The Malta Independent 7 May 2021, Friday

Keith Schembri charged with corruption, money laundering and is refused bail

Albert Galea Saturday, 20 March 2021, 08:33 Last update: about 3 months ago

11 people, including former Office of the Prime Minister Chief of Staff Keith Schembri, have been charged in court in connection with two magisterial inquiries this evening.

The arraignments were in connection with a recently concluded magisterial inquiry in connection to allegations surrounding Schembri and former Allied Newspaper managing director Adrian Hillman and another magisterial inquiry which thus far is yet to be established.


Keith Schembri, his wife Josette, Nexia BT's Brian Tonna and Karl Cini, Zenith Group's Matthew Pace and Lorraine Falzon, and former Allied Newspapers Managing Director Vincent Buhagiar were earlier seen at the building which houses the police's Financial Crime Intelligence Department.  Adrian Hillman - Buhagiar's successor at Allied Newspapers - meanwhile is in the United Kingdom.

In the Hillman case, Schembri had allegedly passed €650,000 on to Hillman through regular €5,000 payments between 2011 and 2015. This is believed to be linked to when Keith Schembri's company, Kasco, had won a tender to supply Allied Group's Progress Press with a printing press back in 2010.

The inquiry's conclusions have not yet been published.

Schembri had already said that he expected to be charged in a Facebook post earlier this week, while also saying that he did not agree with the inquiry's conclusions and called them a 'travesty of justice'. 

The Malta Independent will be providing updates live throughout the day – keep refreshing this page for those updates.

22:02 The court imposes a €20,000 deposit and €40,000 personal guarantee. Buhagiar must also observe a curfew. His lawyer asks for a moment to make a phone call to arrange the deposit. The accused surrenders his ID card and is led out of the courtroom. The sitting is over.

22:01 The court grants Vince Buhagiar bail. The magistrate emerges from chambers for the last time tonight. The court grants Vince Buhagiar bail.

21:47 Mercieca Rizzo: “I understand that today he is elderly... but I remind the court that the crimes took place 10 years ago... He had more than the required maturity and knowledge to know between right and wrong.”  The magistrate retires to her chambers.

21:43 Mercieca Rizzo says that the fact that Buhagiar was arraigned separately didn't mean the offences are less serious. She mentions his high office in the Allied Group and how his actions betrayed the trust of his employees. “Money laundering is an offence in itself, and the predicate offence is not required for conviction,” she says.

21:40 AG lawyer Elaine Mercieca Rizzo says the argument that the man was unfortunate to be arraigned on the same day as the others is “disrespectful to the court”.

21:37 The defence lawyer refers to bail decrees by the Court of Magistrates in similar cases where the accused (not Buhagiar) were granted bail, including a case involving USD300 million. “The court shouldn't treat others differently because their surname was Tabone or Portelli,” she says, to objections from the prosecution.

21:35 She stresses that the crime attributed to Buhagiar is not those of the previous arraignments.

21:31 Dalli says Buhagiar was summoned as a witness in 2017. “He was treated as a witness. Everyone knows what happened in 2017. Everyone was following the news,” she says. Dalli adds that Buhagiar is an elderly man vulnerable to COVID-19, which she claims is “rampant” in prison.

21:28 The defence lawyer points to the fact that the prosecution had arraigned Buhagiar alone, which is testament to the fact that they are distinguishing between him and the others. She insists that Buhagiar is being charged over things that happened in 2012. “All the evidence is preserved in the inquiry,” she adds.

21:26 Dalli points out that contrary to the previous cases, here we do not have a person with assets abroad. “There were three ‘problematic’ transactions according to the conclusions,” Dalli says. “Two did not result,” she claims. Dalli asks about the predicate offence. She argues that Buhagiar's misfortune is being arraigned on the same day as the others and that he must now convince the court that he is worthy of bail.

21:21 The police inspector says the accused has no assets outside Malta's jurisdiction. 

21:20 The lawyer asks the inspector to confirm whether the investigations are ongoing in his regard. He replies that they are not, but they are ongoing with regards to third parties. Defence lawyer Veronique Dalli asks about Buhagiar's health. The inspector says he is scheduled to go to hospital for an operation at the end of this month.

21:16: The court issues a freezing order over his assets. This is standard procedure in money laundering cases. Defence lawyer Veronique Dalli requests bail. The prosecution objects. Inspector Xerri is called to the stand.  Dalli: “In Buhagiar's case do we agree that all the evidence against him is documentary?” Inspector: “Yes.” Dalli: “Is it all preserved?” Inspector: “Yes.”

21:12: The last person to be charged was former Allied Group director Vincent Buhagiar. He was charged with money laundering, conspiracy to commit a crime, making false declarations to Malta Enterprise, Bank of Valletta and customs, fraud and corruption. He pleaded not guilty.

21:09 - Bail is denied as well - Pace and Falzon will go to Corradino Correctional Facility with those who faced court earlier today.  One last person is left to be charged: former Allied Newspapers managing director Vincent Buhagiar.  He is being represented by lawyers Veronique Dalli and Dean Hili.

20:59 - Meanwhile back in court, the magistrate has once again retired to her chambers to decree on the bail request for Matthew Pace and Lorraine Falzon.

20:50 - Keith Schembri, his father, and his associates meanwhile have arrived at the place they will be calling home for the foreseeable future at least: Malta's prison the Corradino Correctional Facility.

Our photographer Giuseppe Attard, still camped outside the law courts, snapped this shot of a seemingly despondent looking Schembri, with his arms crossed, through the prison van's tinted windows as he departed a few minutes ago.

20:44 - “They should have known better, we have, complicity, fraud, money laundering... we have a person who would prepare the transactions for clients. The other accused was a director and the company's AML officer,” the prosecution says.

Again, police testify that there are third parties who are still under investigation.

“It would be shameful, if we insert this concept that we can start denying bail. It is hurtful. We know the law too. The court is effectively giving the prosecution a tool to decide on whether to grant bail or not. This is very, very serious,” Gatt says as he begins his bail submissions.

20:39 - It's becoming a bit pedestrian now - the court, like in the previous two cases, upholds the request for the freezing of the duo's assets. The defence makes a request for bail, citing the same reasons as the previous case, and the prosecution objects, citing the same reasons.

20:32 - The next round of charges are filed against Lorraine Falzon and Matthew Pace, who are also accused on behalf of Zenith, which was previously named MFSP. They are assisted by lawyers Mark Vassallo, Edward Gatt, Ishmael Psaila and Shaun Zammit.

The pair are accused of money laundering, false declarations, and criminal conspiracy. They both plead not guilty, as do Zenith as a company.

20:23 - Don't leave us just yet: we're still waiting for the last batch of people to be accused.  That sitting should start shortly.

20:20 - The court after hearing the arguments observes that the charges deal with money laundering, which while not carrying life sentences, do carry long sentences. It observes that the men had been given police bail, but now the scenario was entirely different that they have been charged.

“This is not based on non-existent fears… Keith Schembri is not being treated any differently from anyone else,” the magistrate says.

20:16 - Magistrate Charmaine Galea emerges.  Bail for all four men - including Keith Schembri - has been refused.  They too will go to Corradino from here.

20:05 - The magistrate now retreats to her chambers to make a decision.

20:03 - AG lawyer Elaine Mercieca Rizzo rebuts: “Shouting doesn't make your point any more convincing. The crimes are here and so are the charges. None of them are time barred and had been given prima facie by magistrates. The prosecution is not here on a whim.”

“This is not the ‘justice of Keith Schembri’. It is the same justice for all,” Mercieca Rizzo insists.

19:57 - “They have been participating in the inquiry for years. Would they wait for the conclusion of the inquiry and to be arraigned to abscond? The predicate offence is the starting point. The date mentioned by the inspector – 2010 – means the predicate offences are apparently time barred,” Gatt notes.

“This is the justice of Keith Schembri… Smoke and mirrors. Now he has been charged, let justice take its course. The same police who decided to give these men police bail are now objecting to their release from arrest”, he continues in a raised voice.

19:49 - Gatt asks Superintendent Frank Tabone this time about the decision to grant Schembri police bail.  Tabone replies that this was because investigations were ongoing and because one can only keep a person under arrest for 48 hours.

Gatt now moves onto his final bail submissions.  He says that the men have everything in Malta and have no reason to leave the country.

“These people have everything in Malta. Their families, assets, their life. What is society going to gain by keeping these people under arrest? Here you have a case where the evidence is all documentary and preserved. If they are given bail today or next week, next month what is the gain? The denial of bail must be based on reality not the hypothetical”, he argues.

19:45 - Much like in the previous sitting, Inspector Anne Marie Xuereb has been summoned to the witness stand as the defence makes it submissions on bail.

“Do we agree that they cooperated fully with the investigation?”, Edward Gatt asks. The inspector replies in the affirmative.

Gatt asks about the inquiry led by Magistrate Natasha Galea Sciberras which investigated claims that Schembri had received kickbacks from the sale of Maltese passports under the IIP scheme.  The inspector says that in that inquiry, the magistrate had concluded that there was no prime facie evidence against Keith Schembri.

Answering questions by Gatt, the inspector says that Keith Schembri was “very talkative” and had to be reined in at times. The police would stop him to tell him they are asking on something else.

19:38 - “The prosecution cannot confirm whether offshore companies are still operating. Some of the accused are very close to third parties who are still under investigation,” Mercieca Rizzo explains says – leaving us with a tantalising sense of curiosity over who exactly these third parties are.

19:36 - The court has upheld a request from the prosecution for the assets of the accused to be frozen.

Like the previous four accused, they can only access just over €13,000 of their funds, as is standard procedure in money laundering cases.

Lawyer Edward Gatt requests bail but the prosecution objects "for the same reasons as in the previous sitting".  The court asks Mercieca Rizzo to list the reasons again. 

19:32 - Alfio Schembri represents Kasco Holdings Ltd, while Scerri represents Kasco Ltd and Kasco Engineering Ltd, among others. Keith Schembri himself is also representing a number of companies.

All of them, as expected, plead not guilty on behalf of their companies.

19:25 - All four have pleaded not guilty.

19:23 - The magistrate reads out the charges – a number of companies, including Kasco Ltd and several offshore companies are included in the list.

All four of the accused are charged with money laundering, complicity in an offence that carries a prison term, and fraud.

Keith Schembri and Scerri have also been accused of corruption, while Keith Schembri is charged alone with forgery. 

19:18 - It's now Keith Schembri's turn to face the courts. He is in the dock, as are his father Alfio Schembri, his business associate Malcolm Scerri, and a certain Robert Zammit.

19:14 - The four accused have vacated the courtroom.  They've been hauled back into the police van which brought them to court, and will now presumably go to Corradino.

19:09 - The accused seem dumbstruck by the news.  Bondin Carter has broken down into tears as her lawyer explains what the magistrate's decision means for her. 

19:01 - Magistrate Charmaine Galea returns and bail is denied. She rules that the crimes which they are accused of are extremely serious and that because their status has now changed from being suspects to being accused, she is not assured that they might not try tamper the evidence or flee if they do get bail.

Tonna, Cini, Castagna, and Bondin Carter will be taken to the Corradino Correctional Facility.

18:57 - Karl Cini can be seen weeping in the dock as he is comforted by someone by his side. Beverley Tonna also appears to be emotional in the courtroom.

18:53 - The submissions finally come to an end.  Magistrate Charmaine Galea now suspends the sitting and retires to her chambers to rule on the matter. 

18:46 - The bail submissions are still going. Mercieca Rizzo is currently making her counter-arguments.  She says that there are various examples where bail was not granted  after a person was arraigned in court due to ongoing investigations - the Degiorgio brothers, who are accused of being the hitmen who killed Daphne Caruana Galizia, and drug kingpin Jordan Azzopardi are cited as two such examples.

Tonna Lowell on his part counter-argues that those cases all carry life imprisonment, while Debono reels off a list of people accused of crimes carrying life sentences who were granted bail on arraignment.

18:24 - The respective defences post their final arguments on the bail matter.  We're an hour into this sitting - an hour which has flown by really - and there's still more to come, with the arraignment of Keith Schembri particularly still to follow.

Tonna Lowell tells the court that the gravity of the crime alone is not a ground to deny bail. The fear of absconding, he said, is based on incorrect facts in this case. Two companies mentioned do not exist anymore. The accused live and own property in Malta; their families are in Malta. They had been on police bail since last year. “I am almost upset when I hear there is a risk of them absconding. There is no risk of them absconding... Their respect for the police bail conditions shows that they will be respecting the court’s conditions. These fears are simply phantoms.”

He says that the argument that the prosecution is still investigating third parties doesn't hold any water, and that it could set a dangerous precedent if accepted by the court.

18:17 - The debate over bail is continuing. The inspector reveals that Willerby Trading - one of Tonna's offshore companies - has not been closed by Tonna. 

Tonna Lowell asks whether Karl Cini was involved in the Progress Press inquiry, to which the inspector replies in the positive.

Another inspector - Wayne Camilleri - has now been summoned, this time by Franco Debono.  His questions centre on his client - Bondin Carter.  Camilleri testifies that he doesn't believe that investigations are still ongoing with regards to the Nexia BT Financial Controller, but that other third parties are still being investigated.

18:06 - Back in Hall 22 meanwhile, a debate is now ongoing as to whether the four accused - Tonna, Cini, Castagna and Bondin Carter (just in case you're losing track) - should be granted bail.

Mercieca Rizzo for the prosecution requests that bail is not granted because of the grave nature of the crimes. "The accused are professionally qualified individuals who are accused of facilitating serious crimes. Secondly they have assets abroad and could abscond. The investigations are still ongoing, even with regards third parties,” she says, adding their release could lead to tampering with evidence.

Inspector Anne Marie Xuereb meanwhile is summoned to the witness stand by defence lawyer Tonna Lowell to testify on bail. She says that investigations are still ongoing, even after the conclusion of two magisterial inquiries, and that the accused had always cooperated when questioned by police and when released on police bail.  As far as she knows, she says, there was no allegation of them attempting to absconed or tamper with evidence, she testifies.

18:00 - PN leader Bernard Grech has meanwhile added his voice to the chorus of reactions on what is happening today.

“Today is another small step for justice to be done in a case which Daphne Caruana Galizia uncovered and which started because Simon Busuttil requested an inquiry.”

“Today is another episode which continues to confirm how a criminal clique took over the Labour government and then took over the institutions to make sure that none of them face justice. Today is another episode which confirms how much our country needs to turn a new page and close this dark chapter in its history”, he said.

“This is another step for us to start cleaning our country’s name”, he concluded.

Illum huwa pass żgħir ieħor biex issir ġustizzja fuq każ li kien inkixef minn Daphne Caruana Galizia u li nbdiet...

Posted by Bernard Grech on Saturday, March 20, 2021

17:52 - The prosecution is asked whether it could quantify the amounts related to the charges at hand. Mercieca Rizzo replies that she cannot give a single specific amount, but that she can say that it "greatly exceeds half a million euro".  The defence object to the freezing orders requested by the prosecution.

The court upholds the prosecution's request for a freezing order, and orders the freezing of all the accused's assets.  They can only access just over €13,000 of their funds, as is standard procedure in money laundering cases.

17:47 - Meanwhile, proceedings are continuing in Hall 22. 

Bondin Carter, who described herself as self-employed, has also pleaded not guilty, while lawyer Beverley Tonna - who is Brian Tonna's daughter - has pleaded not guilty on behalf of one of the companies which has been accused.

Brian Tonna was up next, on behalf of Nexia BT and several other companies which he represents. "Not guilty", he replies when asked what the companies will be pleading.

The full list of those companies are: Nexia BT, Nexia BT Limited, BT International Limited, Nexia BT Advisory Services Limited, BTI Services limited, SPX, and Willerby Trading.

17:42 - Keith Schembri has arrived in court.  

17:37 - In court meanwhile, proceedings are continuing.

Nexia BT and its subsidiaries BT International Ltd, Nexia BT Advisory Services, and BTI Services Ltd are amongst those read out in the courtroom.  Willerby Inc - Brian Tonna's own British Virgin Island shell company is also named.

The charges are also being explained: All four of the defendents are being accused of money laundering. Cini and Tonna are being accused of conspiracy and of forgery. Cini, Tonna, and Castagna are also being accused of giving false information to a public official.

Tonna, Cini, and Castagna all plead not guilty to the charges.

17:31 - Simon Busuttil, the man who kicked this inquiry off, meanwhile has now issued a statement:

“Today’s criminal charges against the most powerful man in the Labour Government is a historic turning point in our fight for justice. It’s a damning indictment of the entire Labour establishment. And a resounding confirmation that Daphne was right”, he wrote on Facebook.

“Daphne, this one’s for you. We’re finishing what you started.”

That image which he's shared with the post is the last article posted by Daphne Caruana Galizia before she was killed in a car bombing on 16 October 2017.

Today’s criminal charges against the most powerful man in the Labour Government is a historic turning point in our fight...

Posted by Simon Busuttil on Saturday, March 20, 2021

17:28 - Indeed, a second police van has just arrived at the court's back door - captured below by our videographer Giuseppe Attard.

Meanwhile in court, we are figuring out who is representing who: Tonna Lowell is representing Brian Tonna and Karl Cini, veteran lawyer Michael Sciriha is representing Manuel Castagna, and Franco Debono is representing Bondin Carter.  Gianella De Marco meanwhile is appearing for one of the companies.

All four of the aforementioned accused are people who were involved in audit firm Nexia BT.  Tonna was Managing Partner, Cini and Castagna were both Partners, and Bondin Carter was the company's Financial Controller. 

17:21 - Here we go!  Magistrate Charmaine Galea has entered the courtroom. 

We're hearing that the arraignments may be done in batches, which is why some of those mentioned earlier - including Keith Schembri - aren't yet present in the courtroom. 

17:15 - While we wait for the rest of the accused to arrive - if you're just tuning in to this live commentary and you're looking for some background on the people we're about to see in court and about why they're in court in the first place, do feel free to scroll down through this commentary for some explanations and reminders.

17:05 - Nexia BT financial controller Katrin Bondin Carter is one of the accused.  She is being represented by lawyers Franco Debono and Amadeus Cachia. Meanwhile, lawyers Stephen Tonna Lowell and Giannella De Marco are also sitting on the front bench.  You'd be fooled into thinking that this was a meet up of the bulk of Malta's foremost criminal lawyers if you didn't know any better...

Brian Tonna, pictured below by our photographer Mike Camilleri entering the court in the police van, Karl Cini, Manuel Castagna, and Lorraine Falzon are all seated behind them.

17:00 - The first group of the 11 have arrived at court.  Meanwhile preparations are ongoing inside Hall 22 which will be hosting this evening's sitting as the main players take their seats.

Superintendent Frank Anthony Tabone, Inspectors Joseph Scerri and Anne Marie Xuereb, and lawyer Elaine Mercieca Rizzo will be leading the prosecution.  

Edward Gatt, Mark Vassallo and Ishmael Scerri are representing Keith Schembri, while Veronique Dalli and Dean Hili are appearing for Zenith Finance's Matthew Pace. 

Therese Comodini Cachia and Karol Aquilina - both PN MPs but also lawyers - are in the courtroom too, speaking with Daphne Caruana Galizia's sisters.

16:45 - What seems to be the whole FCID team has arrived at court piled into two unmarked police cars.  We're only 15 minutes away from the expected arraignment time - stick with us for the latest updates, we aren't going anywhere.

16:30 - With around half an hour left before the announced arraignment time, we've got movement at court. Our photographers Giuseppe Attard and Mike Camilleri are now camped at the law courts as they await the arrival of the 11 accused.  The court doors are open and army personnel have arrived at the back garage door of the courthouse, which is where the accused will presumably arrive.

16:24 - That box-file reference is to how this inquiry started in the first place.  Simon Busuttil, at the time PN leader, went to court accompanied by a couple of MPs and party officials with a pile of eight box-files in tow. 

Those box files became the butt of many a Labour-joke, with many opponents to Busuttil using the fact that some of those box files appeared to be empty as proof that the allegations were made up and that he was simply wasting the magistrate's time. 

The fact that we've arrived at such a point today implies that there was indeed something of substance in those files.

Incidentally, it is Simon Busuttil's birthday today.  He hasn't written any reactions to what's happened today on social media yet, but our assumption is that he will feel quite vindicated.

16:06 - Another reaction, this time from PN Deputy Leader David Agius. 

"How right we were. How they told us that the box files were empty.  How much they damaged our Malta", he wrote as he shared a screengrab of the press release issued by the police earlier this afternoon.

Kemm kellna raġun... Kemm qalu li l-box files kienu vojta... Kemm għamlu ħsara lil Malta Tagħna 🇲🇹. 20.03.2021

Posted by David Agius on Saturday, March 20, 2021

15:42 - With some more time before the expected arraignments, it's good to remember that this isn't first time that some of these people will be in court.

Nexia BT's Brian Tonna and Karl Cini have both been in court as witnesses in the Daphne Caruana Galizia public inquiry - but they both refused to answer any questions.

That court appearance was right after both men were hit by a wide-ranging freezing order on their assets after police started a money laundering investigation prompted by the conclusion of a magisterial inquiry into claims that Tonna was involved in graft with the former Prime Minister's Chief of Staff Keith Schembri over the sale of Maltese citizenship to a Russian family.

The inquiry was requested by former Opposition leader Simon Busuttil over claims that Tonna paid Schembri €100,000. The pair have denied wrongdoing, claiming the money was repayment of a previous personal loan.

Keith Schembri meanwhile has appeared in court no less than twice: once in the aforementioned public inquiry and in the compilation of evidence against Yorgen Fenech in the murder of Daphne Caruana Galizia.

Both times he testified at quite some length, and both times he denied any wrongdoing in anything.  

15:26 - Some reactions to the official news coming through now.  Foremost amongst those is that of the Daphne Caruana Galizia Foundation, who welcomed Schembri's impending arraignment and lamented that it is long overdue, given that Caruana Galizia had first broken the story in 2016.

"The failure to prosecutre Schembri five years ago allowed him to commit crimes related to Daphne's assassination and her investigative work.  Prosecuting Schembri today brings us a step closer to a Malta where no one is above the law.  It is the country Daphne fought for and the one we all deserve", the Foundation said in a statement.

Indeed it was Caruana Galizia who broke the story first, with a story on her blog on 11 March 2016. "This is the scandal of the century - a tangled web of corruption, sleaze and white-collar crime" is how she had described it back then.

15:02 - The names of those who will be charged this evening have not been revealed by police, as is standard practice, but we have seen a number of people at the police's FCID headquarters today in connection with this case.

Keith Schembri is of course one of them - but his wife was also seen entering the building this morning.  Nexia BT's Brian Tonna and Karl Cini were also there, as were Zenith Group - formerly known as MFSP Financial Management - directors Matthew Pace and Lorraine Falzon.  Allied Newspapers Ltd's former managing director Vincent Buhagiar was also spotted, as was Keith Schembri's business partner Malcolm Scerri.

Adrian Hillman is also part of this inquiry, and will face charges, but he is currently in the UK, which means that he won't be physically present in court. We are informed however that a request for his extradition within the coming days will be filed.

MaltaToday are reporting that Keith Schembri's father Alfio Schembri could also be facing charges this evening as part of this group.

14:48 - Interesting to note here is that the police mentioned that the charges are being pressed after the conclusion of two magisterial inquiries - whereas so far today we have only discussed one. 

We are informed that the second inquiry which the police are referring to in their statement is one which investigations a possible defrauding of Malta Enterprise.  Schembri himself had referred to this in his eulogised Facebook defence last Thursday, saying that the magistrate had recommended criminal action against members of Allied Newspapers on charges that they defrauded Malta Enterprise.

14:24 - OFFICIAL NEWS: The arraignments will be at 5pm.

The Malta Police Force has just released a statement which says that after the conclusion of TWO magisterial inquiries and after intensive investigations by the FCID's anti-money laundering squad, 11 people will be charged later today.  These 11 people have not been named, but we know from the statement that nine are men and two are women.

Charges will also be issued against 20 companies, the police said.  The charges are going to be before Duty Magistrate Charmaine Galea and will relate to, amongst other things, corruption, fraud, and money laundering.

14:16 - We are hearing from court that the arraignment will not take place at 3pm, but will be pushed back to 5pm.  We did say this might be a long day...

13:30 - A brief update from court: while the doors have opened and Magistrate Charmaine Galea has been spotted going inside, we're still expecting the arraignments to take place at around 3pm - so in 90 minutes or so.  We're told that the courts were opened early for the Magistrate to hear charges related to a separate case.

13:11 - While we wait for the arraignments, we can provide another slice of background for you to consume over your weekend lunches.

Two of the people we saw at the police’s FCID headquarters in Hamrun were Matthew Pace and Lorraine Falzon – respectively the Executive Director and the Managing Director of Zenith Group.

Zenith Group only became to be known as such in 2018 after they rebranded from being known as MFSP Financial Management, a financial management company set up in 2007 which was focused on investments for their clients.

When they rebranded, they were still facing a substantial list of former clients who were seeking compensation before the Financial Arbiter and in court.  Certain concluded cases included them being judged to have mis-sold a €10,000 investment to a student who was a part-time McDonald’s employee, and also them being made to pay a total of over €45,000 in two separate cases for failing to act in the best interest of clients who lost money following the collapse of the Eurus Safe fund.

So – where do they factor into all of this?

An FIAU report into the money laundering allegations concerning Schembri and Hillman which was leaked in 2017 found that Hillman had two investment accounts with MFSP – one set up in his name in 2010 and another set up in the name of Lester Holdings Group Limited – Hillman’s British Virgin Islands company – in 2011.

The report found that both accounts were funded exclusively by Schembri and his companies, with Hillman receiving a total of €394,675 and a further US$169,675.

The full story on this, as revealed by The Malta Independent, back in 2017 can be read here.

Matthew Pace comes into this because he was the person managing Schembri’s investment portfolio.

12:37 - In news unrelated to these proceedings, the latest Covid-19 situation update has been released by the Health Ministry: five patients have died in the last 24 hours while 210 new cases of the virus have been found.  You can check out the full update here.

12:34 - The doors of the law courts have opened in Valletta. This may prove to be quite a long day.  Our journalist Shona Berger is currently in Valletta outside the law courts, along with our photographer Mike Camilleri and a slew of journalists and cameramen from other media houses.

12:07 - Major developments – we are being informed that the arraignments are expected to happen at around 3 o’clock this afternoon.

Magistrate Charmaine Galea is on duty today, which means that those who will be arraigned will be facing her in court.

Three cars have left the FCID building in Hamrun meanwhile.

12:03 - More reactions, this time from PN MP Jason Azzopardi – one of those who had accompanied Simon Busuttil to court with his box files of evidence against Schembri.

“Don’t forget.  What’s happening today is a result of the work which Simon Busuttil and a very small group of people did in silence, day and night, in May 2017”, he said in a Facebook post.

“We did it out of our own hearts and because the police back then had orders from Castille not to touch the case.  Joseph Muscat back then had told us that we were wasting the Magistrate’s time”, he continued.

Today and in the coming days we will know the trust, he said before adding that it is those eight box files which will arraign people in court.

“Don’t forget. Because in May 2017 and in the summer of 2017 there were a lot of people who, in a coordinated manner both from the PL and the PN did everything to discredit that work”, he concludes.

A typically defiant statement – but also one which seemingly takes a swipe at those who entered the PN in the summer of 2017, which is after the PN lost the general election and which is when Adrian Delia took over the reins of the party.

Tinsewx. Dak li ha jigri llum huwa r-rizultat tax-xoghol li Simon Busuttil u grupp zghir hafna ta' nies ghamilna...

Posted by Jason Azzopardi on Saturday, March 20, 2021

11:52 - A bit of a profile on Adrian Hillman: he served as the managing director of Allied Newspapers Ltd, which is the company which runs the Times of Malta.

Hillman had always denied being financially involved in anything with Schembri – Kristina Chetcuti, who used to work at the Times of Malta, said as much in an opinion piece she wrote last year reminiscing about what had happened.

However, when Daphne Caruana Galizia alleged in March 2016 that this was not the case and that Hillman had indeed received payments from Schembri, Hillman went out on leave and subsequently stepped down from all his roles at Allied Newspapers a couple of days later – although he said that this was being done without “any admission of liability.” 

In fact he remained an employee of the company until he tendered his resignation in May that same year.  He later claimed that he had been unfairly dismissed from the company – a claim which the company rejected completely.

He later had a couple of contracts at the American University of Malta as a government member on the Board of Trustees, and also at the Malta Gaming Authority as a government consultant where he earned €4,000 per monthboth of which were terminated last year.

As we said already, we’re informed that he is in the UK, which means that he won’t be arraigned today.

11:44 - Some more transport-related news from the FCID.  A Correctional Services Agency Ford Cruiser has now left the building - but it isn't clear if there was anyone actually in the back of it.

11:37 - A question that many of our readers must be wondering - since Keith Schembri and a whole host of other cast members have been seen - where is the other main character in this drama?

Adrian Hillman hasn't been seen today, neither in Hamrun nor in Valletta, and there is a reason for that: we are informed that he is currently in the United Kingdom. That means that he won't be one of those arraigned today.

11:20 - Developments at the FCID in Hamrun.  Nexia BT's Karl Cini seems to have left the building in an unmarked police car.  This could mean that he is about to be taken to court to be arraigned.

11:09 - Things have quietened down since this morning, but we are only in the first stage of what we are expecting to happen throughout the course of the day.  Schembri and a number of others are expected to be arraigned in court at some point in the day.

Our journalist Shona Berger and photographer Mike Camilleri are currently waiting outside the law courts in Valletta, which is still closed, along with other members of the media.

We're also informed that a religious preacher - fully armed with microphone and portable amplifier - was evangelising in the square for a bit too. He's pictured below close to the bench, microphone in hand. Something besides the gentle pattering of the rain to break the silence at least.

10:54 - Another person has entered the FCID buildings in Hamrun - this time it is Lorraine Falzon, who is the Managing Director of financial services company Zenith Group. She is the second person from this company to enter the building - Matthew Pace, an Executive Director of the same company, is also inside and has been there for over two hours now.

10:33 - The NGO Repubblika meanwhile – who we are fairly certain will have a lot less sympathy for Keith Schembri and his choice of friendships than Pullicino Orlando does – have taken to Twitter to wonder whether this is the start for justice for Daphne Caruana Galizia.

It was Daphne Caruana Galizia of course who first broke this story back in March 2016 – almost five years to the day from today.

10:21 - We’re also going to be bringing you some of the reactions to today’s developments as we spot or receive them.

One of the earliest reactions to today was from someone unexpected: Jeffrey Pullicino Orlando.

The former PN MP turned PL candidate almost addressed Keith Schembri in a Facebook post, saying that they knew each other well and that he could confirm that he is a brilliant strategist who had contributed greatly to the PL’s 2013 and 2017 electoral wins.

“You were entrusted an important role by our friend Joseph [Muscat]. Wouldn’t it have been better for everyone had to you not focused more on it than on certain friendships?”

Keith... ...nafu lil xulxin sew. Naf u nikkonferma li int strategist mill-aqwa. Nikkonferma li tajt kontribut kbir...

Posted by Jeffrey Pullicino Orlando on Friday, March 19, 2021

10:07 - Another person to add to that list: Malcolm Scerri has just arrived at the FCID as well.

Scerri is Keith Schembri’s business partner and the CEO of Kasco Group. 

He was one of the people who filed an urgent constitutional case on Thursday in a last-ditch attempt to get the magisterial inquiry – which was conducted by Magistrate Josette Demicoli – to be declared null.

He tells the media gathered outside the FCID that he has no idea whether he will be arraigned.

10:01 - Besides Keith Schembri’s lawyers and Keith Schembri himself, a number of other individuals have been seen entering the FCID throughout the morning in connection with what we’re expecting to happen later today.

Here’s a who’s who, so to speak, of who we’ve seen so far:

Brian Tonna – We haven’t actually seen him entering the building, but we’re informed he is inside and has been so since 7:30 this morning. Tonna was a managing partner at Nexia BT, and has been implicated in numerous scandals which involve Schembri as well, such as the Panama Papers and allegations of kickbacks on passport sales under the IIP.

Karl Cini – A partner at Nexia BT and Brian Tonna’s right-hand man.  He too has been at the centre of some of the biggest scandals to rock Malta in recent history, such as the Panama Papers and, by extension, the Egrant inquiry.

Matthew Pace – He is an Executive Director from the financial services company Zenith Group.  He too has had a share of controversy in the past: he served on the board of the Planning Authority while also a director of property realtors Remax.  He quit from the board after a court found that he had a personal interest in the db Project in Pembroke – a project he voted in favour of.

Vincent Buhagiar – Now retired, Buhagiar was the managing director at Allied Newspapers Ltd before Adrian Hillman, having been appointed to the post in 2003. He didn't give any comment to journalists as he entered.

09:47 - Keith Schembri has arrived in Hamrun.  He gave no comment to journalists as he rushed into the police's Financial Crimes Investigation Department (FCID) building.  His lawyers Edward Gatt and Mark Vassallo and his wife Josette are all inside the building already.

09:32 - Keith Schembri knew of what is coming today as early as Thursday, which is when he took to Facebook to issue a defence which attacked everyone from the judiciary to the ‘establishment’ for what will likely come to pass today.

We’ll spare you reproducing the whole 1,400 words – if you’d like to read that you can check out our article on it from Thursday – but we’ll delve into the salient points which emerged.

Firstly, unsurprisingly, Schembri denied that he did anything wrong.

In his post, Schembri said that all of these police investigations and questioning that he has been facing is down to none other than the PN ‘establishment’ because they couldn’t stand that a Labourite from Cospicua had done well in the business world.

The magistrate’s conclusions, he said, have a hidden hand behind them to cause damage to the government and the party.

This is a 180 degree turn on the usual Labour stance that ‘the institutions are working’ and that the judiciary should be trusted to do his job – now somehow, according to Schembri, it has been taken over by the PN’s apparent establishment.

Schembri also railed against leaks of the inquiry and its progress to the media, and against a particular court expert – Miroslova Milenovic – over political ties she apparently has in her native Serbia.

What he didn’t mention is how Milenovic was also a court expert in the Egrant inquiry – something which both he and the Labour party have used consistently as something to discredit the aforementioned PN ‘establishment.’

09:17 - So - while we wait for more developments - let's understand a bit what has brought us to this point.

Schembri and co. are expected to be arraigned in court today in connection with a magisterial inquiry which was recently concluded. 

That inquiry was conducted after a request by then PN leader Simon Busuttil - yes, this is when Busuttil took to court with eight box files in tow - into allegations that Schembri had paid the then managing director of Allied Newspapers Ltd Adrian Hillman some €650,000 through offshore companies and accounts.

The payments were allegedly made to Hillman's offshore company in the British Virgin Islands called Lester Holdings and date back to between 2011 and 2015. Schembri allegedly used companies based in Gibraltar and accounts in Switzerland and the now dearly departed Pilatus Bank to make the payments.

It is believed that the payments are connected to when Schembri's company - Kasco - was awarded a multi-million contract for the supply of Allied Newspapers' brand new printing press.

Both Schembri and Hillman have denied any wrongdoing, and Allied Newspaper - who run the Times of Malta - have said that they had no knowledge of any payments.  Schembri in fact published a 1,400 word defence on Facebook earlier this week when it had become apparent that he was set to be charged  - more on that in a bit.

09:04 - Keith Schembri isn't the only person we are expecting in court today.  In fact, the FCID's offices this morning have been very busy, with a number of people going inside.

We've seen both Matthew Pace - a bit of an explainer on who he is will follow in a bit - and Nexia BT's Karl Cini enter the building in recent minutes, while we're also informed that Nexia BT's Brian Tonna has been inside since around 7:30 this morning.  Neither Pace nor Cini elected to comment to the media as they arrived, as seen in the videos below

Meanwhile, Keith Schembri's wife - Josette Schembri Vella - has also arrived at the FCID, implying that Schembri himself is likely inside there as well.


08:49 - Keith Schembri's lawyers Edward Gatt and Mark Vassallo were coy on the possibility of their client being arraigned today.  They told journalists that they'll have information from police later today before entering the FCID's headquarters in Hamrun.

08:39 - So, what is the exact procedure of what we expect to happen today? The crux is that we are expecting multiple arraignments in court in connection with the Keith Schembri-Adrian Hillman inquiry which was concluded recently.  The first step to this however is that those who are going to face charges will be summoned to the police's Financial Crimes Investigation Department in Hamrun - after that, they will be arraigned in court.

Our videographer Giuseppe Attard is present in Hamrun this morning - we are informed that both Keith Schembri's lawyers Edward Gatt and Mark Vassallo are in the building already, and we have also seen Matthew Pace - the former Planning Authority board member - enter the building in recent minutes.

08:36 - Good morning and thanks for tuning in with us.  We are expecting there to be some significant developments throughout the day and we will be providing continuous updates which you can follow here.

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