Former OPM chief of staff Keith Schembri and former Nexia BT partner Brian Tonna were both unable to explain when or how funds for a loan from Schembri to Tonna were transferred.
The matter was investigated by a magisterial inquiry started after a complaint by then Opposition leader Simon Busuttil back in 2017, who claimed that €100,000 in kickbacks had been transferred from Tonna to Schembri from the sale of passports to Russian nationals.
The funds were found to have been transferred in two payments of €50,000 and were deposited in an account held in Schembri’s name at Pilatus Bank. The funds originated from Tonna’s BVI company Willerby Trade Inc.
At the time, Schembri had claimed that the transfer constituted the repayment of a loan he had given to Tonna years earlier when he was going through separation proceedings.
Tonna, along with former partners Karl Cini and Manuel Castagna and the firm’s financial controller appeared in court today for the first sitting in the compilation of evidence against them, after they were charged with corruption, money laundering and forgery, among other charges on Saturday
During today’s sitting before Magistrate Donatella Frendo Dimech, the prosecution said that both Schembri and Tonna could not explain how and when the transfer for the original loan had taken place, adding that while the inquiry had not found any prima facie evidence of kickbacks, it had not found their testimony convincing.
The prosecution noted that when asked, both Tonna and Schembri could not remember how or when the funds had been transferred to Tonna. Here it was pointed out that this contrasted with the fact that Tonna would meticulously log all other income and expenditure.
The prosecution said it could also not understand why Tonna needed the money, given that he had other funds he could have used.
In their testimony before the inquiring magistrate, as well as to the police, the Nexia BT partners claimed that the BVI company Willerby Trade Inc was used to deposit profits from the firm which would then be reinvested.
The prosecution noted that it could not understand why, if this was the case, that Willerby Trade was used to repay Schembri and not any other of Tonna’s companies.
It also pointed out that identical invoices for the sale of the passports had been issued by both Willerby Trade and BT International, despite the fact that it was only the latter that was a licensed IIP agent.
The case against the accused is also based on the findings of a second magisterial inquiry which was completed a few weeks ago and which investigated a transfer of €650,000 from Schembri to former Allied Newspapers managing director Adrian Hillman.
The court heard how Schembri had said to the police that it was agreed that the printing equipment being purchased on behalf of Allied Newspapers was purchased from the United States, adding that the payment went through companies in different jurisdictions so that less tax could be paid.
The prosecution described how on many of the occasions the accused were questioned they had refused to answer questions or had stated that they could not remember.
A request for bail was made on behalf of the four accused however there was no time for the court to hear oral submissions from their lawyers during today’s sitting.
In both cases, the prosecution said it had found a large number of documents that had been falsified in order for the firm to cover its tracks following the Panama Papers and the subsequent fallout from it.
This will take place next Tuesday at 10:30am.
You can read a blow-by-blow account of today’s sitting here.
What did you make of today’s sitting?