The Malta Independent 18 July 2024, Thursday
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Lawyers demand explanation for gargantuan Vitals-related freezing orders

Friday, 21 June 2024, 11:02 Last update: about 26 days ago

Defence lawyers representing a number of defendants accused of fraud and misappropriation in relation to the fraudulent hospitals concession have demanded prosecutors provide an evidential basis for the multi-million euro freezing orders imposed at their request, urging the court not to allow itself to be reduced to “a rubber stamp” in that regard.

Former Deputy Prime Minister Chris Fearne, Central Bank Governor Edward Scicluna, and 13 others, amongst them former and current permanent secretaries and lawyers, are facing charges relating to fraud arising from the concession of public hospitals to Vitals Global Healthcare. Fearne and Scicluna face additional charges of misappropriation and fraudulent gain. Other defendants are charged with money laundering.

Charged alongside Fearne and Scicluna are former permanent secretaries Alfred Camilleri and Joseph Rapa, current permanent secretary Ronald Mizzi, adjudication committee members James Camenzuli, Manuel Castagna, and Robert Borg, financial controller Kenneth Deguara, and five lawyers: Kevin Deguara, Jean Carl Farrugia, Aron Mifsud Bonnici, Deborah Anne Chappell, and Bradley Gatt.

The 15 defendants are charged with fraud, with Fearne and Scicluna being additionally accused of misappropriation and making fraudulent gain by abusing their position. Money laundering is also amongst the charges facing other defendants.

Magistrate Leonard Caruana heard three witnesses today: Deborah Farrugia, Secretary to the Chamber of Advocates and Legal Procurators, who gave evidence about the registration status of law firm DF Advocates; Franklin Calleja, Registrar of Criminal Courts, provided digital copies of the Vitals inquiry and discussed the handling of evidence; and Former FCID Inspector Anthony Xerri testified about the police's role in seizing evidence during the inquiry.

Xerri, who had since left the police force, was unable to recall certain aspects of the investigation and will testify again at a later stage after the court upheld a request to grant him access to the relevant parts of the inquiry in order to refresh his memory.

Perhaps the most striking thing which emerged from today’s sitting was the prosecution’s reluctance or inability to explain the calculation process which had resulted in the outsize amounts seized by the freezing orders it had requested.

The defence lawyers contested the €20 million and €40 million freezing orders issued against the defendants, questioning the justification and calculation of these amounts.
The prosecution argued that the law did not demand detailed evidence to justify the freezing orders, citing the relevant legal provisions. 

“So a prosecutor in the Republic of Malta, in 2024 is objecting to being asked to justify a freezing order.” observed lawyer Franco Debono, telling the court that the law placed an obligation on the prosecution to substantiate the amounts frozen

Lawyer Stefano Filletti added that the law required that “reasonable cause” be shown before such an order could be issued, otherwise the court’s role would have been reduced to that of “a rubber stamp.”

“Before the law would seize everything you had. Today it can seize that and can also seize more than you have,” Filletti said. 

“Before they confirmed those orders on oath, I surmise that they were certain of the figures,” argued the lawyer, pointing out that the figure of €40 million frozen from Deborah Chappel did not emerge from the inquiry, adding that Chappell certainly didn’t have it in her bank account, either.

“One presumes that this exercise has already been done,” said the lawyer, but observed a “total reluctance on the part of the prosecution to explain how they had reached that figure.”
Debono submits that the UK’s 2002 Proceeds of Crime Act, which is the basis for recent amendments to the equivalent legislation in Malta, requires “a detailed examination of the material put before it,” and that the court must find reasonable cause.

“A freezing order for €20 million, €40 million here…I expect the prosecution to come here and provide evidence to support those amounts, that we are allowed to question it and the court examines it.”

Lawyer Franco Galea added that case law had established that the higher the amount of money to be seized, the greater the burden of proof on the requesting party.

 

 

14:14 The sitting is over, adjourned to 26 June.

14:13 Refalo dictates a note stating that all the persons earmarked for prosecution by the magisterial inquiry “have already been charged in court, either in today’s proceedings, or other proceedings, or are to be charged in future proceedings.” 

14:13 Debono: “The prosecution is saying ‘We filed a freezing order for €20 million. We are saying there is reasonable cause and that the court must figure out how we got there, itself’.” The court would be abdicating from its responsibilities if it acquiesced, argued the lawyer. 

14:08 Nobody could understand where the freezing order amounts came from, argued the lawyer

“The prosecution and the police had much more in their possession, when they told the court they had no more, because today we know that they had not only the report of the inquiry report, but also the entire proces verbal. Why hide all this? To hide that there was no reasonable cause?” 

14:08 The court must decide that the request is just and justified by a reasonable cause, argues the lawyer. “Today we can just throw out a number… reasonable cause must be given and be supported with evidence and the defence must be allowed to question it.” 

14:06 Filletti adds that although the law does not speak of reasons for freezing orders, this is only if it is taken literally. “Have we forgotten the principles of natural justice we were taught at university? … But even if they interpret it literally, how can you establish ‘reasonable cause’ without evidence?” 

14:03 Debono: “The bottom line is that the prosecution is requesting freezing orders of €20 million and is resisting requests to explain why. This is Malta in 2024. This is the grave situation we are in.” 

14:01 Reasonable cause means on a balance of probability, but this requires evidence. “We are saying: you have 72 boxes of evidence, please indicate to us, which one has the justification for your request. What are you doing here? Did they come here expecting to throw million euro freezing orders around on their say-so?... The prosecution must substantiate their requests with specific evidence, not argue that they don’t need evidence!”

14:00 The defence is objecting because the amounts in the freezing order are substantial, said the prosecutor, which had been established by the inquiry.

Debono counter-argues, saying that in his 24 years in these courts, the fundamental principle is that “this is the court of evidence.” It is the first thing explained to jurors, he says. The prosecution’s request was “a subtle attempt to undermine this rule”. They could have gone about it differently, the defence had suggested alternatives, but insisted on going down this route, he says.

13:59 Prosecutor Spiteri cites articles of the law, which she says show that the prosecution is not obliged to justify the amounts. It is evident that if the court decides to examine the evidence, it would be substituting the law with its discretion. The law doesn’t want this, she says. “The law speaks of reasonable cause, not evidence,” argues the lawyer.

13:49 “Lord forbid the court has to succumb to every request from the prosecution. The courts are a shield to protect the public…Otherwise the court would not be a court at all, but a rubber stamp,” Galea concludes. 

13:47 Franco Galea adds that the prosecution had submitted that there was nothing in the law requiring it to justify, however even in garnishee orders, the law doesn’t require it either. Previously the courts would wash their hands of responsibility but today civil courts are insisting on evidence to show how the amounts were reached. “Our jurisprudence says that the higher the amount to be seized, the greater the burden of proof on the requesting party.” 

13:46 “This is a freezing order for €20 million, €40 million… I expect the prosecution to come here and provide evidence to support those amounts, that we are allowed to question it and the court examines it.”

Sometimes the freezing order leaves harsher and more irremediable consequences than the sentence handed down on the merits. 

13:45 The €40 million didn’t emerge from the inquiry, he said and Chappell certainly didn’t have it. “One presumes that this exercise has already been done,” said the lawyer, but observed a “total reluctance on the part of the prosecution to explain how they had reached that figure.” 

13:45 Previously freezing orders would freeze everything, with inheritance, salary and everything. It is almost better to have the old system, said the lawyer. “Before the law would seize everything you had. Today it seizes that and can seize more.” Today the AG can decide to slap a €40 million freezing order, like she did to Deborah Chappell and refuse to subject it to scrutiny.
“Before they confirmed those orders on oath, I surmise that they were certain of the figures.” 

13:44 “So a prosecutor in the Republic of Malta in 2024 is objecting when asked to justify a freezing order,” Franco Debono remarks. The law placed an obligation on the prosecution to substantiate the amounts, he said. “This could happen to anybody! Today it is these defendants, but tomorrow it could be anybody… so that everybody will know.” 

13:43 The lawyers for the defendants struck by freezing orders reserve the right to call a prosecutor to the stand to testify about the requested freezing orders. Rebekah Spiteri submits that the law doesn’t require evidence to support a freezing order. 

13:43 The sitting after that will be held on 2 July at 11am for the freezing order, 412A and any witnesses. After that, a hearing will take place on 10 July at 9:30am. 

13:42 The court adjourns the case to June 27 at 10:30am. This will be a brief sitting for the defence to declare who it will be bringing as witnesses and for the prosecution to declare what witnesses it intended to bring for prima facie. Superintendent Rennie Stivala and Inspectors Xerri and Wayne Rodney Borg will testify then. 

13:42 Tonna Lowell points out that in the other Vitals-related case, the prosecution had declared to the court that it would not be bringing new witnesses. The defence lawyers say they are unable to foresee whether they would be contesting prima facie before they see the inquiry.

13:21 Tonna Lowell informs the court that he envisages the need to call a substantial amount of witnesses, but would not be able to give a number today. The court clarifies that it would never limit the defence’s witnesses, but needed to structure his diary for the coming sittings. 

13:21 Magistrate Caruana returns to the courtroom. He informs the parties that the court had written to the President to request an extension, known as a “proroga,” which should alleviate the extreme time pressure in this case.

He asks what witnesses the defence wished to bring. Debono says that the defence will be calling at least two witnesses, but also wants whoever signed the freezing order to testify about it. “We are talking about millions of euros. It cannot be done lightly.” 

13:01 The sitting is suspended for 15 minutes. 

13:01 No more witnesses today. The court suggests a 15 minute break, but Debono reminds the magistrate that today’s sitting was supposed to end at 1:30pm. The defence intended to file a 21 page note in reply about the freezing order, says the lawyer. The law is new and there is a lot to say, he tells the court.

“The law says that in order to issue a €20 million freezing order you must have reason to believe, which is not the same as reasonable suspicion…. we are saying that the prosecution took an oath on a €20 million freezing order,” says the lawyer, arguing that now that the prosecution had decided to take that course of action, it had to be in a position to justify it.

12:51 Prosecutor Francesco Refalo says he would not be objecting, as the request is only for access to the file in the presence of the police, but said that he would object should the defence request the file be brought to court.

Lawyer Arthur Azzopardi appearing for Robert Borg, asks the court to instruct the witness to ascertain the date when the devices were seized, to establish which came first: the keywords or the devices.

The witness confidently replies that "the list came first". 

 

 

12:50 Lawyer Franco Galea asks about the keywords. It would not be “fraud” or “corruption” but they were names of people and companies. He asks whether the court gave them to him by decree, but Xerri replies that it wasn’t the case. He explained that the coordinator for the group of foreign experts would communicate with him.

Lawyer Joe Mizzi asks the court to grant the witness access to the police file he had mentioned in his own testimony, in order to refresh his memory before his next court appointment.

12:47 Xerri confirms that he knows who Ronald Mizzi is. The lawyer asks why he was present during testimony if he had no investigative responsibility in this case. “Did you ask the Commissioner whether there was any scope of investigating?”

Xerri replies that he had joined the investigation two years after it started and that the discussion would have been made before then. In reply to another question from Filletti, Xerri confirms that the Commissioner had never instructed him to investigate.

12:43 “Did you see the police file before today?” asks the lawyer.

“Before I left the police force, I made a formal request for the files I had prosecuted. This was never upheld.” He explains that he had asked for them because he would still have to testify about them. 

12:41 The lawyer suggests that the company subject to the search warrant was never prosecuted. “I don’t know what was prosecuted as I am no longer in the force but the company is DF consultancy…”

Filletti asks about Ronald Mizzi’s summons and establishes that Mizzi had been summoned as a witness, not a suspect.

12:40 Mizzi asks the court to permit that the witness be shown the relevant police file to refresh his memory, but Refalo objects.

Franco Debono asks the witness whether inspector Shaun Frendo had also been involved. He might have been, Xerri replies.

12:38 Xerri confirms that Chappell had testified during the inquiry. “Did you not feel duty bound to stop an illegality from taking place in your presence?”

The magistrate points out that the witness had said he doesn’t remember.

“Then why didn’t he prepare himself beforehand?” says Mizzi angrily. “The only witness who can testify about this comes here and says he doesn’t remember.” 

12:35 Mizzi confronts the witness with the fact that Chappell is a lawyer and had expressed discomfort in replying to questions covered by professional privilege. “Did you not feel the need to warn her at that point that she was a suspect, in order to release her from the obligation of professional secrecy?”

“First of all I don’t remember talking to her.” 

12:34 Mizzi asks why documents and devices were seized from people who are not suspects.

“Because the inquiring magistrate instructed us. The orders were clear: to retrieve the items, hand them over the experts. I never had access to their contents.”

“The police had no instructions or grounds to analyse [the devices]...” he says, adding that the warrant would simply order him to conduct a search. 

12:32 Mizzi now turns to the search conducted at Malta Enterprise. The witness confirms that he had been present. Asked whether he had requested documents and mobile phones relating to Chappell, he said he could not recall, but said it was possible.

The lawyer refers to Chappell’s testimony the following month. “Am I correct to say that at that point, Deborah Chappell was a suspect?”

“No, we did not have suspects.” 

12:25 He denies being involved in the search on DF Consultancy Services. Repeating his previous statement, the warrant was handed to him by the magistrate and he then delegated to his officers.

“Was there a particular list of names indicated by the inquiring magistrate to look for during the searches?” the lawyer asks.

The foreign experts would indicate the names, replies the witness, adding that he is unable to recall whether Chappell’s name was one of them. 

12:24 Mizzi asks whether he would have acted differently had he been told that Chappell was a suspect. Witness cannot recall whether he had been present for her questioning.

Usually a police inspector, the magistrate and the foreign experts would be present during her deposition to the magistrate.

“My role [during testimony] was nothing more than asking questions to clarify points that I wouldn’t have understood, in preparation for probable questions in subsequent proceedings.” 

12:24 Mizzi asks whether Chappell was not given the usual rights afforded to suspects before being spoken to. “As I said before in other proceedings, I don’t remember.”

“Can you check?”

“No.”

The records of questioning sessions would be held by the police, he says, but he was no longer in the force. 

12:23 Lawyer Giannella De Marco asks the witness whether he would be accompanied by inquiry experts during the searches, who would tell him what items to seize. He confirms this.

Lawyer Joseph Mizzi asks whether he had discussed Deborah Chappell. The name vaguely rang a bell, said the inspector. Asked whether he had been told that Chappell was a suspect, the witness replies that he was never told who was considered a suspect.

12:14 Galea asks whether his client Bradley Gatt had featured in the search requests. "I don't even know who he is," replies the former inspector.

12:14 “Do you know that DF Consultancy Services does not feature in the charges at all?” Franco Debono says, asking who had asked for it. “Do you know what you were looking for? This company has absolutely nothing to do with this case.”

“I was not involved in that process,” replied the witness, adding that he was not involved in that search. He explains that his superior, Superintendent James Grech, had decided that four searches were to be carried out on the same day

12:07 Franco Debono asks about the search warrant for DF Consultancy Services Ltd. The witness says he had not been involved in that search. The warrant had originally been handed to him by the magistrate and he had delegated it to another inspector. “From memory they were George Frendo and Shaun Friggieri, but I don’t remember which one of them carried it out.”

12:04 Refalo asks the inspector what analysis the police would carry out on the documents it was ordered to seize by the inquiring magistrate.

None, replies the witness. The police’s work was to seize the evidence indicated by the magistrate and place them in evidence. The inspector said that he had no access to the evidence seized after that.

11:59 Former FCID Inspector Anthony Xerri is called to the stand. Refalo asks him to explain his role in the magisterial inquiry. The same witness already gave another court this account on oath earlier this week.

11:58 “I appreciate what my colleague is saying, but it would be wise to first allow the court and the parties to actually see the documents themselves,” Tonna Lowell said.

The court upholds the request, in deference to the principle of equality of arms. The magistrate reserves the right to decree on the confirmation or otherwise of the inquiry experts. 

11:57 Refalo, after ascertaining that the defence was not making any requests, reserved the prosecution’s right to reply at a later stage. Galea asks the court not to rule on this request for the time being, because he had only received his copy of the inquiry at the start of this sitting and would like to prepare.

In his reply, Refalo points out that the experts had been appointed in terms of section 550 of the Criminal Code and is therefore valid. The prosecution reserves its right to reply to the defence’s objection at the opportune stage. 

11:50 It was not an expert’s competence to give an opinion on whether a crime was committed, he says. That was the sole discretion of the courts. Experts are appointed to analyse objective evidence within their area of expertise. “If the court needs an expert to interpret whether a crime was committed, what is it there for?” says the lawyer.

“The defence, jointly, objects to and reserves its position on, the appointment of all of the experts in the magisterial inquiry for several reasons. But in view of the stage of these proceedings, this issue will be raised at the opportune moment. This note is intended to indicate the position of the defence in a timely and immediate manner.” 

11:50 The court confirms the experts nominated in the inquiry. Stephen Tonna Lowell submits that the nominations are irregular and ultra vires and asks the court to “have a little look at them” before confirming the nomination.

Filletti amplifies: “The wording of the appointment, as seen by us and published in the newspapers, shows that these accountants and financial analysts who are not lawyers, were asked to identify every crime or illegal activity that they saw. This means that you have a foreign, non-legal person, interpreting the Criminal Code.”

11:43 Lawyer Franco Galea says that the law doesn’t say that this law is somehow precluded from deciding on the admissibility of the evidence before it. “The court is not a rubber stamp or a tape recorder that must accept everything presented before it.” 

11:43 Prosecutor Francesco Refalo replies that at this stage the court doesn’t rule on the admissibility of evidence and makes reference to the law regulating access to the magisterial inquiry and its exhibition in the acts of criminal cases. The prosecution reserved the right to reply should a position be taken in this regard by the defence. 

11:42 Lawyer Stefano Filletti, on behalf of the entire defence team, reserves the right to object to the admissibility of the entire inquiry and evidence, at the opportune moment. Prosecutor Francesco Refalo replies that, at this stage, the court doesn’t rule on the admissibility of evidence and makes reference to the law regulating access to the magisterial inquiry and its exhibition in the acts of criminal cases. The prosecution reserved the right to reply should a position be taken in this regard by the defence. 

11:36 Before letting Calleja go, the court instructs him to verify whether any further acts had been filed in the inquiry after the proces verbal was sent to the police.

The defence tells the court that it was exempting him from having to print the inquiry in view of the massive volume of documents which form part of it. The court authorises the parties to access the contents of the devices which had been formally exhibited, as required. 

11:36 Lawyer Franco Vassallo asks whether the devices exhibited during the inquiry are included. The witness says that, to his knowledge, they were. “I cannot come here and not exhibit what is in my possession.”

Franco Debono asks how the inquiry experts had been paid. The prosecution questions the relevance of this question. Calleja says this should also emerge from the acts of the inquiry and the court agrees. 

11:30 Lawyer Michael Sciriha asks whether, after the proces verbal had been delivered to the police, they had sent anything back to the magistrate. The witness says there are no records of this and asks for clarification.

“At one point the magistrate concluded the inquiry and sent it to the police. After that was there any communications between the recipient and the magistrate who sent it?”

The witness says he will look for any records of notes being registered, but says he does not have access to their contents. 

11:25 The parties have access to it he says, adding that the data exhibited that forms part of the inquiry had also been printed. The laptops and device extractions are on hard drives exhibited in the acts, but Calleja said he did not have the technical knowledge to make copies of them. Magistrate Rachel Montebello has appointed an expert to do so, he says. 

11:24 Debono asks the court to inspect the document itself, after which it is shown to the lawyers. Lawyer Giannella De Marco asks whether it contains the evidence or just the proces verbal. The witness replies that it has everything. 

11:22 The next witness is Registrar of Criminal Courts and Tribunals Franklin Calleja. He exhibits a digital copy of the documents from the Vitals inquiry.

The registrar tells the court that he consulted with the registrar for Magistrate Gabriella Vella and confirmed that a hard copy and a soft copy of the proces verbal had been handed to the Commissioner of Police, in April. 

11:18 Debono is getting worked up now. “I’m sorry to say, but we’re stretching the point here. Does the law mention temporary registration anywhere?”

The court responds: “She is not the right person to answer.”

Witness suggests the other members of the committee are in a better position to answer the questions.

11:18 The court says it understands that this means there is a temporary registration, but Debono asks where this emerges from the law. “Did it fall from heaven just now?”

“Once they go through all the law firms, and see that they are all compliant, they will put them online. But this is a task being done by someone else,” the witness says. 

11:17 Debono asks whether DF Advocates is today a registered law firm. The court also asks what the firm’s status is. Is it registered or is it an applicant?

“I can’t say. What I can say is that it has applied and that there is a register.” 

11:17 The witness says there is a list but it is not final. When the process is finished it will be published online.

“So to date no law firms are registered?” the prosecutor asks.

Those who have applied are in this list, this excel sheet, and are being processed, the witness says. 

11:16 “We have an excel sheet with a list of applicants. But now we are carrying out the vetting process.”

Spiteri points out that the witness repeatedly mentioned registration, which implies that there is a list of registered law firms.

11:09 The volume of applications meant that another assistant had to be hired to assist the two individuals who are compiling the data, explains the witness.

Prosecutor Rebekah Spiteri points out the date of the email is April 2022 and suggests that if not registered, applicants would not be allowed to practise law. “I’m not here to interpret the law,” says the witness. The court agrees.

The April 2022 date emerges from the law, as the law gives law firms a year to register, explains the witness.

11:07 Debono asks whether the nature of this information will be accessible to everyone or whether it is confidential. “It is not within my competence to say so,” replies the witness, explaining that she was testifying with the permission of lawyer Stefan Camilleri and Karl Briffa, who are members of the committee. 

11:07 Debono repeatedly insists that it is not the registration of a law firm. “What is the difficulty to say unequivocally that this is not a registration of a law firm?”

The witness responds: “I have already said so several times.” The document is not the final one in the procedure, the witness replies to a question from the court. 

11:06 The magistrate clarifies. If an application is approved and ticks all the boxes, upon registration is any document or certificate issued?

“I don’t think I’m the qualified person to say, but eventually this information will be online when there is a final list.” 

11:04 She says she had replied to that email and sent the requested information. Every lawyer and legal procurator has to register with the Committee, she said.

Debono insists that this is not the actual application. He says there is a process which then follows, before the professional is registered.

He suggests that from the application form it does not emerge that DF Advocates is registered as a law firm.

10:55 Franco Debono shows her a document and asks whether she had ever seen it before.

“I received an emailed request from Inspector Wayne Rodney Borg, in which he asked for information.” It is not clear what the information was at this stage.
In an attachment to the email there was a letter urgently requesting the registration information relating to DF advocates as provided to the Chamber. 

10:52 First witness is Deborah Farrugia, secretary to the Chamber of Advocates and Legal Procurators, a subcommittee of the Committee for the Administration of Justice. She has been called to the stand at the request of the defence. 

10:52 Good morning everyone.

 

 

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