PN deputy leader Simon Busuttil and foreign minister Francis Zammit Dimech were both aware of alleged fraud by the director general in the directorate for internal auditing and investigations, it emerged in a court case yesterday.

The man alleging the fraud, Joseph Borg, said he had told Dr Busuttil that Rita Schembri was a fraudster and Dr Busuttil advised him to report to the police. Dr Zammit Dimech, on his part, told him he would speak to the Prime Minister about the matter.

Borg, 75 of Swieqi, was testifying in the case against him, in which he is charged with threatening and blackmailing Ms Schembri, who reported an email to the police in which Borg said that if she did not do what he wanted in 24 hours, he would pass information he had about her to Olaf, the EU anti-fraud office, and to the Office of the Prime Minister. Schembri is a member of the Olaf team.

Borg said he gave her 24 hours to pay to pay back two Nigerians and an Italian who, according to Borg, had been defrauded by Schembri. He said Schembri and her husband, Mark, had accepted a gift of €28,000 for a restaurant. They did not have any right to this money because the restaurant was leased to Schembri from himself, Borg said.

Defence counsel Edward Debono said the accused had acted as whistleblower several times in the past, in cases involving former Mr Justice Herrera, former Minister Lorry Sant, and Piju Camilleri. Borg said that what he did was not for himself, but because he did not want someone to occupy a public position when she was a fraudster.

He said he had not referred to fraud committed against him, when Rita Schembri had kept for herself Lm9,500 which were intended for him. Nor had he referred to her defaming him by calling him racist, or to her evading VAT and income tax. Schembri had also breached company rules, and he had not asked for payment of €82,000 due to him. All he had done, Borg testified, was to tell her to return the money she defrauded the Nigerians and Italian.

He said he had drawn up a report for Olaf and before sending it he sent Rita Schembri an email, giving her the opportunity to undo the fraud she had committed.

Inspector Chris Pullicino prosecuted; Dr Pio Valletta is appearing for the Schembris.