David Gonzi, the son of Malta's former Prime Minister Lawrence Gonzi, has been formally included in an investigation started by Italy's Anti-Mafia Police over the operations of a number of Malta-based gambling companies allegedly run by the mafia.
According to The Times of Malta, Gonzi's name appears multiple times in a 700-page document the investigators submitted last week to the tribunal in charge of the case. In a public statement issued on July 29, Gonzi denied all the accusations and called the report redacted by the Italian authorities "factually incorrect."
Gonzi explained that he has "already taken action to provide all the necessary information to the Maltese authorities, including the Malta Financial Services Authority (MFSA) and Financial Intelligence Analysis Unit (FIAU)."
The possibility of Gonzi being part of the investigation has been rumored since July 22, when an operation named "Gambling" led to the arrest of 41 individuals, plus the seizure of 82 online gambling sites and cash and assets for more than €2 billion.
Italy's authorities believe that Italy's Mafia-type criminal organization 'Ndrangheta used a number of gambling companies licensed in Malta to recycle the money.
According to the Magistrate in charge of the preliminary investigation, Caterina Catalano, the illegal operations were mainly carried through Uniq Group Limited, a gambling company established in Malta in 2010 and led by Mario "Mariolino" Gennaro. Gennaro is a man known for his tight connections with the 'Ndrangheta organization.
Initially focused on online gambling, the hub has quickly expanded its business over the past years and opened over 500 gaming points throughout Italy, despite the company not possessing any license to offer gambling or betting services in the country. The authorities believe that Gennaro chose to base his business in Malta as the Island's regulation on gambling allowed him to avoid Italy's strict anti-mafia and anti-money laundering controls.
Although Gonzi did not take an active role in operations of the Uniq Group, his position is considered to be worthy of an investigation by the Italian authorities since he is a shareholder and director of a company named GVM Holdings, which provided fiduciary services to the Uniq Group.
"Since my first contact in October 2013 and since becoming a Director [of GVM Holdings] in December 2014, we have never had any reason to suspect that the companies mentioned in the investigation were involved in any unlawful activity whether in Malta or elsewhere," Gonzi explained. "It was only on this basis that the companies were accepted as clients of GVM."
To his defence, he also stated that "in all cases of companies that have a gaming license, the Maltese authorities carry out extensive and rigorous due diligence processes to verify that the ultimate beneficiaries are of good standing. In the case of all such GVM clients, including the ones being investigated, the Maltese Gaming Authority (MGA) and the company's banks successfully completed this due diligence process."
In addition to this, Gonzi said that GVM had also conducted a separate process to investigate the operations of their clients. "GVM carried out its own due diligence process to ascertain that the individuals concerned were of good standing."
The due diligence process included the request of certified copies of the ultimate shareholders' passports, proof of residential address, and copies of their police conduct records.
Although Gonzi is the only member of GVM to be explicitly named in the investigation, it is not to be excluded that the Italian authorities will continue to gather information on the involvement of the company in the alleged illegal activities to understand if any other members of GVM — including Malta's former Prime Minister, Gonzi — had any role in facilitating the operations of the Uniq Group in the island.
"This is Just The Tip of The Iceberg"
The shadows casted by the investigation over the efficiency of the Maltese legislation on gambling are seen as something that could significantly influence the development of the gambling industry on the island.
With over 8,000 people employed by approximately 250 licensed operators, iGaming was Malta's second-biggest source of income in 2014, contributing nearly to 12 percent of the island's Gross Domestic Product (GDP).
In the eyes of the Maltese authorities, this number is supposed to grow in the future, as a major €220 million project named Smart City aims to attract even more iGaming and tech companies to Malta.
"[Smart City] has been built with a backbone of infrastructure to support these kind of companies," the CEO of the development project Anthony Tabone said earlier this month. "The properties are based on the success of Dubai Internet City, Dubai Media City, and Dubai Knowledge Village.
However, according to international gaming lawyer and founder of the Gaming Legal Group, Bas Jongmans, an increase in the number of iGaming companies based in Malta could represent a serious threat for the correct functioning of the gambling legislation — posing a concrete risk for players and operators all over Europe.
"There are problems that need to be addressed, and the amount of gambling companies that trust companies handle is one of those," Jongmans told PokerNews. "I see a lot of trust companies that just keep accepting more and more clients, and this needs to be discussed."
Although a higher number of companies based and licensed on the island would help the local economy grow, it would also come with the risk of the gambling authority and trust companies not having the resources needed to perform the correct checks.
"It's quite interesting to see how fiduciaries should be and compare the theory with what we have today," Jongmans continued. "One of the major issues that we have today, is that the companies that should manage all the information related to those who have a gambling license or wish to obtain one do not have the means to follow up on everything. They do not have the means to pose all the questions that should be asked, nor to follow up on the answers. Unfortunately, given the amount of money some fiduciary companies make through their services, it is hard to foresee any changes in the near future."
According to Jongmans, this is "just the tip of the iceberg" for the operation that led to the closure of a number of gambling companies connected to Italy's 'Ndrangheta and questioned the practices of a well-established fiduciary like GVM.
"Trust companies have too many clients and, as a result, I believe they are not following up as they should do," he said. "A fiduciary should know what happened with their clients at all times, and this simply cannot happen when you have hundreds of clients."
Italian Politicians Call for Stricter Controls on Gambling
Meanwhile, the investigation was also debated in Italy, where representatives of all the major parties in the country's Parliament praised the work of the investigators and asked the government for tighter checks on gambling-related activities.
"The 'Gambling' operation proves that gambling is a great source of revenue for the organized crime, and Italy needs urgent measures to stop this," commented Massimo Baroni and Matteo Mantero, two members of the Italian Parliament and of the country's second-biggest political party, Movimento 5 Stelle (M5S).
"Over the past few years, the offer of gambling services has increased significantly, also because it was said that this would limit the illegal activities connected to gambling," the two added. "Today, we can see that this approach as proven to be wrong: the organized crime is inside the legal gambling industry and uses it to grow its business and for money laundering purposes."
According to another member of Italian Parliament, Giovanni Paglia from Sinistra, Ecologia e Libertà (Left, Ecology and Freedom), the Italian government needs to "take immediate action to modify the way authorities check the companies that operate in the gambling sector."
Image courtesy of The Times of Malta