Malta Enterprise officials had met former Allied Newspapers managing director Adrian Hillman to make it clear that funds granted to the printing company could only fund capital investment, not running operations.

The details emerged from testimony given by former Malta Enterprise chairperson Mario Vella in the ongoing compilation of evidence against former OPM chief of staff Keith Schembri, his father Alfio, his business partner Malcolm Scerri and accountant Robert Zammit. 

The former chief of staff has been absent from the proceedings since his lawyers informed the court two months ago that Schembri was receiving treatment for a serious medical condition.

All four are pleading not guilty to a series of financial crimes, including money laundering and fraud in connection with a multi-million euro printing deal allegedly involving the payment of some $5.5 in backhanders to former Progress Press officials, Hillman and Vincent Buhagiar.

Criminal investigations against Schembri and the other co-accused followed upon the conclusions of two magisterial inquiries wrapped up in September 2020 and March 2021, focusing upon suspect financial crimes linked to Nexia BT and Progress Press respectively. 

Testifying on Monday, Mario Vella, who chaired the Malta Enterprise board of directors between 2013 and 2016, explained how Progress Press had sent a letter, with business plan attached, when applying for the grant.

He recalled meeting Hillman once, in the presence of another Malta Enterprise official, around the time when that funding application was submitted. 

The objective of that meeting was to make it clear to the applicant that the grant was to cover only capital investment not running operations, said Vella, outlining the process involved from application stage to the final letter of intent. 

Asked directly by the court, presided over by magistrate Donatella Frendo Dimech, whether that grant also covered consumables, Vella’s reply was a straightforward “no”.

Consumables not mentioned in letter

There had been two letters of intent and neither had mentioned consumables, the witness added.

Defence lawyer Mark Vassallo pointed out that a former Malta Enterprise official had testified that the letter of intent was based upon the company’s business proposal.

But Vella disagreed, insisting that the letter of intent was issued in line with the decision of the Malta Enterprise board which had “the final say.”
Disbursement of the funds followed clear rules, Vella explained further. 

Proof of payment, in the form of invoices and receipts, was called for and Malta Enterprise also insisted on checking documentation concerning bank transfers. 

As for verifying that the machinery had actually been bought, that was a task allotted to engineers who carried out physical inspections, the witness said. 

It was immaterial who the supplier was, said Vella.

The main interest lay in determining that the goods were actually purchased and in any case, invoices would reveal the supplier in due course, he explained when answering further questions by the prosecution.

Vella also explained that although the estimated cost of the Progress Press project stood around €5.5 million, the grant agreed to by Malta Enterprise stood at €1.6 million.

Asked by the defence lawyer how that figure had been calculated hinting that Malta Enterprise had been aware that the values supplied by Progress Press included consumables, the witness replied, “Taking cognizance doesn’t mean that I approved”.

Earlier in the sitting, Times of Malta financial controller Adam Vella testified that he had not been involved in the Malta Enterprise grant which had taken place before he joined the company. 

Shown three emails sent by him to Malta Enterprise, the witness said that he had issued them upon instructions by former financial controller Claude Licari, who had left the company by the time the last email was sent.

Vella could not tell who had issued receipts nor the purpose of the funds referred to, explaining that when he joined the company he had been told that those funds related to some digitalisation project for which the company had applied for a Malta Enterprise grant in 2013. 

The case continues in November. 

Inspectors Joseph Xerri prosecuted, assisted by AG lawyers Antoine Agius Bonnici and Sean Xerri de Caro.

Lawyers Edward Gatt and Mark Vassallo are defence counsel.