Two Malta Enterprise engineers had inspected printing machinery purchased by Progress Press from Kasco Engineering Ltd, confirming that it was in line with the investment proposal covered by the €1.6 million grant. 

Both engineers took the witness stand on Friday in the ongoing compilation of evidence against former Progress Press managing director Michel Rizzo and former financial controller Claude Licari, who are both pleading not guilty to fraud and money laundering, allegedly stemming from a Malta Enterprise funding application dating back to 2013.

During Friday’s sitting, a high-ranking financial officer from Malta Enterprise also confirmed that all invoices presented by Progress Press, in terms of the grant greenlighted by a letter of intent, had been vetted against bank statements and receipts for payments.

Engineers Herbert Caruana and Pierre George Theuma gave separate testimonies confirming they had carried out an on-the-spot inspection at the company’s premises to attest whether all the machinery detailed in the original proposal for funding was actually in place. 

Both said the three items detailed as machinery and equipment, namely an HP digital press, binding machine and Komori press, were in place in line with the funding proposal.

The only variations noted were slight changes in certain features of the models.

The dimensions of the cutter were smaller and a cover on the binding machine was missing, but those variations would not affect the functionality of the machinery.

Likewise, the Komori press was found to be an ‘inferior’ model to the one originally proposed.

However, the overall scoping of the project was unaltered, said the engineers, explaining that a report on the inspection was forwarded to the incentives administration department at Malta Enterprise. 

During Friday’s sitting, Joseph Zammit, chief officer of finance at Malta Enterprise, outlined the procedure involved in applying for a grant with respect to a substantial investment project, normally spread over a three-year span. 

The application landed before an evaluation committee that would then present its conclusions to the board that is to decide whether the application qualifies for a cash grant or tax credit. 

In this case, the board issued a letter of intent in October 2013 for a €1.1 million cash grant and a further €700,000 by way of subsidies on bank loan interests. 

That letter was superseded by a second letter issued two months later for a cash grant of €1.6 million, after Progress Press informed Malta Enterprise that it would not be availing itself of a bank loan. 

Ultimately, the sum forked out to the printing company worked out to €1,552,248, in view of the slight variation in one of the models delivered and which was reflected in the price actually forked out by Progress Press.

Malta Enterprise had verified all invoices against proof of payment, said Zammit, explaining the vetting involved. 

Bank statements of Progress Press had been checked against receipts issued by Kasco Engineering Ltd, confirming that the figures and cheque numbers matched.

Answering questions by AG lawyer Antoine Agius Bonnici, the witness said that invoices were taken to refer only to equipment and machinery, which constituted a capital expense, unlike consumables and maintenance expenses related to the running of the machinery. 

However, that answer prompted Rizzo’s lawyer, Joe Giglio, to point out that the Progress Press business plan had been approved for funding “in terms of the letter of intent” dated 2013.

That letter of intent had also detailed the capping of the fund which in this case worked out at 40% of the total expense.

The €1.6 million grant did not exceed 40% of €5.5 million, Zammit said. 

“Now, seven years after that approval, do you tell Progress Press that those invoices were not in accordance to what you had approved? That consumables were not included? It was crystal clear under the business plan that consumables were included,” Giglio pointed out heatedly. 

Moreover, throughout these years, the company had sent its annual accounts to Malta Enterprise, clearly indicating the nature of expenses involved. 

“Did you ever go back to Progress Press saying that you would only fund machinery,” Giglio questioned further, directing the witness to return with further information on these queries in future sittings. 

Licari’s lawyer, Roberto Montalto, also asked Zammit to provide information as to whether Licari’s name featured in any documents or correspondence.

Had Malta Enterprise ever pointed out any irregularity to the former Progress Press financial controller, asked Montalto, also bearing in mind that ultimate advice had been issued by PwC. 

The court, presided over by magistrate Natasha Galea Sciberras, deferred the case to next week. 

Inspectors Anne Marie Xuereb, Joseph Xerri and Ian Camilleri prosecuted, alongside AG lawyers Agius Bonnici and Sean Xerri de Caro.  Lawyer Christopher Cilia represented Malta Enterprise.