Updated 1.15pm
Saint James Hospital magnate Josie Muscat on Wednesday strongly denied having anything to do with a failed cancer treatment project spearheaded by Vitals Global Healthcare.
Muscat confirmed that he was the first person to suggest setting up a cyclotron in Malta but insisted he had discussed that with state agency Malta Enterprise, not Vitals or its shareholders.
He “never, never, never” spoke to Vitals or its suspected secret shareholder Shaukat Ali Chaudry about the plans, Muscat said when questioned in court.
Josie Muscat, whose Saint James Hospital group is the largest private healthcare provider in the country, was testifying in the case against Joseph Muscat, Keith Schembri, Konrad Mizzi and many others.
Prosecutors allege that Joseph Muscat and other defendants took bribes and committed acts of fraud and money laundering as part of the Muscat-led government’s project to award Vitals a 30-year deal to run three state hospitals.
That deal was annulled by a civil court last year on the basis of fraud. All defendants facing criminal charges deny any wrongdoing.
Wednesday’s court hearing was almost entirely taken up with testimony concerning the 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.
Even now, 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.
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.
Testifying on Wednesday, Josie Muscat said that the idea for a cyclotron first arose in 2011 or 2012 but that he dropped out of the project after growing suspicious about an Italian investor in the project.
Muscat said he met that Italian investor during a trip to Israel together with Malta Enterprise representatives. Muscat stressed that he had paid for his own passage and accommodation on that trip.
Joseph Muscat walks to court on Wednesday. Photo: Emma BorgThe court also heard testimony from an architect engaged to work on structural works at the Life Sciences Park in connection with the cyclotron project.
The project was dropped in around 2017, Karl Farrugia testified, as he recalled equipment being left abandoned in the Mater Dei Hospital car park.
Sciacca Grill and Keith Schembri
Earlier in the hearing, the court heard testimony from a Malta Business Registry representative, who said that one of the companies facing charges, Sciacca Grill, had no known ties to co-defendant Keith Schembri.
The company was previously called Kasco Food Group and owned by Schembri’s Kasco but shares were transferred to Noel Zammit in 2014, the representative said. Zammit remains the company’s owner and director to this day.
Inspector 'never suspected' auditor
The court also heard testimony from former inspector Anthony Scerri, who was tasked by the inquiring magistrate with helping to arrange and coordinate testimony as part of that inquiry.
Scerri came under some tough questioning by the lawyer representing auditor Chris Spiteri, who testified several times before the magistrate.
The former inspector insisted that police officers simply followed the magistrate’s instructions at all times and consulted with court-appointed experts when seizing items and documents from Spiteri’s office.
He also confirmed that Spiteri was never cautioned or given the option of having a lawyer present while testifying in the inquiry.
“I never suspected Spiteri, I didn’t know what the magistrate had in hand,” Scerri said.
The case continues on Thursday.
As it happened
Live blog ends
1.15pm That's all from us for today - a relatively uneventful court hearing. We've got a wrap-up of the key events available at the top of this article.
Thank you for having joined us, we'll be back tomorrow.
Case adjourned
12.45pm And with that, the magistrate defers the case to tomorrow morning, when submissions on the prima facie case presented by prosecutors will start being heard.
The magistrate is running a tight ship: she tells defence lawyers that the case will then continue on June 25. That session, she tells them, will be just two hours long.
No more witnesses
12.44pm No more witnesses are to testify today – Inspector Wayne Borg was due to testify but the two defendants who wanted him to do so, David Meli and Mario Victor Gatt, appear to have had a change of mind.
The witnesses who were due to connect via videoconferencing are also no-shows for today.
BOV representative presents Taomac statements
12.39pm A Bank of Valletta representative is the next to testify. The witness is here to provide account statements of Taomac Ltd, one of the companies linked to the cyclotron project, dating back to January 2012.
They do so, and that’s about it. The witness is done testifying.
Josie Muscat and the cyclotron
12.35pm Josie Muscat is asked by lawyer Chris Cilia about his involvement in the cyclotron project.
He says it all began years ago, when Malta Enterprise wanted to set up a project “for animals.”
“I found that rather strange,”
Josie Muscat eventually ended up in Israel with Malta Enterprise representatives at some point between 2010 and 2012. He says that’s when he met Musarella. “I didn’t like the look of it,” Muscat says.
Muscat emphasised that he paid for his own passage and accommodation during that trip.
He confirms that the cyclotron idea was his, but says he never signed any contracts with Malta Enterprise.
Cilia says the inquiry concluded that the project’s real promoter was Shaukat Ali Chaudry.
Muscat says Vitals had nothing to do with the project for as long as he was involved in it and that he “never, never, never” spoke to Vitals or Ali about the project.
He denies suggestions by Cilia that he was just a front for Ali.
Josie Muscat testifies
12.21pm The next witness is Josie Muscat, the doctor and former MP who owns Saint James Hospital.
Muscat has said that Vitals shareholders were initially keen on buying out the private hospital group he owns.
After years and millions, still no cyclotron
12.18pm The next witness is Joseph Zammit, the CFO at Malta Enterprise. He is also asked about the Cyclotron project.
Zammit says the agency approved a soft loan in 2017 for the purchase of that cancer equipment, which is currently installed at the Life Sciences Park.
The project was originally proposed by Josie Muscat [of Saint James Hospital] back in 2015, he recalled. Muscat later informed Malta Enterprise that he was exiting the project for personal reasons. By that point, €4.7 million (61% of its full cost) had been approved.
When Josie Muscat exited the project, an Italian investor (Musarella) took over. And then Vitals came in. The agreement was for the loan to be repaid in three tranches.
By the time the third payment was due, Steward had taken over from Vitals. The company told Malta Enterprise it was no longer interested in the project. And at that point, Malta Enterprise took over the project for €6.9 million, says Zammit.
And all these years later, the equipment is still not working, the witness confirms under questioning.
Audit firm RSM was tasked with carrying out due diligence on Mtrace [the company that owned the cyclotron] when Malta Enterprise decided to buy it.
Dizzying cyclotron
12.08pm We’re getting into the weeds of the Cyclotron project here.
Farrugia is asked for details about specific companies and individuals linked to the project. He explains that his firm had a Polish consultant who advised on the type of concrete needed to block radiation.
After another volley of questions about the project specifics, Farrugia is done testifying.
Cyclotron project
12.03pm The next witness is architect and civil engineer Karl Farrugia, the director of Forward Structures.
His firm worked on the Cyclotron project at the Life Sciences Park in 2014 – structural interventions and various other works on an underground section of the park used for cancer treatment.
Then there was a change in shareholders and suppliers – “there was some issue with payments, apparently,” the witness recalls – and things ground to a halt. Equipment was left at the Mater Dei car park, he recalls.
Farrugia says his firm’s involvement in the project ended in around 2018. The last set of drawings they drafted was dated May 2017. His firm was not involved in the installation of equipment, he says.
Reminder: the Cyclotron project was a failed Vitals initiative to create a cutting-edge cancer treatment centre. Prosecutors suspect the company used taxpayer money to fund the project, then re-sold the failed venture back to the government.
Kasco and Sciacca Grill
11.56am Back to legal proceedings: a representative from the Malta Business Registry presents documents related to Sciacca Grill, one of the companies facing charges. The witness also confirms that lawyer David Meli [another co-accused] was not involved in Nexia BT or Steward’s Maltese firms.
Lawyers David Bonello and Franco Debono note that shares in Sciacca Grill were transferred from Keith Schembri’s Kasco in March 2014. The company was previously known as Kasco Foods Limited.
The MBR representative confirms that Schembri resigned as a director of the company in 2013 and transferred shares to its current owner, Noel Zammit, the following year.
A bullish Reppublika
11.48am Meanwhile, Repubblika's Robert Aquilina says he's encouraged by the way things are going so far.
Defence lawyers are focused on finding non-existent procedural defects, he says, rather than focusing on substantive matters.
"It is clear that the inquiring magistrate and her appointed experts did a serious and thorough job," he writes.
AWOL on Zoom
11.46am But there’s a problem – none of the three [non-Maltese] witnesses have connected to the videoconferencing link.
There’s an Italian interpreter in court, but defence lawyer Arthur Azzopardi says that won’t be needed as all three speak English. If only the court could get in contact with them.
Technoline witnesses
11.43am That’s all from Scerri. The next three witnesses will testify via videoconference. They all relate to Technoline, the medical procurement firm at the heart of the alleged wrongdoing.
We've written plenty about this company. You could start here and continue here.
'I never suspected Spiteri'
11.41am Grima gets the witness to say that he never considered Spiteri a criminal suspect.
He asks the witness why he did not caution him before he testified before the magistrate a second time. “I never suspected Spiteri, I didn’t know what the magistrate had in hand,” Scerri said.
No caution or lawyer
11.37am Scerri, under questioning, confirms that Spiteri had no lawyer to assist him during questioning by the magistrate. Nor was he cautioned.
Defence lawyer Grima says other defendants were legally assisted and even cautioned.
Seizing Chris Spiteri's documents
11.34am Grima presses on. The application also notes that “investigations are still ongoing by the police.” Is there a mistake there, too?
Scerri insists that the police always followed magisterial orders in the case.
Grima says that court experts were “looking in boxes” during the search. Did police check to see what experts were seizing?
Scerri says that police officers showed the experts files or items to see if they believed they were relevant. They did not make that decision themselves. “We checked the titles of files and so on and handed them to the inquiring magistrate. Then it was up to her,” Scerri said.
He confirms, under questioning, that police did not exclude any documents containing privileged information.
Scerri also confirms that he did not seek the authorisation of the Commissioner for Inland Revenue before pressing charges against Spiteri. He says he does not know if any other police officers did so.
'There might be a mistake in the date'
11.24am Grima is questioning Scerri’s credibility as a witness: he notes that Scerri was not present for each of his client’s testimonies before the inquiring magistrate, and pokes holes in his assertion that the police did not investigate the Vitals case.
The inspector, Grima tells the court, testified that after one of Spiteri’s testimonies, his testimony was examined by the police. So did the police investigate, or not?
Scerri says that he was instructed by the magistrate to search Spiteri’s office. But he needed that order in writing, in the form of a search warrant. So he filed a request for one.
But Grima says the dates do not tally: the search warrant was filed in June, while Spiteri testified in June and July.
Scerri sticks to his recollection of events but says “there might be a mistake in the date.”
Inspector Scerri testifies
11.15am We begin proceedings with the testimony of former inspector Anthony Scerri.
Lawyer Jason Grima has questions for him [Grima represents Vitals auditor Christopher Spiteri].
Magistrate out - court in session
11.12am Magistrate Rachel Montebello begins today's court hearing. All defendants are present, save for one person representing one of the companies facing charges. Another company representative is appearing on its behalf today.
We still don't know who will testify today, but given that the police have stated that they relied solely on the magisterial inquiry to press charges, they most likely do not have too many witnesses up their sleeves.
At this stage, the prosecution’s biggest headache is getting to the prima facie stage (namely, the court decree that there is enough prima facie evidence for accused to stand trial on indictment).
Court fills up
11.03am The court session will begin any minute, and the courtroom has filled up. There are lawyers, defendants - Muscat, of course, but Adrian Hillman, Christopher Spiteri, Pierre Sladden, Brian Bondin and Konrad Mizzi too. Others might be present, too, but it's hard to tell from the gallery that journalists are packed into.
Muscat in court
10.43am We spotted Muscat as he entered court. A few bystanders applauded. One encouraged him "ejja Joseph" [Come on Joseph]. Muscat met those words of encouragement with a grin.
No crowds today
10.40am There were hundreds for the first court hearing. Dozens for the second. And even fewer for today's. The only person we spotted outside court ahead of the 11am court hearing was Robert Aquilina, honorary president of NGO Repubblika.
It was 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.
There were no crowds outside court on Wednesday. Photo: Emma BorgThird court hearing
10.35am This will be the third time Muscat and co. 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 braying crowd gathered outside court to voice support for Muscat.
That circus did not go down well with Labour insiders, who say it cost them votes.
The second court hearing was held after the MEP elections, which humbled Labour and Muscat's pre-electoral bravado. And that was reflected in the show of force outside court: the hundreds of people who gathered for Muscat's first court hearing had thinned out to just a handful.
Crowds gathered for Muscat during his arraignment. Photo: Matthew MirabelliWelcome
10.30am Good morning and welcome to this live blog. We'll be bringing you live updates from the Valletta 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.
If you need to refresh your memory about this cast of characters, we've got you covered.