The Malta Independent 19 April 2021, Monday

Former Allied Group managing director Vince Buhagiar formally indicted on money laundering charges

Friday, 26 March 2021, 13:41 Last update: about 23 days ago

Progress Press suffered a loss of €5.5 million as a result of inflated prices agreed by two of its directors for new printing machines bought from Kasco Technical Services.

Vince Buhagiar, who was chairman of Progress Press, and Adrian Hillman, managing director of Allied Group, had negotiated the deal for the new Mrieħel printing press with Kasco’s directors Keith Schembri and Malcolm Scerri.

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Testifying in the compilation of evidence against Buhagiar, Inspector Joseph Xerri said that Buhagiar and Hillman conspired to defraud the company that employed them.

The inflated price left Kasco with a profit that was shared between Buhagiar, Hillman, Schembri and Scerri.

“In the forensic audit expert's opinion, the commissions paid were disguised bribery payments,” the inspector testified, in relation to the information gathered by the magisterial inquiry.

The case revolves around allegations that Schembri paid Hillman up to €650,000 during that same period through offshore accounts.

Hillman, who is in the UK, has so far not been charged.

The inspector said that Buhagiar claimed the payments he received from Kasco in his investment account held at MFSP were for consultancy services. However, Buhagiar never produced an invoice for this consultancy work, unlike the invoices he produced for consultancy services he gave Allied Newspapers.

Buhagiar’s defence lawyer, Veronique Dalli, argued that her client had a gentleman’s agreement with Kasco, while Allied would not pay a cent unless the company received an invoice. She insisted that every entry in Buhagiar’s account was declared to the taxman and fiscal authorities.

Dalli also asked the inspector to confirm that Kasco’s bid for the printing machine tender issued by the Allied Group was chosen after a competitive process that also involved an audit firm.

At the end of the sitting, the court ruled there was enough prima facie evidence for a bill of indictment to be issued against Buhagiar.

Buhagiar was arraigned last week along with 10 other people, including former OPM chief of staff Keith Schembri, on charges of money laundering, fraud and forgery.

The compilation of evidence against Schembri and his associates from the Kasco Group was held earlier today. The court yesterday heard submissions on charges filed against Nexia BT's managing partners and the owners of Zenith Finance.

The case concerning Buhagiar involved allegations that Schembri conspired with Buhagiar and another Allied Group managing director, Adrian Hillman, to cream off thousands from a deal through which Progress Press bought printing machinery from Kasco. Progress Press is part of the Allied Group, which also published the Times of Malta newspaper.

The case is being heard in front of Magistrate Donatella Frendo Dimech.

14:46 That's it for today. Thank you for following. A summary of proceedings will appear shortly.

14:41 The magistrate ruled there was enough prima facie evidence for the Attorney General to issue a Bill of indictment against Buhagiar.

14:40 The case will continue on 27 April at 12:15pm.

14:34 Dalli had filed an application asking what bank account Buhagiar can withdraw his pension from, as there is a freezing order. The court is needed to re-authorise the withdrawal of the amount allowed by law. "It's more administrative than anything," she says.

14:32 The defence will not contest prima facie, says Dalli. The court thanked her for her loyalty to the cause of justice.

14:29 Dalli says she needs it to prepare Buhagiar's defence.

14:28 AG lawyer Elaine Mercieca Rizzo says that she wants another sitting to present the inquiry findings after Easter.

14:28 The inspector says that there was no record of this with JobsPlus. A JobsPlus representative will testify about this at a later stage, he adds. The inspector's evidence is suspended.

14:27 Dalli asks whether her client was ever asked to issue an invoice. "He was not," the witness replies. Dallis says that Buhagiar had a gentleman's agreement with Schembri but Allied Newspapers would not pay out a cent without having an invoice.

14:25 He adds that Buhagiar was involved in the agreement on the prices. "Buhagiar is here today because he was involved in consultancies for Kasco Technical and never issued an invoice but then worked with Allied and issued invoices," the inspector says.

14:21 The inspector confirms that Buhagiar was not the author of the invoices presented to customs.

14:21 Xerri: "We agree."

14:20 Dalli: "Do we agree that every entry in Buhagiar's account was declared to the taxman and fiscal authorities?"

14:20 Inspector Joseph Xerri: "Yes."

14:19 Dalli: "When you say Buhagiar was negotiating with companies, do we agree that there was a tendering process and the board would select?"

14:18 She asks about the GWS machine. A tender had been issued by the company, she points out. "The three bids were evaluated by Progress Press's directors," replies the witness, adding that an audit firm was also involved. In previous testimony we learnt the audit firm was PWC.

14:17 Defence lawyer Veronique Dalli stands up to conduct her cross-examination.

14:17 Xerri: "€5.5 million. The prices were inflated. The GWS machine was bought for €8 million from the US supplier and sold to progress at a €5 million mark-up."

14:15 The witness finishes testifying. Lawyer Joe Giglio, who is representing the Allied Group as parte civile, stands up to ask a question. "How much was the actual loss suffered by Progress Press as a result of the actions?"

14:14 Hillman received over a million in total. Both he and Buhagiar had made unexplained large deposits in banks. "It's a clear case of bribery to buy machines from Kasco," the inspector tells the court. Malmos, an offshore company held by Schembri, had paid Hillman through a number of transactions, which could not be explained by Matthew Pace of MFSP. Pace was granted bail earlier today.

14:07 Inspector Xerri says that Hillman and Buhagiar were working against the interests of the company. "A complex web of inter-related transactions had been uncovered. They all received in their own names, a number of payments in offshore companies," he says.

14:03 Progress Press paid $3.3 million for a second machine in 2009, which Schembri bought for $2 million. Hillman's offshore company Lester Holdings received $125,000 from one of Schembri's offshore firms, Malmos. The inspector continues dishing out details that have already been heard in court in the previous case against Schembri.

13:58 Buhagiar provided consultancy services to Progress Press until 2015. Matthew Pace was the relationship manager handling Buhagiar's investment account at MFSP, now Zenith Finance.

13:57 The value declared to customs for the machinery was some €2 million and the final amount paid by Progress Press was €3 million due to delays. The inspector is reading through the same evidence he had testified earlier, at great speed.

13:56 The inspector says that Malta Enterprise, a government entity, had approved a loan interest subsidy to Progress Press on a loan of €9.8 million signed by Adrian Hillman and Vince Buhagiar.

13:50 Progress Press bought the machinery for $18.5 million, which was paid over the years as per contract.

13:46 The inspector goes through information that has already been presented in the previous sitting.

13:46 Kasco was due to make $5.2 million profit from the deal. The profit was split between Keith Schembri, owner of the Kasco Group, former Allied managing director Adrian Hilman, Vince Buhagiar and Malcolm Scerri, a business partner in Kasco.

13:43 Vincent Buhagiar had worked with Allied for 40 years and had reached the chairmanship of the board of Progress Press. It emerged that in 2007 a decision to move to a new building was made and a private tender was issued. In August 2007 three bidders took part, including Kasco. The GWS model machine was being used to print the Financial Times and it was selected for Malta. The machine arrived in Malta in 2010.

13:40 Inspector Joseph Xerri takes the stand and gives an overview of what led to the man's arrest. He tells the story we already heard this morning about the magisterial inquiry leading to Saturday's arrests. He says that Allied Group directors Austin Bencini and Michel Rizzo, today's managing director, were spoken to as well throughout the course of the investigation.

13:37 A knock on the door and the magistrate enters. We are back in session. Lawyers Veronique Dalli and Dean Hili are representing Vince Buhagiar. Lawyer Joe Giglio appears parte civile for Progress Press.

13:24 We are waiting for the compilation of evidence against former Allied Group managing director Vince Buhagiar to start. Buhagiar was the only one to be granted bail last week when 11 people were arraigned on various money laundering, fraud and forgery charges.

13:23 Good afternoon.

 

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