A money laundering case concerning Josette Schembri Vella has been branded “academically obscene” by her lawyers.
Defence lawyers told a court on Monday that prosecutors were finding it very hard to prove the basic elements of the crime she is alleged to have committed.
Schembri Vella, who is the wife of former OPM chief of staff Keith Schembri, was arraigned two weeks ago and charged in her capacity as director of 3City Designs Ltd, a company she held in part-ownership with Kasco Ltd.
She and 3City Designs are currently pleading not guilty to acts of money laundering allegedly linked to transactions carried out between 2008 and 2020.
She is also being separately charged with failing in her duties as company director, while her lawyers claim that her only shortcoming boiled down to the fact that she failed to call board meetings.
When the compilation of evidence kicked off on Monday, Inspector Ian Camilleri from the financial crimes investigation department testified how the police probe had followed the conclusions of a magisterial inquiry that had been sparked by an application filed by former Opposition Leader Simon Busuttil.
A task force had investigated suspicious transactions involving the former chief of staff as well as Brian Tonna and other officials from accountancy firm Nexia BT.
Attachments orders were issued in September 2020 against 95 individuals, including natural and legal persons and searches were carried out at the private residences and offices of the suspects.
Investigators tracked down a €650,000 transaction from Keith Schembri to former managing director at Allied Group, Adrian Hillman, allegedly linked to the sale of printing machinery at an inflated price.
That transaction, involving grants from Malta Enterprise, had been agreed upon and planned even behind the back of some of the board members at Progress Press, said the inspector, explaining further how the suspicious funds had been funneled through companies, including some in foreign tax havens.
“These nonsensical adjectives have nothing to do with this case,” interrupted lawyer Edward Gatt.
However AG lawyer Antione Agius Bonnici pointed out that the information was important to establish the predicate offence, namely the alleged underlying criminal activity.
The magisterial inquiry had ordered investigations against Schembri Vella and 3City Designs, went on Inspector Camilleri, explaining that the company was allegedly used as a money laundering vehicle set up in the name of the accused who held 50% ownership.
Kasco owned the other 50 per cent of the shares. The company had also offered services to Hillman.
During police interrogation, Schembri Vella insisted that she had no access to the accounts of 3 City Designs which, up to 2018, were handled by Kasco’s accounts team and she would even sign a whole booklet of blank cheques.
She finally managed to take control of those accounts in 2019.
Investigators had traced no funds from the suspicious machinery sale in Schembri Vella’s accounts and in fact that was why she was charged in her capacity as director rather than in her personal capacity, the inspector explained.
“Could you tell us what the predicate offence is in this case?”Gatt questioned once again.
Monies from the inflated price on the Progress Press machinery sale appear to have been channeled through 3 City Designs, said Camilleri.
Schembri Vella always insisted that she knew nothing about that transaction but as director she shouldered legal responsibility, the inspector added.
Asked about the amount allegedly channeled through 3City Designs, the witness said that his fellow investigator could answer that better since she had handled that aspect of the investigation.
“The accused has rights. This case is academically obscene. The court is the only lifeline for such persons,” exclaimed Gatt, arguing that Schembri Vella had no cause “to be here.”
Since the other inspector who was meant to testify about the amount of funds allegedly laundered was not present for today’s hearing, the prosecution requested the court to defer the case.
That request prompted objections by the defence team who pointed out that the prosecution ought to have put forward at the first sitting, all witnesses necessary for the court to be able to assess whether Schembri Vella had a case to answer.
“The prosecution clearly has great difficulties to prove the basic elements of the charges filed against the accused,” minuted Gatt.
After consultation with the parties, the court, presided over by magistrate Donatella Frendo Dimech, deferred the case to next week for all evidence necessary for the prima facie stage to be wrapped up.
AG lawyers Antoine Agius Bonnici and Andrea Zammit assisted Inspector Camilleri as prosecution.Lawyers Mark Vassallo and Veronique Dalli were also defence counsel.