A decision regarding a fresh request for bail for Keith Schembri will be made on Tuesday morning.
Edward Gatt, lawyer to Keith Schembri, put forward his bail submissions during a court hearing on Monday afternoon.
The crux of Gatt's argument is that risks of absconding or tampering of evidence are non-existent. "We shouldn't be worried about accepting or not accepting bail because of what people might say," he told the court.
He said that all four of the accused should be granted bail in this scenario.
"With all due respect, the only reasons I can see them not getting bail is because they are who they are."
Arguing against bail, lawyer Elaine Mercieca Rizzo from the Attorney General's office pointed out that while the crime itself started in 2010, it persisted until at least 2019. The crime involved a wide group of people, including auditing firm Nexia BT and financial services firm MFSP.
Mercieca Rizzo admitted that the prosecution isn't convinced that those who are accused will allow proceedings to go on serenely. She said that other investigations are ongoing, and those investigations don't exclude the possibility of having further arrests and arraignments.
Keith Schembri together with his elderly father Alfio Schembri, a director of several of the Kasco companies, and business partner Malcolm Scerri and financial controller Robert Zammit have been charged on multiple counts of money laundering, fraud, forgery and corruption.
Initially, all men were denied bail and taken to the Corradino Correctional Facility.
They formed part of a group of 11 people charged recently, including a former managing director at Allied Newspapers, publishers of Times of Malta.
During Monday's sitting, Emmanuel Schembri from the Financial Crimes Investigations Department (FCID) also took the witness stand. He formed part of a task force in the department analysing financial statements.
He gave a rundown of various transactions involving BTI Management Ltd. In total, the company held seven bank accounts with BOV and a further six credit cards. Nexia BT directors Brian Tonna, Karl Cini, and Manuel Castagna held a client account which saw 22 transactions amounting to €600,000, including cheques from offshore companies originating from the British Virgin Islands (BVI) and Gibraltar, who's ultimate beneficial owner was Keith Schembri. The offshore companies in question are Colson Services Ltd and Malmos. Some transactions were marked as 'Loft', a Maltese company owned by Schembri's wife.
He also said that Transactions were coming in from MFSP, which has since rebranded to Zenith Finance. The officer presented documents to the magistrate as provided by Zenith.
After listing down a raft of transactions, companies, and natural persons, Emmanuel Schembri's testimony came to a close.
The defence yesterday cross-examined Inspector Anne Marie Xuereb. Xuereb was involved in two magisterial inquiries: one that was heard by Magistrate Natasha Galea Sciberras and another that was presided by Magistrate Josette Demicoli.
Lawyer Mark Vassallo (appearing for the Schembris) asked about Willerby Trading Inc - the BVI company belonging to Brian Tonna. Karl Cini and Manuel Castagna had shares in this company, he said. The inquiry into these offshore structures started due to allegations of kickbacks from the sale of Maltese passports to three Russians. Vassallo questioned why these three Russians were never contacted in relation to these kickbacks. However, Inspector Xuereb mentioned that those three Russians testified in court and said that they didn't know that this money was used for kickbacks. As a result of this, the police felt that there was no need to contact them over the matter.
Defence Lawyer Mark Vassallo asked the Inspector whether Caroline Tonna was approached over the possibility of garnishee orders against her husband Brian Tonna during their marital separation. "From our investigations it was clear that Brian Tonna didn't need to borrow any money for the separation." They were referring to a loan deed between Brian Tonna and Keith Schembri, whereby Schembri loaned €100,000 to Tonna due to financial concerns in this separation period.
What we've learnt from today's sitting:
Inspector Joseph Xerri said that investigations showed that Kasco gained a profit of $5 million when selling machinery to Progress Press. The price tag for machinery was $13 million.
A number of off-shore companies were used to hide commissions received.
In the meantime, it was told, that Brian Tonna was paying back Keith Schembri by salary cuts that were directed to the Willerby account, owned by Karl Cini and Manuel Castagna.
15:58 In the meantime, the magistrate ruled a separate decree, saying that the accused's assets will remain frozen for the time being.
15:54 He concludes. The magistrate will decree on the bail submission tomorrow morning at 8:30am.
15:53 Mercieca Rizzo's submissions come to a close, and Edward Gatt stands up to make a small comment. "The argument is a photocopy of that used against Matthew Pace and Lorraine Falzon in another case," he says, referring to the two directors that we granted bail in a similar court proceeding last week.
15:50 Mercieca Rizzo admits that the prosecution isn't convinced that those accused will allow proceedings to go on serenely. She further added that other investigations are ongoing, and those investigations don't exclude the possibility of having further arrests and arraignments.
15:47 "The worries of the prosecution exist against all four of the accused, not against Keith Schembri alone. I can't be more clear about this," she says.
15:44 Arguing against bail, Mercieca Rizzo points out that while the crime itself started in 2010, it persisted until at least 2019. The crime involved a wide group of people, including auditing firm Nexia BT and financial services firm MFSP.
15:40 His bail submission ends, lawyer Elaine Mercieca Rizzo makes submissions on behalf of the Attorney General's office.
15:34 The crux of Gatt's argument is that risks of absconding or tampering of evidence are non-existent. "We shouldn't be worried about accepting or not accepting bail because of what people might say."
15:27 He says that all four of the accused should be granted bail in this scenario. "With all due respect, the only reasons I can see them not getting bail is because they are who they are."
15:21 The court can only consider whether these men are going to do something wrong, such as tampering of evidence, Gatt remarks. "We're going back to 2010 here. Realistically, is it normal for our court not to offer bail in such a situation? One shouldn't deny bail just because he's Keith Schembri."
15:17 "I appeal that when one deliberates whether or not to accept bail, one must see only that evidence they have so far and the way the procedures have been going ahead. There are a lot of people who can't stand Keith Schembri, and those who love him - but we're not concerned with this," Gatt says.
15:12 We are back in the courtroom - lawyer Edward Gatt is making his oral submissions requesting bail for his client.
15:03 The testimony will continue behind closed doors for the time being. Journalists have been asked to exit the courtroom.
15:02 Vassallo makes another point about an audit carried out by PwC. The police official admits that the audit was not investigated. According to Vassallo, PwC was tasked to audit the tendering process, and mentions that Harbinson Forensics was a partner.
14:51 The price of the printing equipment purchased by Progress Press was described as inflated - but Vassallo questions how an "inflated price" was still significantly cheaper than the equipment that was being offered by competing bidders.
14:48 Xerri describes how the Times of Malta, owned by Allied Newspapers, had decided to move their offices from Valletta to Mrieħel and acquire printing equipment. Vassallo asks him to confirm that the company had been speaking to several bidders to purchase a printing press. Xerri confirms this, and that the bidders had a relatively level playing field.
14:45 "Did you speak to anyone from Progress Press and Allied on this case?" Vassallo asks.
"We took action based on testimonies in the magisterial inquiry," Xerri says.
No one from the FCID seems to have contacted shareholders or members of management from Progress Press or Allied Newspapers in relation to this case. "Did you not contact the victim, let's call them the victim, in all this?"
"The victim testified during the magisterial inquiry."
14:41 The parties return to their seats, and Joseph Xerri's cross-examination begins.
14:39 Inspector Anne Marie Xuereb steps away from the podium - her testimony ends. We move on to the next witness of the day - Joseph Xerri. Before his testimony begins, Elaine Mercieca Rizzo asks to bring something to the attention of the court. She, together with Edward Gatt and Mark Vassallo, have gathered around the magistrate to discuss something privately.
14:33 "We don't believe this 'loan' was in fact a loan, but we never said it was a kickback either," the Inspector says.
14:30 Vassallo is is being particularly forceful in his questioning. He asked the Inspector whether Caroline Tonna was approached over the possibility of garnishee orders against her husband Brian Tonna during their marital separation. "From our investigations it was clear that Brian Tonna didn't need to borrow any money for the separation." They are referring to a loan deed between Brian Tonna and Keith Schembri, whereby Schembri loaned €100,000 to Tonna due to financial concerns in this separation period.
14:20 Lawyer Mark Vassallo asks about Willerby Trading Inc - the BVI company belonging to Brian Tonna. Karl Cini and Manuel Castagna had shares in this company. The inquiry into these offshore structures started due to allegations of kickbacks from the sale of Maltese passports to three Russians. Vassallo questions why these three Russians were never contacted in relation to these kickbacks. However, Inspector Xuereb mentioned that those three Russians testified in court and said that they didn't know that this money was used for kickbacks. As a result of this, the police felt that there was no need to contact them over the matter.
14:15 The defence will now be cross-examining Inspector Anne Marie Xuereb. Xuereb was involved in two magisterial inquiries: one that was heard by Magistrate Natasha Galea Sciberras and another that was presided by Magistrate Josette Demicoli.
14:12 Another police officer, Marco Pisani, takes the stand. He describes how last September, Pisani together with other colleagues conducted a search on Keith Schembri's Mellieha residence. Once the search was over, other searches were carried out at CT designs in Bormla and at the Kasco offices in Bulebel. Several items were seized and passed on to Inspector Anne Marie Xuereb. He says that Keith Schembri cooperated all throughout. Marco Pisani's testimony ends there.
14:09 According to the police constable, €11,300 worth of cash was elevated from the house. Scerri confirms that Alfio Schembri did not resist any arrests or seizures, and cooperated with the police throughout the operation. He listed the items seized, and steps off the podium.
14:06 Next to the stand is Nathaniel Scerri, a police official who was also present for the arrest of Alfio Schembri. He too is describing the arrest to the court.
14:04 Inspector Farrugia is listing a variety of items seized during the arrest, including seven mobile phones, a laptop, and a document relating to one of Alfio Schembri's companies. Some cash was also elevated from a safe within the house. Lawyer Mark Vassallo asks him a few technical question, relating to from where the items were seized and the location of Alfio Schembri's house, and his testimony comes to a close.
13:58 After listing down a raft of transactions, companies, and natural persons, Emmanuel Schembri's testimony comes to a close - he will not be cross-examined by the defence. Inspector Tonjoe Farrugia takes to the podium next - he is describing the arrest of Alfio Schembri.
13:52 Transactions were also coming in from MFSP, which has since rebranded to Zenith Finance. The officer presented documents to the magistrate as provided by Zenith.
13:51 The offshore companies in question are Colson Services Ltd and Malmos. Some transactions were marked as 'Loft', a Maltese company owned by Schembri's wife.
13:48 Emmanuel Schembri is giving a run down of various transactions involving BTI Management Ltd. In total, the company held seven bank accounts with BOV and a further six credit cards. Nexia BT directors Brian Tonna, Karl Cini, and Manuel Castagna held a client account which saw 22 transactions amounting to €600,000, including cheques from offshore companies originating from the British Virgin Islands (BVI) and Gibraltar, who's ultimate beneficial owner was Keith Schembri.
13:33 Emmanuel Schembri from the Financial Crimes Investigations Department (FCID) takes to the witness stand. He formed part of a task force in the department analysing financial statements. He will first be cross-examined by the Attorney General's office.
13:29 And we've started: the Magistrate Donatella Frendo Dimech has emerged from the chamber.
13:29 Keith Schembri, Alfio Schembri and Malcolm Scerri have entered the courtroom. Keith Schembri and his business partner Malcolm can be seen discussing something with their lawyers. Robert Zammit has also entered the dock.
13:18 The primary accusation against Schembri is corruption in the private sector relating to Allied Newspapers and Progress Press. This is the predicate offence - the crime is a component of a larger crime, being money laundering in this case.
13:18 So far, all the key courtroom players are present in the courtroom, bar the accused and the magistrate. Lawyers Edward Gatt, Mark Vassallo, and Ishmael Psaila are defence counsel for the accused, while lawyer Elaine Mercieca Rizzo is leading the prosecution from the office of the Attorney General.
13:08 A quick refresher on why we're here: Schembri was arraigned in court on 20 March on charges of corruption, false testimony, and forgery. He was arraigned with his father Alfio Schembri, business partner Malcolm Scerri, and financial controller Robert Zammit.
13:05 Good afternoon. We are live from Hall 22 today for the compilation of evidence against ex-OPM chief of staff Keith Schembri.