Adrian Hillman gave no explanation when Allied directors demanded answers from him about his alleged financial dealings with Keith Schembri and offshore companies, a court heard this week. 

Directors at the company told police investigators that blog posts by Daphne Caruana Galizia in 2016 that exposed secret payments Hillman had allegedly received from Kasco Engineering Limited, a company owned by Schembri, came as a “shock”.

The payments were for purchases of digital printing machinery from Kasco by Progress Press. 

Progress Press is a subsidiary of Allied Newspapers, which is the publisher of Times of Malta. Hillman was the managing director of the group at the time. 

Inspector Anne Marie Xuereb said he gave company directors no explanation when summoned by the board. 

Hillman stands accused of money laundering, criminal conspiracy, fraud to the detriment of Progress Press and Malta Enterprise, making a false declaration to a public authority and accepting bribes.

After failing to provide an explanation about the allegations, Hillman was immediately placed on garden leave and suspended, said Xuereb, running the court through a summary of information gathered during investigations into the allegedly fraudulent deal.

Those investigations, triggered by an application filed by former Opposition Leader Simon Busuttil, formed part of a magisterial inquiry that investigated the 2013 deal.

The inquiry was concluded by Magistrate Josette Demicoli in March 2021 and resulted in criminal charges being issued against Schembri, his business associates, former Progress Press chairman Vincent Buhagiar as well as Hillman. 

Prosecutors claim that the price for the new printing set up at Progress Press was purposely inflated, by including consumables in the company’s funding application to Malta Enterprise.

Part of the price was eventually covered by a €1.5 million investment aid granted by the State entity which, however, was meant to cover only plant and machinery. 

Prosecutors further claim that the deal masked millions of US dollars in suspected backhanders traced to accounts controlled by Hillman, Buhagiar, Kasco owner Schembri and Schembri’s business partner Malcolm Scerri. 

Schembri himself, when interrogated prior to his arraignment on March 20 last year, had told police about his friendship with Hillman, which dated back to 2001. 

The two came to know each other because they operated within the same business sector and Schembri said he had engaged Hillman’s services on various projects both locally and abroad, describing him as “a very valid person”.

Yet, when asked to supply documents to prove such a business relationship, Schembri could produce no contracts of work nor invoices to support the transfer of funds traced to Hillman’s account, said Xuereb. 

Schembri had explained how various quotations to supply paper to Progress Press had always invariably failed.

But following a change at board level and thanks to Hillman, his luck had changed and he finally managed to get the contract to supply the printing press with paper, Schembri had told investigators, before opting for his right to silence at the final interrogation hours before his arraignment. 

Hillman’s lawyer asked whether Schembri had mentioned that his successful bid was the cheapest offer Progress Press received when it issued a call for paper supply offers. 

“He said that there had been a change of directors,” replied Xuereb, adding that police had not verified whether that bid was cheapest.

As for the purchase of the printing machines through Kasco, Progress Press had chosen the machines after its representatives had travelled to a Financial Times facility in Brussels to see similar machines in operation. 

Keith Schembri, who served as chief of staff to Prime Minister Joseph Muscat. Schembri was unable to provide paperwork about his business relationship with Hillman. Photo: Matthew Mirabelli

Hillman’s lawyer, Stefano Filletti, again asked if the bid was the cheapest one. 

“I cannot recall at present if it was cheapest. It was verified but at the moment I cannot recall,” said the inspector, also confirming that Progress Press business transactions were audited by PwC.

One of the company directors had told investigators that the company “always got a clean audit report” and nothing fraudulent was ever flagged, the inspector testified.

As questions focused upon the grant obtained from Malta Enterprise, the witness said that the beneficiary of those funds was Progress Press.

“Not Adrian Hillman personally,” asked the accused’s lawyer.

“Progress Press,” came the reply.

Hillman’s lawyer finally contested that his client had been ‘fired’ by the company, pointing out that he had resigned.

In fact, an agreement had been drawn up and signed between Allied and Hillman as to how the parties were “to go about the matter. You cannot simply tell such an official not to report for work the next day,” said Filletti. 

Investigators were shown board minutes to that effect, said the witness.

While facing separate charges of money laundering and fraud, Progress Press was admitted as a victim in criminal proceedings against Schembri, Hillman and Buhagiar, claiming that it was “the victim of an illicit, secretive and abusive side deal that took place behind the backs of the company’s directors.”

Hillman’s case continues in May.

Magistrate Donatella Frendo Dimech is presiding over the case.AG lawyers Antoine Agius Bonnici and Sean Xerri de Caro assisted the prosecution.Lawyer Stefano Filletti was defence counsel.Lawyer Mario Spiteri Bianchi appeared parte civile.