Seven men and two women were arraigned to face customs fraud and corruption charges on Wednesday after an operation led by the EU’s anti-graft agency last year, the first major operation in Malta by the European Public Prosecutor’s Office. 

The EPPO explained in a statement that at issue is a suspected fraudulent scheme to evade the payment of customs taxes and duties on the importation of clothing, bags, shoes and other goods from China, by under-declaring their value and weight. It is alleged that this was done with the complicity of customs officials, who are believed to have been offered money to refrain from correctly carrying out their duties. 

The alleged illicit activities started in December 2021 and were halted in July 2023, when the suspects were arrested at the request of the EPPO.

It is estimated that these activities caused damage of over €15.9 million to Malta’s national budget and over €7.6 million to the EU budget, the EPPO said.

Earlier in the investigation, in order to recover the damage to the EU and national budgets, the EPPO said it seized property worth €6 million and 195 containers of goods, worth a combined value of €5.8 million, as well as vehicles, luxury items and €170 000 in cash. 

The accused are Customs employees Duncan Mangion, Carmel Busuttil, Timothy Galea, Jonathan Theuma, Edward Mifsud and Marica Bugeja, company directors  Jonathan Mizzi and his wife Greta Mizzi (Convey Shipping and Trading Agency Ltd), and Libyan businessman Otman Ali Otman Abdulkader (Akakus International Limited).  

All were accused of money laundering, promoting and actively participating in a criminal organization. 

The Mizzi spouses, Abdulkader and the two companies were separately charged with fraud exceeding €100K affecting an illicit loss of EU budgetary funds, making fraudulent gains, and other fraud exceeding €5K to the detriment of the Maltese government.

Jonathan Mizzi and Abdulkader were separately charged with bribing customs officials, falsification of public documents, knowingly making use of such false documents and false declarations.

Mangion, Busuttil, Galea, Theuma, Mifsud and Bugeja were also charged as public officers with complicity in the fraud, accepted bribes and misappropriation.

The Mizzi couple, and Abdulkader were also separately charged with making false declarations for tax purposes, namely to evade customs duties and other taxes over merchandise in 31 containers.

All pleaded not guilty.

Prosecutors told the court that in 2022 and 2023 Malta was involved in Operation Octopus focusing on imports from third countries. Various goods were imported - from e-bikes to pyjamas - and declared as having been made in Taiwan when in fact they came from China.

Several containers with false declarations were discovered.

The imports were made by a company registered in the name of Greta Mizzi but investigators suspected that the business was run by Jonathan Mizzi and later by the company Akakus. Some 50 containers per week were imported, mostly in transit to the EU. 

In July 2023 search and arrest warrants were issued.  

Searches revealed items which had not been declared and others which were undervalued. Invoices were tampered and items were not shown as originating from China. 

Following the arrests, the suspects were released on police bail three times. The prosecution confirmed that they all always cooperated.  

Asset freeze orders running into millions

There was no objection to a defence request for bail, although the defence strongly objected to asset freeze requests running into several million euro.

The prosecution requested an assets freeze of €23 million each for the Mizzi spouses, Abdulkader and the two companies and €5m each for Mangion, Mifsud, Galea and Theuma, €4m for Bugeja and €1.2m for Busuttil.

Lawyer Alfred Abela argued that once a container truck was released from customs and stopped later, no one could tell if that was the same container. Yet on the basis of its contents, the police were calculating the amounts of the freezing orders.

After deliberation, Magistrate Noel Bartolo upheld the freeze requests.

EPPO Officer Geoffrey Azzopardi prosecuted together with Inspector Joseph Xerri. Lawyers Franco Debono, Adreana Zammit, Arthur Azzopardi, Ishmael Psaila, Alfred Abela, Michael Sciriha, Lucio Sciriha, Rene' Darmanin, Alfred Abela and Roberto Spiteri were defence counsel.