Updated 4.45pm

Matthew Caruana Galizia told court on Monday he could not defend his mother’s publication of an article alleging that the secret offshore company Egrant belonged to Michelle Muscat, given that the main witness was dead and he did not know what she had in mind when penning the article.

Caruana Galizia took the witness stand in libel proceedings filed against his mother and himself by former Prime Minister Joseph Muscat over a 2017 article, first published in her Running Commentary blog alleging that the secret offshore company Egrant belonged to Muscat’s wife, Michelle.

That story had prompted Muscat to request a magisterial inquiry to investigate those claims. 

The inquiry, led by then-Magistrate Aaron Bugeja, concluded that there was no documentation linking the Muscat family to the Panama company, with a UK-based forensic accounting firm also failing to find any evidence linking the Muscats to Egrant Inc on the servers of now-shuttered Pilatus Bank. 

Former Prime Minister Joseph Muscat, and his wife, Michelle, pictured in 2019. Photo: Mark Zammit Cordina

Following the journalist’s assassination in October 2017, Muscat had testified in the libel proceedings, saying he would drop the cases if Caruana Galizia’s heirs accepted the findings of the Egrant inquiry. 

But the family had said they would not concede “to extortion from our public servants”. 

Six years since Caruana Galizia first published the article, Matthew Caruana Galizia testified that it would take a miracle to defend his mother’s publication. 

“Unless I’m in church and a box of evidence lands before me, we’re greatly prejudiced. The main witness is dead. I don’t have what she had. I don’t know what she had in mind. We’d need a miracle or my mother to come back to life to break free of that prejudice,” explained the witness. 

Asked by the family’s lawyer, Joseph Zammit Maempel, to shed light on the manner in which his mother handled her sources, Caruana Galizia said that, especially in the few years before her assassination, she was contacted by high-level sources, “most of them official sources”.

She had a very strong sense of ethics, he added.

Most of the time, he would find out about some investigation she was working on only once she published the story. 

When the workload became too much to handle single-handedly and he was assisting her on some minor investigation, he sensed her sense of ethics. 

Having worked as an investigative journalist for the past 23 years, Caruana Galizia explained that most of what he learnt came from his mother. 

Her sense of ethics was such that she would never record a conversation with a source unless they were comfortable with that. 

Yet, while working in a newsroom, he realised that recording conversations with sources was a practice adopted by many journalists. 

His mother, he said, had worked in newsrooms and had a career in journalism spanning 30 years. Her sense of ethics and her reporting was “really solid,” recalled her son, adding that he would never ask her any questions about her sources. 

She rarely asked him anything related to her investigations and he clearly remembered the “few instances” when she did. His mother had once asked him a direct question about the secret companies MacBridge and 17 Black.

'Hypothetical case'

Caruana Galizia is also facing separate libel proceedings about a Facebook post he wrote about money laundering.

Titled #CorruptionFacts part 10 A passport selling and money laundering story, Caruana Galizia's post was published on May 10 of 2017. It claimed Muscat had an offshore company, took commissions on passport sales and was involved in money laundering

At the witness stand on Monday, Caruana Galizia said the social media post was a hypothetical case intended to explain to people in Malta how money laundering worked.

Without transparency, we risk having politicians involved in corruption, he told court. 

Caruana Galizia meanwhile recalled discussing, with family members including his mother, how the work of journalists varied greatly from that conducted by an inquiring magistrate.

No journalist had “a million euros to spend on the investigation”. Nor did they have the power to order seizure. Journalists had to rely on sources and statements by politicians “if they spoke to them”.

Referring to the Egrant allegations libel proceedings, Caruana Galizia said the focus of the inquiring magistrate had seemed to be “extremely narrow”.

“The whole world now knows that what was going on at Pilatus Bank was not normal… there is a high probability that it was illegal. One source described the bank as a laundromat,” he said.

But the magisterial inquiry was very narrow: it looked at a single offshore company while journalists adopted a much wider approach looking at “tens or hundreds of offshore companies," Caruana Galizia added.

When laundering funds, people use “more than one company, more than one bank and more than one frontman,” went on Caruana Galizia. 

“A single police officer would struggle to investigate with the powers they have, let alone a single journalist.”

'Muscat toured the world promoting Maltese passports'

Reading from the Facebook post at the centre of the libel suit against the witness, Magistrate Victor George Axiak asked whether the reference to Joseph Muscat and other high-profile figures was by way of example or whether it was a reference to specific facts. 

“In any investigation, you don’t pull something out of thin air,” replied Caruana Galizia.

The witness went on to explain how accountant Brian Tonna had a company in Malta acting as an agent for the sale of Maltese passports and visas. 

Another company in the British Virgin Islands was set up to bill the Maltese company for its services.

“Why would Brian Tonna do that?” asked the witness, adding that it was “close to impossible” for anyone to find out who owned the BVI company. 

In fact, it was only after the Panama Papers came to light and Maltese tax authorities got access to that information that they began to collect taxes from the hidden depositories of revenues.

Tonna was an accountant and not a passport salesman “like Joseph Muscat who toured the world promoting Maltese passports," he added.

So how was Tonna getting referrals for passport sales and what was he doing with the money, asked Caruana Galizia. 

Moreover, Tonna’s firm, Nexia BT, was involved in the country’s main projects, including Electrogas and the Vitals Hospitals deal, besides offering accountancy services to high-profile figures, including former prime minister’s chief of staff Keith Schembri. 

“They were involved with people occupying the most senior roles in government.”

Understanding the context is very important, said the witness. 

'A hole in the information'

When carrying out such investigations, journalists like himself and his colleagues had to keep in mind the factor of “extreme opacity,” Caruana Galizia explained. 

Meetings with politicians were not logged and donations towards the funding of electoral campaigns were supported by “poor and incomplete” documentation. 

“There’s a hole in the information.”

There was the risk of “circular transactions” whereby, for instance, politicians facilitated the sale of passports and a sales agent created an offshore account where funds from those sales may be channelled.

Then those funds would pay for the luxury lifestyle or campaign of the politicians. 

The public had a right to know how politicians were funding their lifestyle and political campaigns, Caruana Galizia stressed. 

Muscat’s lawyer, Pawlu Lia, reserved the right to cross-examine the witness at a later stage.

The proceedings continue in June. 

Lawyer Joseph Zammit Maempel is assisting Caruana Galizia’s heirs.