, nor any company/entity of which I am or have been involved in, have ever had (or had the intention to have) any relation whatsoever with the entities you mention." Asked to clarify whether he owned or had any relation to 17 Black, Fenech did not respond.

Brian Tonna, head of NexiaBT, the accountancy firm that sent the email, said he was prevented by client confidentiality from commenting. He added that the firm was cooperating fully with the authorities.

The December 2015 email said both 17 Black and Macbridge were registered in Dubai. Reuters found no trace of Macbridge. The banking correspondence reviewed by Reuters indicated 17 Black was registered in the nearby emirate of Ajman and opened an account at Noor Bank in Dubai in June 2015.

The person familiar with 17 Black's arrangements in the UAE said 17 Black was a "flexi-desk company," a business that could be created without a physical presence in the country. Around 9 million to 10 million euros went through 17 Black's account at Noor in 2015, the person said, after which the account became dormant. Reuters could not confirm those figures.

The source said that most of the money paid into the 17 Black account had swiftly moved on to other entities, though it had retained a balance of about 2 million euros. Based on the absence of evidence for the business purpose of these in-out transactions, Noor Bank froze the account in September, the source said.

In a statement, Noor Bank declined to confirm any details of the bank account or its actions, saying it was "legally precluded from any unauthorised disclosure of confidential customer information" but always complied with any formal requests for information from authorities.

Maltese financial investigators have traced two payments to 17 Black, according to a source briefed on the investigation and a draft FIAU report from 2017 seen by Reuters. One was $200,000 sent to 17 Black on July 10, 2015, from Orion Engineering Group Limited, marked as provision of "manpower" in Qatar. Orion is a Maltese company owned by Maltese businessman Mario Pullicino, according to the report and public corporate records. Pullicino was also a company secretary of Armada Floating Gas Services Malta Limited. Armada was set up in June 2015. It provided a gas storage tanker for the new power station commissioned by Mizzi.

Pullicino confirmed to Reuters making the $200,000 payment and said it was for work unrelated to the Malta gas project. Speaking by telephone, he declined to provide further details of the transaction, 17 Black or its owners. He said his company "has never paid any money to any politically exposed people."

Pullicino did not respond to further questions about whether he knew 17 Black was owned by Fenech.

Another payment to 17 Black consisted of $1.5 million sent in November 2015 by Mayor Trans Limited, a Seychelles company with a bank account in Latvia, marked as for "financial advisory services."

Mayor Trans, according to public U.S. regulatory filings relating to that start-up, is ultimately owned by an Azeri citizen named Rufat Baratzada. The address given for Baratzada in U.S. regulatory filings is a modest apartment in Baku, the capital of Azerbaijan. Neighbours there described 51-year-old Baratzada as a former subway worker.

His family, contacted at Baratzada's new one-storey home at end of an unpaved road on the outskirts of Baku, said he was now working as a security guard on a construction site in Baku. Reached by telephone and asked whether he owned Mayor Trans, Baratzada said: "If it's me, it's me." He declined to talk further.

POLITICALLY EXPOSED

Through the autumn of 2015, the Panama companies acquired by Mizzi and Schembri applied to open bank accounts in Panama, Miami, Dubai, St. Lucia and the Bahamas, according to evidence assembled by Malta's financial investigators from emails, obtained directly from the offices of Maltese accountants for Mizzi and Schembri, and detailed in the draft FIAU report. Copies of the emails were also contained in the Panama Papers and shared with Reuters by the German newspaper Süddeutsche Zeitung, which first obtained the Panama Papers.

According to those emails, opening bank accounts proved tough. The biggest obstacle, the emails indicated, was that the ultimate owners were politicians.

Financial institutions are obliged to take special care in handling customers designated as "politically exposed persons," or PEPs - people entrusted with a prominent public function or their families. Banks shy away from handling the money of PEPs if they are unsure about the source of it.

The emails show that efforts to open accounts for the Panama companies of Mizzi and Schembri continued until February 2016. That month Caruana Galizia and other Maltese media reported the existence of the Panama companies. Mizzi and Schembri then commissioned audits of the New Zealand trusts they had set up to hold the shares of their Panamanian companies. Both audits were conducted in October 2016 by an office of Crowe Horwarth accountants in Wellington, New Zealand.

The firm declined to comment on questions from Reuters. In notes attached to the audits published by Mizzi and Schembri, the accountants said that the audits were based on "sufficient and appropriate evidence." The audits stated the Panama companies had carried out no trading activities and that neither had a bank account.

In March last year, 17 Black changed its name to Wings Development, according to the person familiar with 17 Black's arrangements in UAE. An official at Ajman Free Zone said Wings Development was still registered there but provided no evidence. Reuters could locate no company of that name for comment.

(Additional reporting by Margarita Antidze in Tbilisi, Maria Tsvetkova in Moscow and Jacob Borg of the Times of Malta in Valletta; Editing By Richard Woods.; This story is part of the Daphne Project, coordinated by Forbidden Stories, a Paris-based group that continues the work of journalists silenced through murder or imprisonment)

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