The biggest and most complex court case of the year, so far, continued on Thursday as Joseph Muscat and another 13 individuals face corruption charges in connection with the Vitals hospitals deal.
The prosecution argued that numerous transactions related to the hospital project revealed a fraudulent scheme. Based on experts' advice, the magisterial inquiry recommended action against the accused without requiring further police investigation.
The first part of the sitting revolved around the cyclotron project, which was meant to assist cancer patients.
Defence lawyers insisted that the cyclotron project was done, contradicting inquiry conclusions. But other witnesses said that the equipment is still in boxes.
Once again, at least one defence lawyer hit out at the prosecution for failing to question their clients before dragging them to court.
Sitting over
1.45pm Today's sitting is over.
The compilation of evidence will continue on Tuesday, June 25 at 9.30am.
We'll bring you a wrap-up of today's proceedings shortly.
'No case to answer'
1.40pm Lawyer Dalli wants to know why nobody spoke to her client Taomac Ltd.
"It’s not credible to say that this company was simply being operated as a front. There is nothing tangible about Taomac. It is totally extraneous to VGH. It was Malta Enterprise that asked it to step out of the project. The experts’ report is totally void of any transaction, traces. This is immensely dangerous.
"Did anyone search Taomac’s offices, were any documents seized? Nothing at all. Yet, Taomac was simply charged and we've ended up here in court. We insist that there is no case to answer as far as Taomac is concerned,” argues Dalli animatedly.
Who's who?
1.30pm You might be rightly confused over the names of individuals and companies being named in court. Here's a story we prepared earlier referencing the people implicated in this case.
Lawyer hits back
1.25pm Lawyer Dalli says nobody sent for the company to speak to them and get their version after they were charged with money laundering to the tune of €62,500.
AG simply speaks of “suspicion” when it comes to Taomac and nothing else. The company is named only once in the experts’ report simply to say when the company was set up and that it transferred its shares.
Dalli says the share capital transfer was at same price. The experts should have sent for Taomac to delve into that “strange 62500 transaction.”
Taomac was incorporated in 2012, and a business plan was done with Saint James three years later.
Dalli adds: "Had anyone investigated they would have found out that it was Malta Enterprise which asked Taomac to move out of the project. Police did not bother to investigate. The cyclotron project and request for soft loan was at an advanced stage. When Taomac was asked for due diligence the company said they were facing some proceedings in Italy over illegal dumping reports. Later, Taomac was totally acquitted in those proceedings, as will be proved here."
Malta Enterprise asked Taomac to move out of the project.
Taomac asked Malta Enterprise what it was expected to with that 62500 share capital.
The company held on to that capital until another company came along and expressed interest in acquiring that share capital. And that was the 62,500 transaction.
'Charge them'
1.20pm Jonathan Vella worked at Christopher Spiteri's auditing firm and they facilitated the crimes of money laundering, fraud and made false declarations, the court hears.
Vella was in touch with several of the people now facing the same charges. He worked in Spiteri’s firm assisting in the audits, as company secretary of Bluestone and VGH Assets. He had the know-how.
The inquiring magistrate gave clear directions for these persons to be charged with these crimes.
Taomac sold its shares in MTrace to Vitals Procurement in Jersey for the same purchase price. That flagged suspicions that Taomac was simply holding those shares for third parties.
Refalo from the AG's office adds: "It was a smokescreen. The holder was Vitals Procurement Ltd in Jersey. That’s why prosecution insists that there’s more than prima facie as far as Taomac is concerned."
So to sum up, the voluminous inquiry, the experts’ reports and so on, the inquiring magistrate “did not say ‘investigate further, but charge these persons with these offences'”, says Refalo.
Lawyer Veronique Dalli rebuts on behalf of Taomac. She says that after hearing the prosecutor she is more convinced than ever that action against the company was done in a hasty manner.
A fraudulent soft loan
1.15pm Refalo explains that MTrace got a fraudulent soft loan from Malta Enterprise. MTrace did not have the funds to pay its 31% share of expenses on the project. So there is prima facie on MTrace too.
Brian Bondin was CEO of MTrace and was involved in the scheme, fraudulently set up to get the loan from Malta Enterprise.
Bondin enabled the scheme to get monies from Malta Enterprise. Technoline was also to cover the 31% share of expenses.
'Funds derived through fraud'
1.10pm Francesco Refalo from AG’s office goes first.
He says the detailed inquiry roped in a lot of experts who reported on the hospitals case.
It was evident that Gateway was given a convertible loan from Vitals of over €5 million to buy all shares of Technoline. All these were funds derived through fraud which were meant for the hospitals concession.
Technoline became the sole provider of medical equipment to Vitals.
Experts concluded that there was prima facie evidence where it comes to Technoline. The trail of funds, namely €5 million, is the same for Gateway. These were funds from the concession which ought to have been spent on the hospitals, Refalo explains.
Over €2.3 million were channelled to MTrace, which were meant to go for the cyclotron project.
Submissions to be heard
1pm Magistrate asks what the defence lawyers have to say about prima facie.
Lawyers for Joseph Muscat are not contesting, so as to facilitate the process because it is in his interest for proceedings to be conducted expediently.
Konrad Mizzi and Keith Schembri also submit to the court’s decision. Clarence John Thompson does likewise, together with a number of other parties.
Gateway Solutions, MTrace, Technoline, Taomac, Sciacca Grill, Brian Bondin and Jonathan Vella are contesting the prima facie.
The court will start hearing submissions today and continue on Tuesday when the decree will be delivered.
Last witness
12.55pm The last witness is Malcolm Mifsud, who audited Gateway Solutions Ltd's accounts from 2018 to 2022.
Asked about loan and interests to date, according to the 2022 audit, Mifsud says the company signed a private agreement with Steward Health International Ltd around 2017 for a loan of €5,850,733. By 2022 the outstanding balance was €690,325.
Documents presented by Gateway’s auditor showed that the loan plus interests was settled last year.
That testimony wraps up today’s witnesses.
Equipment is there, cyclotron isn't
12.40pm Court is back in session.
The next witness is Joseph Cremona, a representative of the Radiation Protection Board set up under EU Directive on Radiation.
The board vets justification for request and then lists the necessary documentation.
The law says that all radiation activity must be notified to the authority.
MTrace wanted permission to use cyclotron at Life Science Park.
Was the permit issued?
"It’s not that easy. First we need to check the structure, the nature of concrete and so on. But the permit for the installation of equipment was never issued. The last inspection by a foreign expert took place in 2017. All we inspected was the facility structure not the cyclotron as such. “Cyclotron is still in boxes... we were shown the boxes. The project stopped.”
"Last year we were going past LSP and we noticed some works on the road near the bunker where the cyclotron was to be installed. We went to inquire about it and were told that remedial works were being done because of some water seepage problems," says Cremona.
Lawyer Arthur Azzopardi shows him a set of 12 photos.
"Do you recognize the place?"
"I recognise the equipment. These are related to the cyclotron but the cyclotron as such I didn’t see."
Asked if it’s what he personally attested or was told, he says that that’s what he was told. He’s under the impression that works were still ongoing for cyclotron to operate.
Short break
12.10pm The court sitting is being suspended for 15 minutes because the interpreter was called elsewhere and her services will be needed for the following witness/es.
We'll continue after this break.
Discussions stopped in 2017
12.10pm Alexander Camilleri, a representative of the Environment Resources Authority takes the witness stand.
He says ERA involvement began in 2016 but discussions started by the planning authority earlier. A meeting was also held between ERA and MTrace.
Details of the applicant and project description statement were submitted in 2015.
In 2017, they were told that the project was being reactivated as long as MTrace satisfied the requirements by ERA.
It was confirmed that the project description was still valid. The authorised representative of the project was Brian Bondin for MTrace.
So what did ERA do?
ERA issued guidelines to facilitate a follow-up but in reality it was not followed up. The applicant did not follow those guidelines. The coordinator on the project asked for a meeting because they had some reservations about ERA's requirements. That was in June 2017 and that was the last contact with the authority. That’s where discussions stopped.
'Everything stopped there'
12pm Serracino Inglott from the Medicines Authority said that some 10 years ago, Malta Enterprise informed the authority that "there might be interest" in a cyclotron facility.
“But that's it. Everything stopped there."
Cyclotrons and facilities 'in boxes'
11.55am Some context to the court discussions today: Cyclotrons are used to produce a radioactive tracer for nuclear imaging during PET/CT scans. This enables patients, primarily those suffering from cancer, to be diagnosed and the effectiveness of their therapy to be monitored. Malta has never used the cyclotron so far.
In March 2021, Times of Malta reported that the cyclotron was not being used and was “still in boxes” at the Life Sciences Park. In the meantime, the country had been importing tracer from a company called Curium, in Rome.
The cyclotron itself became the property of Mtrace, a company that was owned by Steward and Andrea Marsili, the general manager and managing director of Curium, the same Rome company that supplies Mater Dei Hospital with the tracer.
You may want to read this Times of Malta story from January 2023 for more background.
Medicines Authority CEO: 'We had no applications'
11.50am Anthony Serracino Inglott, CEO of the Medicines Authority is the next witness.
He says no permits were issued for the cyclotron facility.
"We had no applications," he says.
"Not even by Malta Enterprise?"
The CEO replies: "No, usually as far as I know it would be the project owner to apply."
Serracino Inglott said that where it comes to cyclotron, the authorities were still in the stage of considering if there was suitable manpower to produce appropriate medicines.
"We would need capability to carry out inspections of the facility... The only thing that was done “long ago” was some interest in that service about radio pharmaceuticals. As an authority we would then need to ensure that we would be able to deliver that service to the country."
Magistrate turns down request
11.45am Lawyer Arthur Azzopardi makes a formal request for court to carry out on-site inspection at LSP property of INDIS to prove that contrary to what the inquiry states, the cyclotron facility exists.
The Attorney General lawyers object.
"I’m flabbergasted," says lawyer Chris Cilia. "The prosecution’s questions a while ago hinted a trace of disbelief (regarding cyclotron). So I would expect them to agree to go on-site. We’re here for justice not an inquisition!"
But the magistrate turns down the request saying that proof is not necessary for court to reach prima facie stage in terms of law.
Lawyer suggests on-site inspection
11.35pm Next witness is senior planning officer Ian Galea.
Asked if the Planning Authority issued a permit for cyclotron, he says that there was no specific request for cyclotron but permits were issued.
All plans are in digital form on PA system.
Lawyer Azzopardi suggests that the magistrate should conduct an on-site inspection at Life Sciences Park to confirm that the cyclotron facility exists.
But the magistrate points out that at this stage the court must decide whether there is enough prima facie evidence for the accused to have a case to answer, not to prove the existence or otherwise of cyclotron.
Background: Investigators working on a magisterial inquiry into the Vitals deal concluded that the company used taxpayer money to purchase the firm that owned the cyclotron, then eventually resold the firm to Malta Enterprise.
Facility idea conceived in 2009, aborted in 2017
11.20am ABI Associates Environmental Consultants Ltd Adrian Mallia says that they carried out some work for MTrace after carrying out works for Malta Enterprise in 2009.
He presents documents about the company’s statements on environmental impact and subsequent changes in factors all related to the cyclotron facility, which was already being conceived back in 2009.
Construction works were done, equipment was imported, but ultimately the project was aborted.
On Wednesday, another witness said that the project was taken over by Malta Enterprise and ready to go.
Asked for the purpose behind certain details, defence lawyer Arthur Azzopardi said it was to prove that the cyclotron facility was actually built and ready when the magisterial inquiry says this project does not exist.
Questions about cyclotron project
11am So far we've had witnesses from GO Plc, Firetech Ltd, Terracore Ltd and TS Container Services. The questions are focusing on the promised cyclotron project.
The project cost millions to set up and was then sold to Malta Enterprise for roughly €6.9 million when Vitals’ successor, Steward Healthcare, decided to drop it.
Years later, the equipment remains unused at the Life Sciences Park adjacent to Mater Dei Hospital, a Malta Enterprise representative confirmed under oath on Wednesday.
Court in session
10.40am The magistrate enters the Hall 22 and the court session starts.
The accused are all seated around the back end of the hall. Their lawyers are at an extended defence bench and in the places normally reserved for jurors during trials. The prosecution team are on the left-hand side of the hall.
Who are the defence teams?
10.35am There are teams of lawyers assisting the accused.
Muscat is assisted by Vince Galea, Charlon Gouder, Ishmael Psaila, Luke Dalli and Etienne Borg Ferranti.
Schembri and Mizzi are assisted by Edward Gatt and Mark Vassallo.
David J Meli is assisted by Giannella DeMarco and Charles Mercieca, while Spiteri is assisted by Jason Grima.
Pierre Sladden and a number of companies are assisted by Arthur Azzopardi.
Franco Debono and David Bonello are counsel to Sciacca Grill Ltd, while Stefano Filletti is counsel to Adrian Hillman.
Other lawyers include Stephen Tonna Lowell, Shazoo Ghaznavi, Jessica Formosa, Veronique Dalli, Rachel Powell and David Bonello.
Attorney General lawyers Francesco Refalo, Rebekah Spiteri and Shelby Aquilina are prosecuting together with superintendent Hubert Cini and inspector Wayne Borg.
Muscat, Schembri arrive
10.20am Joseph Muscat and Keith Schembri arrive in court. In this particular case, the accused have to attend the proceedings or risk a €25,000 fine if they missed the session with no excuse.
Fourth court hearing
10.15am This will be the third time the former prime minister and his associates appear in court as criminally accused defendants.
In their first appearance, they were read charges and pleaded not guilty, doing so over the din of a crowd gathered outside court to voice support for Muscat.
The second court hearing saw police confirming they did not investigate the hospitals' case and were relying on the findings of the magisterial inquiry.
During Wednesday's sitting, Saint James Hospital magnate Josie Muscat strongly denied having anything to do with a failed cancer treatment project spearheaded by Vitals Global Healthcare.
What led to this?
10.10am In 2015, the government signed a multi-billion agreement to redevelop and operate three public hospitals with a private company called Vitals Global Healthcare (VGH) Ltd, a company with no previous experience.
Deadlines for several projects are missed as questions are asked over whether the investors can deliver on their pledges.
The National Audit Office said in 2020 that the government’s work to verify the deal with VGH and its capacity to run three public hospitals was “grossly inadequate”.
The contract was transferred in 2018 to a US company named Steward Health Care.
That same year, then PN leader Adrian Delia filed a court case to rescind the concession. The case would eventually conclude in February 2023, with the courts cancelling the deal altogether, describing it as "fraudulent".
A Times of Malta investigation last year showed Muscat got close to €482,000 in various consultancy payments in the year of resignation.
Fast forward to last month and a magisterial inquiry - four years in the making - recommended serious charges against a number of high-profile individuals and companies, sparking a political war.
The last of three reports by the auditor general published revealed that a total of €456 million was paid to Vitals and Steward throughout the concession period. Investigators believe Vitals – and later Steward – stakeholders had no intention of running Maltese hospitals for the 30-year lease period they agreed to.
This included a catering company suspected to be involved in a 10% kickback scheme, a medical equipment supplier which had hidden owners, and a secret shareholder who received monthly €100,000 consultancy payments.
It was NGO Repubblika's work that led to this case reaching the criminal courts: prosecutions were based on a magisterial inquiry the NGO triggered back in 2019.
All those charged deny wrongdoing.
Welcome
10am Good morning and welcome to this live blog. We'll be bringing you live updates from the law courts, where the case against Muscat, Schembri, Mizzi and others will continue.
Those three - and another 11 people - have been jointly charged with a litany of serious crimes concerning the Vitals deal.
Konrad Mizzi, Joseph Muscat and Keith Schembri are the three most prominent officials accused.