The first hearing in a compilation of evidence against 11 people facing charges related to a series of major financial crimes started today with representatives of Nexia BT – Brian Tonna, Karl Cini, Katrin Bondin Carter and Manuel Castagna – and their related companies.

They are among the 11 arrested last Saturday, with the exception of the former Managing Director of Allied Newspapers Adrian Hillman who was abroad. It is not yet clear whether Hillman has returned to the country to face charges. Questions sent to the police by The Shift have not yet been answered.

Former Chief of Staff Keith Schembri, his father Alfio Schembri, Kasco Group CEO Malcolm Scerri and Robert Zammit are also among the accused, as well as Vince Buhagiar, another former director of Allied Newspapers.

Magistrate Donatella Frendo Dimech focuses on the four Nexia BT representatives today.

Police inspector Anne Marie Xuereb from the Economic Crimes Unit is the first to testify. She has a huge cardboard box filled with papers seated next to her on the witness stand.

She says her work began after the inquiry on Brian Tonna and Keith Schembri with regards to the passport kickbacks had started, which was initiated by Former Opposition Leader Simon Busuttil. It was then assigned to Magistrate Natasha Galea Sciberras in May 2017 and concluded in 2020.

She refers to payments made to an account in Keith Schembri’s name at Pilatus Bank through Willerby Trade Inc – of which Tonna is the UBO (Ultimate Beneficial Owner). Two payments were made of €50,000 each.

She says the inquiry found no evidence that it was a kickback, but at the same time found that Schembri and Tonna’s explanation was not credible. Documents provided by the two were shown to be forged, she added.

The two had said that they didn’t need documents for things such as loan repayments “since they were friends”.

Inspector Xuereb says the two could not say when and how the money was passed on. “Yet, documents downloaded from the Nexia BT servers showed that Tonna used to keep account of everything – every cent that goes in and out.”

The inquiry also showed that the amounts seemed to be paid from all three partners, rather than Tonna alone, because of Willerby’s setup. Tonna had said that Willerby was set up for the investment of profits made by the company’s partners.

Inspector Xuereb also says that Tonna had ways of paying Schembri for a loan in different ways as he had the means and the bank accounts. “It is clear enough that if Brian Tonna had wanted to pay the loan back he had enough money in his bank account.”

She adds that Cini and Bondin Carter had worked together to create a substantial amount of documents that were backdated. “The experts helping out said that they were made to mislead investigators with regards to financial transactions and to prevent scrutiny.”

The experts also said that the documents would not have been created if the Panama Papers leak did not happen. Documents were also created to satisfy bank due diligence following an FIAU visit to Pilatus Bank, she said. These included documents that were dated as 2015 but were created in 2016.

She refers to another document about meetings said to be held in 2013, a day after Willerby was created. Yet they found that the bank account was actually opened 16 months after the date written in that meeting.

Inspector Xuereb also mentions discrepancies in invoices to Russian individuals who had obtained a Maltese passport through the cash-for-passports scheme. She said invoices were issued by both Willerby and BT International. She added that since Willerby never traded, they could not have offered the services mentioned in the invoice.

Experts in the inquiry also said that Willerby was created for Nexia BT to transfer funds, an exercise in avoiding transparency.

She says Tonna said he was worried about money following separation proceedings and a garnishee order, but this did not make sense as he had other sources of funds. She says Tonna would also receive part of his salary in cash and undeclared.

Referring to the arrests and questioning last year, Inspector Xuereb says that during Keith Schembri’s arrest, two iPhones, a tablet and various USBs were seized – these will be presented in court tomorrow.

She points out that there were also searches at Three Cities Design and Kasco offices. A laptop and computer tower were seized and given to an expert.

During interrogation, Castagna, Cini and Tonna all refused to answers questions by the police. Inspector Xuereb also said that Schembri and Tonna were questioned about the initials of both men on a loan agreement between Brian Tonna and Willerby Inc, but no replies were given.

Cini and Tonna were asked why Nexia BT employees would be paid by cheque and topped up with cash. Again, questions were not answered. Bondin Carter, during questioning, had said the cash was for leave but it became clear that it was a top-up for employees’ wages.

Cini had also said that Tonna never voiced concerns about money problems, and said Tonna had never told him anything about a loan from Schembri.

The second inquiry – involving Keith Schembri and Adrian Hillman – was added to the first inquiry and investigations continued.  Earlier this month, the accused were given an arrest warrant and the inquiry’s conclusions.

After a brief break, Inspector Xuereb tells the magistrate that when questioned in September 2020, Schembri had referred them to the testimony he had given to Magistrate Galea Sciberras. He told the police that he had opened his account at Pilatus Bank after becoming chief of staff and said that he did not know he would be classified as a PEP. His relationship with the bank was through Ali Sadr and another two persons whose names he could not recall, she said.

The police inspector turns to the Hillman case. When the printing machine was purchased from Kasco Engineering, the company owned by Keith Schembri had invoiced a number of people, including a company that Keith Schembri was behind. They did this to avoid paying tax charges, Schembri told the police. The machines came to Malta and tax was paid on them.

During his interrogation this month, Schembri was asked about an email between Brian Tonna and a Kasco employee about pay Schembri, when chief of staff, would be receiving from the company. The wage was issued in cheques with his father’s name on them and they would be deposited in a separate account. Schembri told the police that they were ‘donations’ from his father, who is among the 11 facing charges of financial crime and fraud.

This month, Tonna, Cini and Castagna were given disclosure documents (an agreement between Nexia BT on one side and Schembri and Hillman on the other). They said they needed more time to give the police a statement.

Inspector Xuereb’s testimony ends. Lawyers have requested bail but this cannot be determined until their oral submissions on Tuesday. They will remain in prison until then.