A Malta Enterprise official who handled an aid application by Progress Press that has landed the company in court detailed the steps that led to the company’s application when he testified in court on Monday. 

George Francalanza, who is currently chief officer at Malta Enterprise, testified under questioning that Adrian Hillman had met with the state agency before an introductory meeting preceding the company’s business proposal. 

Francalanza said nothing came of that meeting and that the business proposal came later. 

The official was testifying in ongoing proceedings against Michel Rizzo, former managing director at Progress Press and Claude Licari, the company’s former financial controller. Hillman faces financial crime charges in a separate case. 

As former company officials, both Rizzo and Licari are pleading not guilty to money laundering and fraud to the detriment of Malta Enterprise allegedly stemming from a €1.5 million investment aid intended to help Progress Press partially cover a €5.56 million capital expenditure on a new printing set-up. 

The company had requested an introductory meeting in July 2013.

Francalanza said that meeting was attended by former Hillman, who at the time was Allied Group managing director, and then Malta Enterprise chairman Mario Vella. The witness said he was not sure whether Rizzo was also present on that occasion.

The meeting was followed up by the company’s business proposal and a first letter of intent issued by the Malta Enterprise board on October 29, green lighting a €1.13 million cash grant and a 3 per cent subsidy on loan interest. 

Days later, Progress Press wrote back to Malta Enterprise requesting a revision of the grant in view of the fact that the company did not intend to take any loans on the investment project.

Consequently, on December 20 Malta Enterprise issued a second letter of intent.

In that letter, the value of the 3 per cent loan subsidy was split up into five payments that were to be forked out to Progress Press on a yearly basis, in addition to the €1.13 million cash grant approved in the first letter of intent.

That was how the full grant added up to €1.167 million, explained Francalanza.

Facing questions by Rizzo’s lawyer, Joe Giglio, the witness confirmed that all correspondence was addressed to Hillman who had the leading role at Progress Press. 

Asked whether there had been any other meetings prior to the July introductory meeting, Francalanza said that “it might have been the case,” adding that Progress Press was familiar with the scheme since it had benefited from such investment aid since 2008 or so. 

“Could it be that they requested to convert tax credits to cash grants?” asked Giglio, pointing out that at the time in question the company might have sought that option since it had registered no profits and thus could not benefit from such tax credits. 

“We said no,” replied Francalanza.

“So there were other meetings with Hillman where he asked for tax credits to be converted to cash and that in case of a new application they would not go for tax credits but a cash grant and loan subsidy,” probed the lawyer. 

“Now I do recall an earlier meeting but nothing came of it. They stopped there. Then came the business proposal,” replied the witness.

Asked whether anyone from Malta Enterprise had ever told him that the workings relative to the Progress Press grant were not being done well, Francalanza replied in the negative. 

The official was also confronted with a statement he had made when testifying previously on the matter. 

“You were reported as saying that at no point did you see elements of fraud. Is that so?” asked Licari’s lawyer, Roberto Montalto, sparking objection by the prosecution who argued that reference was to be made to transcripts of evidence rather than media reports. 

However, in reply to the lawyer’s question, Francalanza rebutted that statement.

“At application stage I could not see any fraud,” he said, explaining that his role was to handle the application up to the letter of intent stage and afterwards broker meetings as necessary.

The case presided by Magistrate Natasha Galea Sciberras continues later this month. 

Inspector Joseph Xerri prosecuted, assisted by AG lawyer Antoine Agius Bonnici. Lawyer Chris Cilia represented Malta Enterprise.