Keith Schembri is being treated at hospital for a "serious condition" and failed to attend his court hearing on Tuesday.

The court was reconvening to hear charges of money laundering and fraud against the former chief of staff at the Office of the Prime Minister.

His lawyer Edward Gatt broke the health update to reporters outside court on Tuesday morning.

Gatt said Schembri was receiving treatment at Mater Dei Hospital and appealed to everyone to treat the former chief of staff as well as his loved ones with dignity during "these difficult times".

Upon leaving court later, the lawyer said Schembri was receiving treatment for "a serious condition".

"We will receive updates from the tests he's having... he's in good hands," he replied when asked to confirm whether the former chief of staff had undergone a biopsy.

Lawyer Edward Gatt speaks before and after Tuesday's court sitting. Video: Ivan Martin

Various witnesses, mostly police and officials from tax and accounting departments, were called up to testify during Tuesday's two-hour sitting. 

Schembri, his business partner Malcolm Scerri and accountant Robert Zammit, are all accused of financial crime offences including money laundering.

Schembri and Scerri are also being investigated by the tax compliance unit. Officials testified on Tuesday that both had made declarations of hundreds of thousands of euros after being audited by the tax compliance unit.

Police officers testified that Schembri's father, Alfio, had told police he would be asked to sign documents at Kasco Ltd, but he did not know what he would be signing.

He also had no say in how Kasco was managed in his role as director. Alfio Schembri also told police that he used to "donate" his salary to his son. When he was appointed chief of staff in 2013, Keith Schembri had said he had distanced himself from his business operations.

Last month, a court granted bail to Schembri and two of his associates accused of financial corruption in connection with a multi-million euro printing press deal.

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.

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.

In the last case, the court heard from a series of police officers about searches in the properties of the accused that uncovered large sums of cash.


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Case adjourned

11.10am After a series of witnesses presented their evidence, the case is adjoured to Wednesday.

Defence lawyer Edward Gatt says that next time the prosecution should present relevant people, like Adrian Hillman, and not officials from the VAT Department.

Hillman remains in the UK, pending extradition.


Previous declarations amended

10.50am Joe Debono from the tax department is testifying.

He says Malcolm Scerri is being investigated for the period 2012 to 2016.

Schembri and Scerri were both subjects of five-year tax investigations and they have both since added substantial amounts to their previous declarations.

As a result of those audits, Schembri later declared some €504,000, while Scerri declared €970,000.


Witnesses being called in

10.30am We are being a bit sparse with information since the court is calling up a series of witnesses to present documents and evidence before walking off within minutes. 


Administrator presents evidence... and gives some advice

10am The next witness is accountant and auditor Raphael Aloisio, an administrator assigned to oversee Kasco Ltd.

He was appointed in November to oversee companies subject to an attachment order.

Aloisio says it was a complex process as the companies were ongoing interests and needed to continue operating, paying salaries and so on.

Two boxes full of documents will be submitted as evidence to support every transaction that was approved while he was administrating the companies.

The administrator tells the court that when experts like him are appointed, it makes more sense to be a supervisor to oversee transactions, especially when the companies in question have active management teams and boards of directors. 

“It’s like a ship. Who is the captain? The administrator or the board of directors?” he says, adding that many will refuse to be administrators because of this issue.

The court tells the administrator that his role is one of surveillance.


27 cheques to BTI

9.55am The witness presents a report on BTI Management Ltd owned by Brian Tonna and Karl Cini.

A total of 27 cheques went into the company's account. 

The company would then issue a large number of cheques to several entities of interest, including Mossack Fonseca, Adrian Hillman and Keith Schembri. 


Transactions between father and son

9.50am PC Andre Farrugia, from the police's FCID is up next. He was assigned to a task force to analyse bank accounts held by Keith Schembri and his father.

Keith Schembri has two joint accounts with his wife at Zenith Finance.

The witness zooms in on a payment of €100,000 to Keith Schembri. These came in the form of cheques. Around 15 were from his father and another 40 from Kasco Ltd. They were signed by Alfio Schembri.

Schembri had then transferred a number of cheques to a Nexia BT-related company.

Nexia BT's Brian Tonna.Nexia BT's Brian Tonna.


Regular payments made

9.40am An analysis of Alfio Schembri's bank accounts showed regular payments from Kasco and Kasco-related companies and also payments out of his account to his son and his daughter-in-law.

Alfio Schembri said he often signed documents presented to him but normally he had no visibility on what they entailed. She says he had no knowledge of various transactions between the group's different companies.


Schembri did not respond to questions

9.35am During his final interrogations in March, just before he was arraigned, Schembri did not responded to questions, the inspector says. 

She presents the financial analysis documents on Alfio Schembri, who is present in the court room. 

He was paid a salary by Kasco but received no dividends and took no commercial decisions. 

Alfio Schembri had first opened the company and his son later joined along with Malcolm Scerri.

There is some confusion as the magistrate is trying to organise the large volume of documents being presented as evidence.


Donated salary to son

9.30am Inspector Leanne Bonello from the anti-money laundering squad is up next.

She says accused Robert Zammit confirmed his involvement as financial controller in Kasco Ltd. In his position, he followed directions and was never involved in the printing press deals. He would also receive directions from Kasco auditors Nexia BT, specifically from Karl Cini. He insisted to police that he never took any commission.

Bonello says that when Keith Schembri became OPM chief of staff his father would get his pay and donate it to his son.


Evidence being presented

9.15am The first witness, Katya Vassallo, takes the stand. She took five transcripts of statements from Keith Schembri.

Deputy court register Liandra Zerafa is presenting the procès-verbal on electronic devices lifted by the police's financial crimes unit. 

An inquiry sparked by former Opposition leader Simon Busuttil in 2017 is also presented.


Court in session

9.10am Magistrate Donatella Frendo Dimech is presiding. 

Lawyer Edward Gatt tells the court that Schembri is receiving medical treatment and cannot be present in court. Gatt says the results should be known today. 

Gatt informs the magistrate that Schembri will not be able to attend tomorrow’s sitting either.

The magistrate says the case will continue and there is no need for Schembri to be present.


Case will go ahead

8.45am The court case was due to start at 8.30am but we've been told proceedings will start around 9am. The case will still go ahead despite Schembri not being present in court. 

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