The police commissioner and attorney general are facing a claim for damages by two directors of a financial firm who have been charged with money laundering and other financial crimes in cases connected to Keith Schembri and Nexia BT.
The two former Zenith Finance directors claim to have been “maliciously prosecuted” and are pinning responsibility for damages upon Attorney General Victoria Buttigieg, Police Commissioner Angelo Gafà, as well as two former senior financial crimes investigators.
Financial advisers Matthew Pace and Lorraine Falzon, of Zenith Finance Ltd and Zenith (Tied Insurance Intermediary) Ltd, are holding the four responsible both in their official and personal capacities.
Pace and Falzon had been targeted by criminal investigations as a result of a magisterial inquiry requested by former opposition leader Simon Busuttil.
Busuttil had submitted findings by the Financial Intelligence Analysis Unit into alleged money transfers to Adrian Hillman, former managing director of Progress Press, and to Schembri, former chief of staff at the OPM, through Schembri’s financial advisers Nexia BT.
A separate magisterial inquiry had investigated claims of alleged kickbacks from the sale of passports involving Schembri and Nexia BT.
Between March and May 2021, Pace and Falzon were among a number of figures, including Schembri and Hillman, who were arraigned under arrest and remanded in custody after pleading not guilty to money laundering and other financial crimes.
The two directors were also charged in their personal and official capacity for accountancy law breaches and criminal conspiracy.
They were granted bail a few days later. The criminal proceedings are still ongoing.
Last year, an inspector from the Anti-Money Laundering Squad testified that Pace and Falzon had been charged in their personal capacity in spite of the prosecution knowing “from day one” that they had made no personal illicit gains.
Inspector Ian Camilleri also said that the decision to press charges and insist on a freezing order upon all assets of the accused and their company had been taken by “a nucleus of persons” following collaboration between the office of the attorney general and the police.
Faced with that testimony, defence lawyers warned that “someone must eventually shoulder personal responsibility” for that decision, which spelt serious repercussions for their clients because their business had been ruined.
The warning was followed up last week when Zenith’s directors took their grievances to court. They filed judicial letters against Gafà and Buttigieg both in their official and personal capacity.
Two other letters were filed, also before the First Hall, Civil Court, against former deputy police commissioner and financial crimes chief Alexandra Mamo and former financial crimes investigator superintendent Frank Anthony Tabone.
Both senior officers have since resigned from the corps and are now legal professionals in private practice.
All four are being held personally responsible for advising criminal action against the directors and their companies in March 2021.
That advice, Pace and Falzon claim, was the result of “gross negligence,” non-observance of the principles of natural justice and consequently, in breach of their fundamental rights.
Gafà, Buttigieg and the two former senior police officials had taken various actions which amounted to “malicious prosecution”.
Therefore, they were to answer not only in their official capacity but also personally for the serious damages suffered by the directors and their companies.
Pace and Falzon called on them to answer for their actions and to settle damages within a month.
They reserved the right to take further legal action in terms of law.
Running parallel to the criminal action before the Magistrates’ Court, Pace and Falzon are also engaged in a constitutional battle revolving around the issue of double jeopardy.
The two had filed a case before the First Hall, Civil Court in its constitutional jurisdiction challenging the criminal action which, they claim, ought to be dropped.
Their lawyers argue that the facts underpinning the money laundering charges were identical to those on the basis of which Zenith Finance had paid a hefty administrative fine in 2018.
That fine was confirmed by a representative from the Financial Intelligence Analysis Unit who testified that MFSP Financial Management Ltd ‒ as Zenith Finance was formerly known ‒ had settled the €38,750 fine for administrative shortcomings flagged by analysts during investigations into the company’s operations.
Criminal charges three years after payment of that fine stemmed from identical facts and the action, therefore, ran counter to the principle of double jeopardy and breached the former directors’ fundamental rights.
Last November, Pace and Falzon were barred from taking any positions in the financial sector until criminal proceedings against them are concluded.
Lawyers Edward Gatt and Mark Vassallo signed the judicial letters.