Consumables included in an application by Progress Press for financial aid from Malta Enterprise to purchase printing machinery were deemed to be ‘minor expenses,’ and never eligible for funding purposes, a corporation official testified on Thursday.

The recurring issue of ‘consumables’ once again cropped up on Thursday in the ongoing compilation of evidence against Adrian Hillman, former Allied Group managing director, who stands accused of money laundering and other financial crimes, including fraud to the detriment of Progress Press and making a false declaration to a public authority.

Senior Malta Enterprise official George Francalanza gave a step-by-step account of the process that followed the submission of the application for investment aid filed by Progress Press back in July 2013.

He said the idea of a €5.56 million investment in a new printing set-up had first been mooted during an initial meeting between former ME executive chairman Mario Vella and Francalanza together with senior Allied Group officials Hillman and Michel Rizzo.

The discussion revolved around forms of financial assistance available to the company by the state entity.

A business proposal for a €5.56 million plant and machinery project was duly submitted, under the signatures of Hillman and Rizzo.

The proposal was discussed internally and was presented to the ME board, which approved a financial aid package of €1.1 million and a further subsidy on projected loans.

The package was outlined, subject to a list of specified conditions, in a letter of intent.

Progress Press came back with a request for reconsideration, informing ME that the company did not intend to resort to any bank loan and asking whether the value of the loan subsidy could be added to the investment aid already approved in the first letter of intent.

That request landed matters back before the board which, converting the value of the loan subsidy to a five-year loan, decided to increase the grant to €1.6 million, under the same conditions previously specified.

A second letter of intent was issued and the offer was accepted and signed by Progress Press.

Asked specifically about the issue of ‘consumables’ which had featured in the business proposal vetted by ME, Francalanza stated that those were not considered for investment aid purposes.

Consumables represented costs that were not capitalized and were included in a company’s profit and loss accounts, explained the witness, making it clear that investment aid did not cover such costs.

Asked by Magistrate Donatella Frendo Dimech for further clarification, Francalanza said that the unquantified consumables in the Progress Press application were deemed to be “marginal costs” and therefore not flagged by ME.

In any case, any cash claim in respect of such ‘consumables’ would not be upheld by the corporation, the court was told.

An investment grant would cover plant machinery and equipment, land and buildings but not consumables, the ME official explained.

The grant was calculated as a percentage on the value of the business proposal, in line with EU rules which set that percentage at 50%, 40% and 30% for small, medium and large businesses.

Progress Press qualified for a maximum grant equivalent to 40% of the value of its proposed investment, said Francalanza by way of explaining the €1.6 aid granted by ME.

Moreover, the grant would only be given once the investment has been made and certified against invoices and proof of payment, such as receipts and bank transactions.

Facing cross examination by defence lawyer Stefano Filletti, Francalanza did not recall any communication on a general level prior to that first meeting with Hillman and Rizzo.

Earlier in the sitting, prosecuting Inspector Lianne Bonello testified that Hillman had told police that his immovable assets consisted in a Swieqi property co-owned with his wife and four apartments he held as sole owner.

His income in 2019 stood at €30,000 and double that amount the following year.

Asked to explain his source of income in the years preceding 2016, Hillman chose not to answer but insisted that every penny had been scrutinised.

Nor did he answer questions about his involvement in particular companies, in the purchase of printing paper and also on the subject of accounts and credit notes.

Asked if he had personally met Brian Tonna and Karl Cini, Hillman likewise did not reply.

The court also heard various testimonies of representatives of the Public Registry, the MFSA, the Malta Business Registry, the VAT department and the Commissioner for Revenue.

The latter provided details about Hillman’s tax returns and notices of assessment, pointing out that Brian Tonna had been appointed as the tax payer’s registered tax representative.

The case continues in October.

Inspectors Joseph Xerri and Lianne Bonello prosecuted, assisted by AG lawyers Antoine Agius Bonnici, Sean Xerri de Caro and Andrea Zammit.

Lawyers Stefano Filletti and Maurice Meli were defence counsel.