A maze of suspicious transactions: Compilation of evidence against Keith Schembri continues

The hearing in the compilation of evidence against 11 people facing charges related to a series of major financial crimes continued on Monday, with former OPM chief of staff Keith Schembri among the accused, together with his father Alfio Schembri, Kasco Group CEO Malcolm Scerri and Robert Zammit, Kasco’s financial controller.

All four have been charged with money laundering, criminal conspiracy, accountancy crimes and fraud. Keith Schembri faces additional charges of false testimony and forgery, while Robert Zammit has also been charged with breaching accountancy obligations.

In the last sitting on Friday, Magistrate Donatella Frendo Dimech heard testimony by Police inspectors Anne Marie Xuereb and Joseph Xerri.

Detailing the deals between Allied Group and Keith Schembri’s companies, Inspector Xerri explained how the company had issued an “invitation only” call for new machines. Kasco Engineering’s offer at US$13 million (€11 million) was accepted following a presentation to the Board by former Managing Directors within Allied Group, Adrian Hillman and Vince Buhagiar.

Police investigations showed Progress Press paid $6.5 million (€5.5 million) more than it should have while the company applied for a subsidy from Malta Enterprise.

Investigations also questioned over €20 million in raw materials that Progress Press purchased from Keith Schembri’s company Kasco between 2010 and 2016. The unexplained deposits in the personal accounts of Hillman and Buhagiar were a clear case of “bribery”, Inspector Xerri said.

The four are among the 11 arrested earlier this month. Former Managing Director of Allied Newspapers Adrian Hillman, who has also been charged in the case, is still to be formally charged. It is unclear whether he is overseas or has been brought to Malta. The police are refusing to comment.

Nexia BT representatives Brian Tonna, Karl Cini, Katrin Bondin Carter and Manuel Castagna as well the representatives of Zenith (formerly MFSP) – Lorraine Falzon and Matthew Pace – are the rest charged in connection with this investigation.

Today, the analysts testified, starting with Police officer Emanuel Schembri from the Economic Crimes Unit, the manager and head of a task force that analyses financial statements. Since September 2020, the task force has been looking at bank statements and other financial documents, including investments, of the accused and everyone else involved in the investigation.

He analysed Brian Tonna‘s BTI Management Ltd bank account, after being tasked by the inquiring magistrates with establishing the provenance of funds.

After sorting through the documents, the task force team created a table for analysis based on the information. When transactions needed further clarification, banks were approached to provide supporting documentation. If anything was still unclear, it was filed as requiring further investigation.

The analyst was specifically looking at one account of BTI management, which opened in 2010 and closed in 2016. It was first named BTI Financial Ltd, which was represented by directors Brian Tonna and Karl Cini. Manuel Castagna resigned from his director role in 2020. The company held seven accounts with BOV, opened between 2012 and August 2015 and six credit card accounts. It was identified as a client account.

In August 2015, it had a total of 22 transactions amounting to some €600,000. The police officer went on to mention a list of the transactions. The courtroom hears, among them, €70,000 from Colson Services Ltd, registered in the British Virgin Islands and of which Keith Schembri is the UBO (Ultimate Beneficial Owner).

Other transactions marked off as Schembri and deposits from BT Consulting Ltd, one transaction described as ‘Loft’, which is the company of Schembri’s wife, Josette Schembri, and two from Malmos Ltd in Gibraltar – of which Schembri is also the UBO.

There were also transactions totalling €200,000 involving Zenith (formerly MFSP) – 10 transactions originating from two offshore companies. The last transaction of €17,000 was from a company struck off in 2017. The police officer said that there were 44 transactions out of the account between 2015 and 2016 – totalling around €600,000, including payments to Kasco Ltd.

Furthermore, some €250,000 was sent to individuals, not companies, in 12 transactions, including to Brian Tonna and Keith Schembri. Transactions to Schembri included €6,000 in 2015. The police officer said these documents were handed over by Bank of Valletta.

Following the analyst’s testimony, police inspectors took the stand and detailed the arrest of Alfio Schembri, the father of Keith Schembri and the searches in his home that followed.

Police Inspectors Anne Marie Xuereb and Josef Xerri were then cross-examined by defence lawyer Mark Vassallo before the press was asked to leave the courtroom. Defence lawyer Edward Gatt then made the submission for bail.

Gatt appealed to the magistrate to look at procedure rather than the public sentiment towards Schembri. He said that the chances of the investigation being prejudiced were non-existent. Gatt argued the police had not presented ‘the truth’ but a “set of arguments” instead.

Lawyer Elaine Mercieca Rizzo, representing the Attorney General’s Office, argued in return that the charges were serious and went on for a number of years, all the way to 2019.

She said there was an association, not only between the accused but with other persons including auditors, financial companies and private individuals. “It’s very complex,” she said.

After the FIAU began investigating in 2016, those involved attempted to “hide the criminal act”. She mentioned the loan agreement as an example. “Let’s not get under the impression that they all sat down and let investigations happen with serenity,” she said.

Magistrate Donatella Frendo Dimech said the decision for bail will be given tomorrow morning.