A Customs official and a Freeport employee were yesterday charged with being accomplices in defrauding the government out of €2 million in unpaid duty and taxes, as the police uncovered a large cigarette smuggling operation.

The prosecution described it as a “big” case, saying the investigation was still under way and more arraignments could be made.

The case is over a container that was concealing more than 10 million contraband cigarettes.

Sebastian Zammit, 60, from Safi, a senior assistant with the Customs Department, and 32-year-old Malta Freeport employee Roderick Borg, from Qormi, were both arraigned under arrest before Magistrate Josette Demicoli.

They pleaded not guilty and were remanded in custody after the court turned down their request for bail.

Their arraignment came hot on the heels of a government statement issued on Saturday night, which said that a number of arrests had been made in connection with the theft or unauthorised exit of a container from the Freeport.

The government said that this kind of theft had been rumoured for a number of years but very few cases had actually been exposed.

The investigation was launched following a report that a container which had entered Malta on July 24 was eventually loaded onto a truck and taken out of the Freeport, only to be returned to its original location an hour and a half later.

On its return the container still bore the Customs Department security seals.

The prosecution, led by Inspectors Rennie Stivala and Carlos Cordina from the Economic Crimes Unit, yesterday accused the two men of the theft of the container from the Freeport laden with 10.5 million cigarettes.

The consignment was spread in 1,050 cases each containing 10,000 cigarettes valued at €304,500 in total.

Customs official Mr Zammit was also charged with committing a crime he was bound to prevent.

The prosecution said the illegal operation took place on August 7, after the container had been shipped to Malta aboard the merchant vessel Northern Jasper. It was also pointed out that the quality of the cigarettes was found to be very low.

The men are alleged to have defrauded the government out of €1.667 million in excise duty, €175,000 in importation duty and €386,000 in Value Added Tax, for a combined figure of €2.23 million.

Inspector Stivala said this was a “big” case as the fines for not declaring such a huge consignment of cigarettes would amount to about €7.7 million.

He added that further arraignments were possible as the investigation was still underway. He objected to the requests for bail made by the defence lawyers, to make sure the accused do not approach potential witnesses.

The prosecution said footage to be submitted as evidence in court highlighted the “nonchalance” with which the crime was committed.

Lawyer Edward Gatt, who was assisted by lawyer Mark Vassallo as defence counsel for Freeport employee Mr Borg, argued that his client had a clean criminal record and had collaborated with the police during investigations.

He added that in view of the fact that the prosecution had already declared to be in possession of footage allegedly exposing this crime, there was very low risk of the accused trying to tamper with evidence.

The court, however, ruled that both men should be remanded in custody but urged the prosecution to summon its witnesses in the next sitting.

Magistrate Demicoli upheld a request from the prosecution to freeze the assets of the two accused.

Gianluca Caruana Curran was defence counsel for the customs official.