Two Progress Press officials facing fraud and money laundering charges made no personal financial gains from the allegedly fraudulent application filed for a grant from Malta Enterprise, a police inspector testified on Monday.
Leanne Bonello, from the police anti-money laundering squad, told the court that after carefully analysing financial statements belonging to Progress Press managing director Michel Rizzo and former financial controller Claude Licari, the police found nothing to prove any financial gain.
She explained how in Rizzo’s case, there was a €4,500 incoming transaction which he could not explain but which the police did not pursue as there were no suspicions.
The inspector was testifying in the first sitting of the compilation of evidence against Rizzo and Licari, who stand accused of making fraudulent gains to the detriment of Malta Enterprise between 2013 and 2019, criminal conspiracy, making a false declaration and falsification of a public document. Licari, who left Progress Press in 2018 is also charged with breaching accountancy laws.
Progress Press, which is the printing arm of Allied Group, faces similar charges. Allied Group is the publisher of Times of Malta.
The inspector told magistrate Natasha Galea Sciberras that the issue revolved around what the police believes was an inflated capital expenditure for three printing machines and a subsequent application for a grant from Malta Enterprise.
She said the machines were purchased in 2013 for €5.5 million, which also included around €2.5 million in consumables and which should not have been included in the application. She said is it estimated that the company received some €730,000 more than what it was entitled to.
She explained that the letter of intent for the Malta Enterprise grant was signed by Adrian Hillman, currently in the UK and against whom the police have launched extradition proceedings, and counter-signed by Rizzo.
Hillman was managing director of Allied Group at the time while Rizzo led its subsidiary Progress Press.
Answering a question by the court on why the police decided to charge the two men in their personal capacity once they had concluded they did not gain from the transaction, the inspector replied that any illicit financial gain fell under the money laundering crime.
Bonello said that while Rizzo told the police he had gone through the letter intent “roughly” before signing it since it had been prepared by Hillman and seemed based on what they had discussed, Licari said he always acted on Hillman’s instructions and issued payments when his then managing director told him to do so.
She said Licari told the police he did not agree that consumables should have been inserted into the total figure. However, he said it had been vetted by the company’s auditors, PriceWaterhouseCoopers, which had not raised any concern. The inspector also confirmed that both Rizzo and Licari were not aware of commissions and backhanders allegedly received by other company officials.
Boxfuls of documentation
The inspector gave a blow-by-blow account of what Rizzo and Licari told the police during their various interrogations. She presented the court with boxfuls of documentation, including invoices and credit notes issued by Kasco, the company chosen to supply the three machines following a competitive tendering process.
Rizzo had told police Kasco was chosen by the board of directors following a presentation by Hillman and Noel Galea, the Progress Press operations manager.
Rizzo explained to them that the Malta Enterprise grant application specifically mentioned consumables but no one from the parastatal corporation raised any queries about it. Moreover, it had been scrutinised by PriceWaterhouseCoopers.
He also told police he had informed Malta Enterprise when it was brought to his attention that one of the machines was not a six-colour machine but a five-colour printer which cost some €225,000 less.
Project based on plan drawn up by Hillman
He was not present when Malta Enterprise inspected the machinery, as he was based in Valletta at the time. He also said that the project was based on a business plan drawn up by Hillman.
On Licari’s interrogations, the inspector said he would issue payments upon Hillman’s instructions and insisted with police he had not been involved in the choice of the machinery. She also confirmed that Licari did not receive any commissions.
At the end of the sitting, the prosecution and the defence agreed on the nomination of accountant and auditor Stephen Paris as an administrator for Progress Press so the company could continue its day-to-day operations, including the payment of employees’ wages.
Paris told the court he was a partner with audit firm Deloitte when the firm was appointed as an internal auditor for Progress Press and Allied Newspapers Limited around 2016.
Attorney General lawyer Antoine Agius Bonnici questioned whether this could constitute a conflict of interest, prompting an outburst by defence lawyer Joe Giglio who said that it was AG’s office that had a massive conflict of interest in this case as it had prosecuted two people without legal basis and only after the office had been criticised by, among other, Allied's newspapers.
Giglio said journalists were doing the investigations that should have been done by the AG but it had “abdicated its responsibilities for the past six years”.
Magistrate Galea Sciberras said she will decree about the appointment of the administrator in camera and put off the sitting to May 18.
The court also took note of a decision by the Criminal Court over an appeal filed by the AG’s officer over the fact that Rizzo and Licari’s personal assets had not been frozen. The court said it will decide on the AG’s request once the magistrate presiding over the case decide whether there was enough evidence for the case against them to continue.
Inspectors Anne Marie Xuereb, Joseph Xerri, Ian Camilleri, and Lianne Bonello prosecuted together with AG lawyers Antoine Agius Bonnici, Andrea Zammit and Sean Xerri de Caro.
Giglio appeared for Rizzo and Progress Press while Licari was represented by lawyer Roberto Montalto. Lawyer Chris Cilia appeared for Malta Enterprise as parte civile.