A judge has ruled that the state breached the rights of two directors accused of money laundering by failing to provide the tools needed to extract data from a locked phone.

The evidence, needed by the prosecution, must now be produced by April 4 or the compilation of evidence against the directors will proceed without it, the constitutional court ruled in a case brought by two former Zenith Finance directors, Matthew Pace and Lorraine Falzon.

I totally forgot [the password]… I honestly don’t know it- Former Zenith director Matthew Pace

The state’s failure unnecessarily dragged out the money-laundering proceedings and resulted in a breach of Pace and Falzon’s rights, the court said.

Zenith used to be worth €25 million but ran into debt after the two were charged with money laundering and a blanket freezing order was imposed on their assets.

Pace and Falzon were among a line of high-profile figures, including former OPM chief of staff Keith Schembri and Nexia BT financial advisors Brian Tonna and Karl Cini, who were arraigned in connection with financial crimes and corruption in March 2021.

Both directors deny the charges. Pace’s password-locked mobile phone was seized when the police searched his home. Having not yet consulted his lawyers, he told investigators that he “was not in a position to provide the PIN number”, the court heard.

That meant that when he and Falzon were arraigned, the police had no access to the phone data.

Extraction of data requested

Nine months into the compilation of evidence, the prosecution requested the extraction of the data, saying that it could contain chats relevant to the case.

But at that stage, Pace was unable to recall the password since the device had been out of his possession for several months.

“In one and half years, my life changed completely. One moment I employed 70, 80 people, the next nothing.

One moment [I operated] a company worth €25 million, suddenly I’m in debt… I totally forgot [the password]… I honestly don’t know it,” Pace testified.

A court-appointed expert was unable to unlock the device and was authorised to seek the assistance of a foreign firm.

However, the service requested by the courts services agency also met an obstacle. The foreign company needed more time because of “enhanced due diligence” that was called for in view of the fact that there were “politically exposed persons” linked to the case.

Meanwhile, progress in the criminal proceedings ground to a halt.

As the prosecution insisted on the phone data, months dragged by.

This finally prompted Zenith’s lawyers to seek redress before the constitutional courts, arguing that their clients’ fundamental right to a fair hearing within a reasonable time had been breached.

Prosecution‘fishing’ for data

The prosecution was “fishing” for data while the accused’s lives were “literally frozen”, defence lawyers argued.

Delivering judgment in the First Hall, Civil Court, Madam Justice Joanne Vella Cuschieri observed that the inquiring magistrate had ordered extraction of the phone data nine days before the applicants were arraigned in 2021.

Since August 2021, records of the court proceedings refer to that evidence and nothing else.

After the breach-of-rights case was filed in July 2022, no luck was registered in obtaining the requested data.

Were it not for that obstacle, the prosecution could have wrapped up its evidence stage “in one-sixth of the time it has taken so far”, said the judge, observing that the AG had insisted on having the electronic data for “20 months”.

The compilation of evidence, which under normal circumstances should have taken a few months, was now edging close to the two-year term solely because of this obstacle, which was certainly no fault of the accused.

The prosecution was in duty bound to produce the best evidence but also to do so within a reasonable time, the judge said. This was “a criterion which in this case is evidently not being observed”.

'Delay was blatant'

The delay was so blatant, the court said, that it was not necessary to wait for criminal proceedings to be concluded to declare that the lapse of time experienced so far was unjustified.

Such delay was attributable to a lack of resources needed to effect the requested extraction from Pace’s devices.

Without entering into an analysis as to whether the data was necessary for the criminal case, the court declared that Pace and Falzon had suffered a breach of their right to a fair hearing within a reasonable time.

At this stage, declaring such breach was “the most effective remedy which the court could give the applicants”, said Madam Justice Vella Cuschieri.

No damages were to be calculated at this stage but once the decision became final it was to be notified to the speaker in parliament and also to the magistrate presiding over the compilation proceedings.

The data was to be produced within six months from the date when the magistrate conducting criminal proceedings had appointed another expert to extract and analyse the phone data “as soon as possible”.

That order was given on October 4, 2022. Upon the lapse of six months from that date – in just over a month’s time – the magistrate was to immediately put an end to the prosecution’s evidence, declared the judge.   

Lawyers Edward Gatt and Mark Vassallo assisted the applicants.