An alleged fuel smuggler paid a hefty FIAU fine issued to his accountant who stands charged with money laundering, a court heard on Monday.
Auditor Chris Baldacchino stands accused of having been the brains behind the laundering of illicit funds for an organised crime group allegedly involved in a €30million fuel smuggling racket.
Baldacchino, who remains in preventative custody, was slapped with a fine of some €58,000 for lax anti-money laundering controls last year.
Testifying in the compilation of evidence against Baldacchino before Magistrate Natasha Galea Sciberras, police inspector Omar Caruana told the court how Baldacchino had been reimbursed for the amount he was fined by a company owned by one of two men charged with running an illicit fuel smuggling ring.
Two former footballers, Darren Debono and Jeffrey Chetcuti have been under preventive custody since their arrest in a police anti-smuggling operation last November.
During his testimony, Caruana detailed how Baldacchino was allegedly involved in the process of financial layering for the former footballers.
Layering is a practice of obscuring the provenance of illicit funds through a series of convoluted transactions and shell companies.
The multi-million fuel smuggling operation would see Maltese ships transport Libyan fuel out of North Africa and into the European market, with the help of falsified paperwork and mafia contacts.
A two-year investigation by Italian police, codenamed Operation Dirty Oil, had blown the lid off the operation after a United Nations’ Panel of Experts on Libya report had detailed the criminal gang’s operations.
The network is believed to have smuggled over 80 million kilos of gasoil out of Libya
Baldacchino had first become known to the police when they started a financial investigation into the companies owned by Debono, the inspector said.
The accountant, Caruana said, was the auditor of several of these companies, including World Water Fisheries, Coast Limited, and Maria Dolores Limited.
“In practical terms, Chris Baldacchino’s name appears in every company that Darren Debono and his family members are involved in,” Caruana said.
Baldacchino had signed off on financial reports and statements by the companies covering a number of years. He had done so, knowing fully well the legal and professional responsibilities he bore.
The inspector testified that following a lengthy analysis, a large number of suspicious transactions had been identified between these companies and others linked to them.
These transactions were mostly linked to fees for consultancy work that the different companies claimed to have provided to the each other.
There was little to no supporting documentation to prove that any such work had been done, despite the amounts paid was often in the high tens of thousands of euro.
One suspicious transaction for consultancy work amounted to €175,00, while the police had also identified a €136,000 third party loan between the companies that raised alarm bells.
The police also had their doubts over a number of cheques that had been issued by the companies without plausible explanation, the inspector said.
The police also had reservations over due diligence done by Baldacchino on these companies and their funds.
In one instance a company was registered as having nine employees all of whom appeared to live in Debono’s San Gwann residence.
The police had also uncovered a company called Forital Spa, an Italian registered operation, on which no due diligence had been done whatsoever.
The alleged fuel smuggling racket is believed to be linked to the Italian mafia, and Debono and Gordon Debono (no relation), who also separately stands accused, had both been arrested by Italian police in 2017.
Furthermore, another company AMDD Consultancy Limited, was of interest to the police. The company’s name AMDD was the initials of Darren Debono’s children in ascending order.
It was owned by a holding company registered in the British Virgin Islands and its director was a certain Nicola Orazio Romeo.
Romeo, once described by police as a Mafia associate, is also facing charges of forming part of the criminal conspiracy that smuggled oil from Libya, using boats belonging to Debono.
Inspector Caruana said that given this company was registered in an untrustworthy jurisdiction, Baldacchino ought to have carried out enhanced due diligence procedures on its activity, but had not only failed to, but exhibited a lack of understanding of what this entails.
Furthermore, during interrogation, Baldacchino was talkative but his answers often failed to address the questions put to him, or to furnish investigators with convincing information.
Baldacchino had also failed to explain the provenance of funds on documents signed by Debono’s daughter-in-law Florinda Sultana.
Illustrating the close relationship between the auditor and his client, the inspector testified how Darren Debono’s wife Odette Goodlip had also been registered as an employee of Baldacchino’s accountancy firm with the state employment agency for a while.
The password to Baldacchino’s mobile phone, given to the police by the accused, was a nickname of Debono’s.
The case will continue on Thursday at 11.30am when some 10 witnesses are expected to be presented by the prosecution. The court is then expected to decided on a request for bail.
Lawyer Antoine Agius Bonnici appeared for the state prosecutor, along with police inspector Joseph Xerri and James Turner for the Financial Crime Investigation Department.
Lawyers Antoine Naudi and Stephen Tonna Lowell appeared for the accused.