Back in March, 11 people including Keith Schembri, the chief of staff to former Prime Minister Joseph Muscat, were arrested and arraigned in court on corruption and money laundering charges.
Schembri was charged alongside his father Alfio, as well as Kasco Group CEO Malcolm Scerri and the company’s financial controller Robert Zammit.
Former Nexia BT partners Brian Tonna, Karl Cini and Manuel Castagna, as well as the firm’s manager Katrin Bondin Carter made up the second group of people charged, while Zenith Finance directors Matthew Pace and Lorraine Falzon made up the third group.
Former Progress Press chairman Vince Buhagiar was also charged in relation to the findings of one of the inquiries and former Allied Group managing director Adrian Hillman has since been extradited to Malta from the UK and also charged in court.
Since the start of proceedings Schembri has started being treated for cancer and has not been present in court. It remains to be seen how the case against him will continue once the compilation of evidence is concluded.
Years of corruption allegations
The arrests followed years of media speculation about serious corruption allegations with Schembri at their centre, and were prompted by the completion of two magisterial inquiries, requested in 2017 by then Opposition leader Simon Busuttil in light of the police’s reluctance to act.
Over the three and half years it took for the inquiries to be completed, Schembri and his associates had weathered several other storms, and despite facing what felt like an endless series of accusations, there was no appetite to investigate it within the country’s institutions.
By the time they were completed, however, the landscape had changed. Both Muscat and Schembri had left the scene, as had a number of other figures like the police commissioner.
The first inquiry was completed in September 2020, with the second’s conclusion arriving six months later in March 2021. The 11 accused were arrested and charged in court days after.
They were kept behind bars for almost two weeks, before being let out on bail. Proceedings against the accused have developed at a relatively fast pace with most witnesses due to testify in the compilation of evidence having been heard.
Arrests follow inquiries’ conclusion
The first inquiry upon which the charges against the accused are based was led by Magistrate Natasha Galea Sciberras, and investigated the allegation that Schembri had received two €50,000 payments from Tonna through accounts they both held at the now-shuttered Pilatus Bank.
The payments were believed to have been kickbacks related to the sale of Maltese citizenship to a family of three Russian nationals.
The second inquiry, led by Magistrate Josette Demicoli, was instigated by a leaked FIAU report which detailed how Schembri had filtered over €650,000 to Hillman in over 30 “suspicious transactions” between 2011 and 2015.
The funds were linked to the purchase of printing press equipment from Kasco Engineering by Progress Press in 2011.
While both inquiries are believed to have called for action against the accused, the findings of the inquiry into the Progress Press affair are understood to be significantly more categorical about the wrongdoing committed.
In fact, the court has heard how Magistrate Galea Sciberras had not found enough evidence to prove that the funds sent by Tonna to Schembri were kickbacks, though she said that she had not found the men’s version of events to be credible.
Most of the time in court has however been spent on the Progress Press affair. The court has heard how Schembri – through his company Kasco Engineering – had overcharged Progress Press around $6.5 million, funnelling $5 million to himself and others in kickbacks.
The cases so far
The accused have all been charged in relation to their involvement in the matters investigated by the two inquiries, with prosecutors describing a web of financial structures which they concluded were used to funnel funds linked to corruption.
It is unclear how detailed the investigations carried out by the inquiries were or indeed how broad their scope was, making it difficult to speculate about how strong the prosecution’s case is.
For example, investigators have said that one of the experts involved in the inquiry had described Zenith’s Matthew Pace a professional money launderer but it hasn’t been made clear whether that claim is based on facts not directly linked to the cases investigated by the inquiries.
The court has also heard how Zenith’s Matthew Pace and Nexia BT’s Brian Tonna and Karl Cini, would prepare documentation to conceal the fraudulent activity and how they forged and altered documentation in order to evade justice.
Progress Press affair dominates proceedings
Witnesses called to testify so far have mainly related to a grant Progress Press received from Malta Enterprise in order to fund the printing press equipment.
Malta Enterprise representatives have testified about the manner in which an investment grant for Progress Press was approved, despite irregularities in the application submitted. They have, however, stopped short of claiming that the state agency had been defrauded by Progress Press, as claimed by the prosecution.
In the meantime, Progress Press has taken both Schembri and Hillman to court to recoup the money it alleged the company was defrauded.
The court has also heard from representatives from the country’s banks and regulatory institutions, which have provided it with information about the accused’s assets and financial dealings.
Police officers have testified about the investigations they carried out which have consisted mainly of combing through bank account statements to identify suspicious transactions.
The prosecution has appeared uncertain and often caught off guard.
The police have admitted that their investigations into the accused only started once the inquiries were concluded.
This has to some extent supported the defence’s claim that the police simply arrested the accused because of who they were and were now trying to build a case to justify the charges.
Sources within the Attorney General’s office have described a somewhat chaotic atmosphere resulting from the relative inexperience of the crop of young lawyers that have been tasked with going up against the country’s most seasoned criminal lawyers.
The prosecution has at times appeared overzealous in its requests and has been repeatedly chided and warned that the case should not be treated like a ”fishing expedition” and that evidence submitted should relate specifically to the charges against the accused.
Whether or not the prosecution’s inexperience will prove costly to the case remains to be seen and it will to a large extent depend on the contents of the inquiry.
With the exception of the proceedings against Hillman, who was only recently extradited to Malta, most of the cases are nearing the end of the compilation of evidence stage.
The Attorney General will then need to determine before which court the accused will stand trial.
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