Former Progress Press chairman Vince Buhagiar could not explain hundreds of thousands of euro he received from Keith Schembri, telling investigators that those were payments for consultancy services forming part of a “gentlemen’s agreement.”
Buhagiar, who is pleading not guilty to money laundering offences, received amounts over US$134,000, US$105,000 and €50,000 from a Gibraltar-based company, Malmos Ltd, owned by Schembri.
Details were disclosed on Tuesday by Inspector Ian Camilleri from the anti money laundering squad at the Financial Crimes Investigation Department when testifying in the ongoing compilation of evidence against Buhagiar.
Buhagiar, who was granted bail upon being arraigned last month, sat in court as the witness divulged further details about an email traced by police from Schembri to a ‘VB’ concerning a transfer of US$35,000.
Schembri, who served as chief of staff to Prime Minister Joseph Muscat, is being charged separately with money laundering, corruption and other crimes.
Under cross-examination by defence lawyer Veronique Dalli, the inspector confirmed that the sole pending suspicion concerning Buhagiar stemmed from “fees from Kasco.”
Buhagiar started working at Allied Group back in 1966.
In 2003, he became chairman of Progess Press, the printing arm of the group, as well as managing director at Allied Newspapers Ltd, the publishing arm that publishes Times of Malta.
He retained those posts up to 2012, when he reached retirement age, explained Matthew Naudi, human resources manager within the group, who was also summoned to testify on Tuesday.
Following retirement, Buhagiar had continued to offer his services to Progress Press on a consultancy basis, up to June 2016.
Asked by AG lawyer Elaine Mercieca Rizzo, Naudi said that there had been no contract of work and neither a consultancy agreement with Buhagiar, so that employment was regulated through invoicing and minutes of board meetings.
The witness clarified that Allied Newspapers and Progress Press were two separate entities, with separate employees and separate directors’ boards.
Directors were appointed by the board, said Naudi, answering questions by parte civile lawyer Joseph Giglio.
Under cross-examination, he confirmed that Buhagiar had retired, not resigned, upon reaching pensionable age.
Three police officers gave an account of the early-morning search and arrest at Buhagiar’s Swieqi home in March, saying that it was the accused himself who had answered their knock at 6:30am.
Two iPhones, an iPad, a laptop and documents related to Allied Newspapers and Progress Press were seized and Buhagiar had cooperated throughout before being escorted to the police lockup.
A number of officers from the MFSA, the Tax Commissioner, the Malta Business Registry and the Capital Transfers Department also presented documents related to Buhagiar’s tax returns and transfers of immovable property.
The court, presided over by magistrate Donatella Frendo Dimech, is to decree upon a request by the defence to authorise the accused to withdraw a specific sum, including his pension, from a local bank account currently hit by a freezing order.
The case continues on May 17.
Lawyers from the attorney general's office Sean Xerri de Caro and Andrea Zammit also assisted the prosecution, together with inspector Joseph Xerri.
Lawyer Dean Hili was also defence counsel.