He refuses to reveal the identities of the third parties, telling the police they can get the information themselves.

Zahra further claims that when he was in Italy, he had listened to a taped conversation between Sebastian Dalli and Ms Cassar about a bank account in England.

Zahra says Sietse Zoodsna (SIMED International’s managing director) had started pressing him for “hard evidence”, but his sources were asking for Lm9,000 to release this hard evidence. At this point, in order to dissuade him, he told Mr Zoodsna that the sources had put up their price and were asking for Lm1 million to release the evidence. However, as Mr Zoodsna insisted that he wanted the evidence, he told Mr Zoodsna that he should go to the police because they could get the information legitimately.

Zahra says Mr Zoodsna offered him three per cent of the value of the tender if the evidence he provided led to the tender being taken away from INSO and awarded to SIMED International. Zahra replied to Mr Zoodsna that his contacts were not going to release the evidence because they were going to be left out of the deal.

Asked by the police to reveal who his sources were, Zahra tells them that he is bound by professional secrecy. The police offer protection to the accused and his informers, but still he does not agree.

As for the bank transactions mentioned in the second report, Zahra says he went to London with his Italian contacts who had connections there. He tells the police that he accompanied his informants to the bank, but they refused to let him in, although he had paid for their trip to England.

The police consider Zahra’s replies as “very evasive” and at this point caution Zahra that he has the right to remain silent as everything he says can be brought as evidence against him.

At first Zahra says he will not continue with his statement as he is now considered a suspect, but he still answers questions put to him by the police.

The accused tells the police that the evidence was with his informants but he does not want to reveal who they are. The police say that his answers are now “dubious”.

At this point, Zahra tells the police that “I was in over my head” and admits that the facts claimed in his second report, as well as in the initial part of his statement, had been “all invented” by him. Asked by the police why he had invented such facts, which were of a serious nature, the accused replies that he had done so because Mr Zoodsna kept insisting on evidence.

Zahra tells the police he never thought that his report would reach such high places. He tells the police that he had sourced the information in his reports from the Internet.

The police then go to Zahra's residence and seize a computer. The accused also gives them his assignment file, a diskette and a CD.

Claudine Cassar's statement

Ms Cassar tells the police that she had picked up whatever she knew about the tender for the medical equipment at the Mater Dei hospital from what her father said about it at home.

She denies knowing Sebastian Dalli personally, but says she has read about him in the press.

Ms Cassar says she did not know any of the other people or circumstances mentioned in the accused’s reports, and denies meeting Mr Fontanelli in Naples and Florence. In the case of the second meeting, she adds that she was heavily pregnant at the time.

When the police check immigration records, Ms Cassar is not listed on the dates indicated by the accused in his second report.

Sebastian Dalli’s statement

Mr Dalli flatly denies any connection with the case. He tells the police that his work is in construction. Mr Dalli tells the police he does not know Ms Cassar, but knows Mr Spiteri (her father) because he tendered for public contracts. He says he has not been to Naples or Florence and, in fact, has not gone abroad for quite some time.