A court has granted bail to Keith Schembri and two of his associates accused of financial corruption in connection with a multi-million euro printing press deal.
The former prime minister's chief of staff is expected to be released from Corradino Correctional Facility on Tuesday on conditions including the lodgment of €60,000 as part of a total bail bond of €150,000.
A magistrate ruled on Monday that the clean record of all three accused, the stage of proceedings and the fast pace of the police investigation eased concerns of possible interference with the case.
Schembri, his business partner Malcolm Scerri and accountant Robert Zammit, are all accused of financial crime offences including money laundering. A fourth man, Schembri's father, Alfio, is also charged but was previously granted bail.
The businessman and former right-hand man of prime minister Joseph Muscat denies the charges of fraud linked to the sale of a printing press to Allied Newspapers and Progress Press.
A previous sitting heard how he paid US$5.5 million (€4.66 million) in backhanders to Scerri, and two former managing directors of Allied Newspapers, publishers of Times of Malta, Adrian Hillman and Vince Buhagiar.
Schembri was among 11 people arrested and charged on March 20 in connection with the printing press scandal and a second magisterial inquiry into alleged passport kickbacks.
He was twice denied bail, with the magistrate previously saying that allegations he had forged documents did not give her peace of mind and that there was real danger of interference in ongoing investigations.
On Monday she praised the prosecution for the speed of its investigations and said that there had been a sufficient change in circumstances to warrant the release of all three on bail.
Magistrate Donatella Frendo Dimech dismissed a defence argument that the court could do away with a bail deposit because there is a freezing order over all the assets of the accused.
Defence lawyer Edward Gatt cited a previous ruling from Judge Emeritus Vince Degaetano that a criminal court would not impose a bail deposit when the accused was hit by a freezing order.
However the magistrate ruled Schembri and Scerri must each lodge a €60,000 cash deposit and Zammit must lodge a €40,000 cash deposit as part of an overall bail bond of €150,000 each.
They will only forfeit the €150,000 if the breach their conditions.
As their assets are frozen, it is understood the men will have to get the money from friends or relatives or seek court authorisation to withdraw the necessary sum. At present they are only allowed an annual allowance of around €13,000.
They must stay in their properties under an 8pm curfew and are banned from leaving Malta. The trio have also been ordered to surrender their passports and IDs, stay away from all witnesses and report regularly to police as part of their conditions.
On Monday the court heard from a series of police officers about searches in the properties of the accused that uncovered large sums of cash. The officers said all the accused fully co-operated with the police.
Court adjourned until May
1.32pm Thanks for following the live blog today. We'll have a brief summary above in a few minutes. The case will resume on May 11 at 8.30am.
One day more
1.22pm While he has been granted bail, we're hearing that Schembri and his associates will not actually be released from Corradino Correctional Facility today.
It's a bank holiday and the bail deposits will need to be withdrawn from a bank.
So the trio will be released tomorrow, after 17 days in prison.
Sufficient evidence for trial
1.13pm The magistrate now delivers her decree. She rules that there is sufficient evidence for the accused to face trial under a bill of indictment.
1.07pm Schembri's bail conditions match those of his associate Malcom Scerri.
He has been granted bail against a total of €150,000, comprised of a €60,000 deposit and a €90,000 personal guarantee.
The bail conditions for all three accused are:
- They cannot leave Malta;
- The cannot approach witnesses;
- They must sign a bail book;
- They have a curfew from 8pm to 7am;
- They must not go within 10 metres of an airport or 100m of any beaches;
- They must surrender their passports and ID.
Keith Schembri granted bail
1.03pm The magistrate has granted all three bail, including Keith Schembri.
Malcolm Scerri granted bail
1.01pm Malcolm Scerri is also granted bail. He is given the same conditions with a deposit of €60,000 and a personal guarantee of €90,000.
Robert Zammit granted bail
12.58pm Robert Zammit is up first. He has a clean criminal record, the magistrate begins. She reflects on the speed at which police investigations have taken place this week. She grants him bail on the condition that he does not leave Malta, approach witnesses, approach 100 metres of the airport or beaches. He has to sign a bail book.
Deposit is €40,000 and a personal guarantee of €110,000.
12.56pm We're back. The magistrate will read out the decrees one by one.
Bail decree later
11.56am The magistrate has retired to her chambers to deliberate on the request for bail for Schembri, Zammit and Scerri. We're told that a bail decree will be expected around 1-1.30pm but we may be summoned earlier.
11.49am There is a legal discussion over potential bail deposits, with the defence pointing out that the assets of the accused are frozen, under court order. The magistrate says there are certain situations when a deposit is lowered when circumstances change. But the court is still taking into account the fact that investigations are ongoing.
The lawyer for the Attorney General points out that substantial amounts of cash were found on the properties of the accused.
Defence sets out arguments
11.34am Edward Gatt, lawyer for Keith Schembri, says he won't repeat his bail arguments from last week. The case is "stale" he says. He notes that today's sitting was meant to hear from "sensitive witnesses".
And he notes that the prosecution's main fear was regarding tampering of evidence. He says he has consulted case law and argues that grounds such as the need to carry out further investigations or proceedings do not correspond to any of the reasons to justify denying bail.
'Circumstances have changed'
11.31am The magistrate asks if there have been any developments in the case this week. Elaine Mercieca Rizzo, for the Attorney General's office, says police have kept to the magistrate's direction but no details are revealed.
"So I understand that circumstances have changed," she says.
11.30am The lawyer for the Attorney General says that they presented three replies to bail questions and their objections are the same as last week, when bail was denied.
11.27am Inspector Omar Caruana is up next and is the final witness today. He was involved in the searches in connection with Keith Schembri on September 21 last year. The Three Cities Studio in Cospicua was searched for ten minutes at midnight, then officers moved on to the Kasco factory at Bulebel, for an hour between 3-4am.
He was also involved in the searches linked to Robert Zammit on March 7, when he was in mandatory quarantine.
11.11am We're back in court. Couldrey Abigail from FCID takes the oath. She arrested Malcolm Scerri on March 7 at a property in Birzebbugia. When police arrived, his son answered the door and said his father was playing tennis at Rinella. Scerri returned home at 7am and showed police into his home study, where they seized documents and a laptop, mobile and €18,950 in cash. Police explained he was under arrest over money laundering.
10.33am Magistrate Donatella Frendo Dimech explains that the witnesses were rather fast this morning so proceedings are ahead of schedule. She explains that the lawyers approached the bench because witnesses summoned for later this afternoon are being contacted to come to court earlier.
She says today is the first time that court has used this set up, hence the audio problem.
The sitting has been suspended until 11am while other witnesses are called.
One case, two rooms
10.29am Because of social distancing requirements, our set up is unusual today. The media is in one hall, while the case is being heard in a separate hall.
We're monitoring proceedings via video link and we're having a few audio problems.
Searches at Mrieħel
10.26am Another witness from FCID Colton Grech, says he assisted in a search at the Times of Malta premises in Mriehel in March but he didn't seize documents himself.
Partly cracked iPhone
10.19am Inspector Turner is describing a search at the home of Zenith director Matthew Pace in March. A partly cracked iphone was seized at his St Paul's Bay home. Pace didn't want to give its password to police.
Francesco Farrugia, a sergeant from the Financial Crimes Investigations Department, was also present for searches at Schembri and Pace's homes. He says Pace was escorted to the Floriana lock up at 8am.
10.10am We have a conveyer belt of police officers testifying this morning.
Another officer takes the stand. Ritianne Ciantar was present at searches of Manuel Castagna's home.
She is followed by another officer who describes going to the Mosta residence of Robert Zammit in March. He couldn't be arrested because he had tested positive for COVID-19 and was under mandatory quarantine but his mobile was seized.
Inspector James Turner is next up, testifying that he played a minor part in assisting at searches at Kasco premises in Bulebel industrial estate in Zejtun.
Nexia BT directors
10.01am Another witness from the money laundering squad - Constable Shaun Cutajar - describes being involved in searches linked to Nexia BT director Karl Cini. A laptop and a pen drive were seized in early morning searches at Cini's home and office, both in San Gwann.
The next witness is Clayton Demicoli, who was involved in a search at the residence of another Nexia BT director, Manuel Castagna on September 22, when police found five mobiles and an iPad. His office was also searched and more electronic devices seized.
09.57am We're back. Another police officer takes the stand. She says she was involved in a search at San Gwann in September last year. Several devices, jewellery and €12,000 in cash was seized.
An iPhone and a laptop were seized at another search linked to Zenith director, Matthew Pace.
Break in proceedings
09.32am The magistrate has moved out of the hall so we're on a short break. We're not sure how long for.
Huddle at the bench
09.30am Lawyers for the defence and prosecution approach the magistrate's bench, where they are consulting about something out of earshot.
09.27am Ezekial Maniscalco, an Economic Crimes officer, takes the stand and describes a search at Keith Schembri's Mellieħa home on September 21 last year.
They were let in by his wife, Josette, who called her husband before police searched the house, room by room. Among the devices seized were iPhones, nine pendrives and two iPads as well as documents. Police then went to Three City Design in Cospicua, where they found nothing.
A PC tower was seized from the Kasco factory at Bulebel.
Schembri was completely cooperative throughout.
Nexia BT offices
09.19am Two police officers have taken the stand and describe seizing devices at Nexia BT offices.
09.17am Alfio Schembri was interrogated by police. He did not answer questions about the sum of money, allegedly wages, handed over to his son.
09.14am Robert Zammit explained a discrepancy between the invoice price and the selling price for the printing press deal. He said that the selling price included consumables over a five-year period.
He also explained there was a document with initials AH and VB. This was Scerri's 'wish list' as to how certain people were to be paid.
09.07am The inspector moves on to Robert Zammit, Schembri's accountant, who is accused of money laundering.
Zammit was shown transactions linked to the machines. He said he always followed the instructions of his superiors, either Schembri or Scerri.
He said he carried out lots of administrative work and invoicing. He hadn't been working at Kasco for long and felt uncomfortable going to his superiors to question the need for the work.
They also always followed the advice of Nexia BT.
09.05am Interviewed by police, Schembri's associate, Malcolm Scerri spoke about the Progress Press deal. They needed experts in the field and Buhagiar was "ideal to offer expertise".
Scerri said the tender for the printing press project was 2/3 million cheaper than the next lowest bid.
'Times would not be pleased'
09.02am The testimony now turns to payments relating to the printing press deal, which were given to former Allied Newspapers managing director Hillman through a series of offshore companies. Schembri told police that Hillman was paid from abroad because "Times would not be pleased if they got to know that he [Schembri] was making payments."
He said that money owed to Hillman and Buhagiar "just happened" to be written down on a document with that letter head.
Schembri insisted that the money to be handed over had nothing to do with the project.
08.57am Camilleri is going over old ground so far. He describes how the investigation was started because of allegations from former PN leader Simon Busuttil over €650,000 worth of kickbacks.
Cheques from father
08.52am Schembri told police that Nexia BT director Brian Tonna administered his companies. He explained that his father [Alfio, who also faces corruption charges], would hand over cheques to him as a donation because Schembri was an only child.
Zenith Finance account
08.50am In November, Schembri released a statement in the presence of his lawyers. He confirmed he had an account with Zenith Finance. He said that due diligence was carried out on all transactions. Various documents were handed over, which are now presented to court.
08.46am He begins by referring to a September 22 arrest when Schembri and the three Nexia BT directors were picked up. Devices were seized from Nexia BT's offices.
Castagna didn't answer questions, Tonna and Cini answered some and Schembri was granted police bail.
Money laundering inspector takes the stand
08.43am Inspector Ian Camilleri is the first witness. He's from the anti money laundering squad and formed a task force to investigate alleged corruption.
08.39am The cast of characters connected to the case includes:
- Keith Schembri, the most high profile man in the dock, accused of corruption in the private sector connected to a printing press deal;
- Malcolm Scerri, Schembri's business partner and co-accused;
- Robert Zammit, Schembri's accountant, also faces charges of money laundering;
- Alfio Schembri, Keith Schembri's father, is also facing money laundering charges;
- Adrian Hillman and Vincent Buhagair, both former managing directors of Allied Newspapers, who are publishers of Times of Malta, accused of being recipients of backhanders in the deal;
- Financial advisory firm Zenith Finance Limited and its owners Matthew Pace and Lorraine Falzon, accused of being accomplices in criminal activity;
- Nexia BT directors Brian Tonna, Karl Cini and Manuel Castagna, Nexia BT financial controller Katrin Carter Bondin also face charges linked to corruption
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