German prosecutor suggested Panama Papers link to Caruana Galizia murder, former AG testifies

The public inquiry into the murder of journalist Daphne Caruana Galizia continues with the testimony of former attorney general Peter Grech

Former attorney general Peter Grech
Former attorney general Peter Grech

German prosecutors believed the Daphne Caruana Galizia murder may have been linked to the Panama Papers in an email to then attorney general Peter Grech.

Testifying in the Caruana Galizia public inquiry this morning, Grech said that shortly after the assassination in October 2017, he had received an email from the German prosecutor's office.

The email suggested the crime could have been linked to the Panama Papers leak and the German authorities were willing to co-operate on the matter, Grech said.

The former AG said he had passed on the information to then-inquiring Magistrate Anthony Vella.

Magistrate Aaron Bugeja, who was leading the Egrant inquiry, had also travelled to Germany to check out the Panama Papers information, Grech added.

He also testified about advice he had given the police against the seizure of servers from accountancy firm Nexia BT unless they had strong grounds for reasonable suspicion.

When prompted by the inquiry board that his advice led police to do nothing for two years, Grech defended his position back in 2016 when the Panama Papers scandal erupted.

He told the inquiry that the police had then raided the Nexia BT premises but they requested advice about the legal consequences of collecting the servers.

“I had advised them, which was spun and did me a lot of harm, that going to an accountancy firm and taking the servers is a very intrusive measure. The advice says this is a drastic measure and you must have a strong ground of reasonable suspicion,” Grech said.

The former AG said he did not know what evidence the police had at hand but many details emerged a year or two afterwards.

“I am ready to explain the circumstances of every advice I gave… This was a particular request for the seizing of servers. I didn't say it couldn't be done,” Grech testified. He added that it was not the AG’s remit to investigate.

In the previous sitting, police Assistant Commissioner Alexandra Mamo told the court that an investigation into the Panama Papers, codenamed Operation Green, was at magisterial inquiry stage and one of two judicial probes was at “a crucial stage”.

READ MORE: Magisterial inquiry linked to police Panama Papers investigation Operation Green at crucial stage

The public inquiry into the murder of journalist Daphne Caruana Galizia is tasked with, amongst other things, determining whether the State did all it could to prevent the murder from happening.

Caruana Galizia was murdered in a car bomb just outside her Bidnija home on 16 October 2017.

Three men, George Degiorgio, Alfred Degiorgio and Vince Muscat, have been charged with carrying out the assassination, while Yorgen Fenech is charged with masterminding the murder.

Melvin Theuma, who acted as a middleman between Fenech and the three killers, was granted a presidential pardon last year to tell all.

The inquiry is led by retired judge Michael Mallia and includes former chief justice Joseph Said Pullicino and Judge Abigail Lofaro.

12:05 Thank you for following. Kurt Sansone
12:05 The next sitting is due on Wednesday 4 November. Kurt Sansone
11:55 This concludes his questioning. Grech steps off the stand. Kurt Sansone
11:54 Grech says he had noted that the wish was for faces to change and he had stepped down. Kurt Sansone
11:54 The board says if he is not comfortable he may choose not to answer. Kurt Sansone
11:53 Comodini Cachia asks her last question about Grech's resignation. Had he been approached by Prime Minister Robert Abela and pressured to resign? Kurt Sansone
11:52 Grech: “One on one, no, but when bankers would come from abroad, I remember Yorgen Fenech would be there. There were sometimes meetings at the ministry of finance where Electrogas representative Catherine Halpin would be there and Yorgen Fenech would attend.” Kurt Sansone
11:52 Questioning moves on. Comodini Cachia asks about an email in which Yorgen Fenech states that government is discussing with him about Electrogas. “Had you ever met a Maltese director of Electrogas?” Kurt Sansone
11:46 Grech: “I know that in parallel, the Maltese Citizenship Act needed to be amended.” Kurt Sansone
11:45 Grech says the draft IIP law was sent to him to clean up and then circulate amongst MPs confidentially. This ended up on Daphne Caruana Galizia's blog, leading to protests, he says. Kurt Sansone
11:44 She asks whether the law was discussed with Henley and Partners. Kurt Sansone
11:44 Grech: “There was a private lawyer advising government.” Kurt Sansone
11:43 Comodini Cachia asks Grech whether he had drafted the law for Individual Investor Programme (IIP). Kurt Sansone
11:42 Grech: “There was one advice, which I gave to John Rizzo. It stated that there was reasonable chance of a conviction. As the law stood at the day, it was up to the police to decide whether to prosecute or not.” Kurt Sansone
11:41 Questioning moves on. Comodini Cachia says that former police commissioner John Rizzo had said that Grech advised in favour of prosecuting ex-European commissioner John Dalli but then incoming commissioner, Peter Paul Zammit, had said Grech gave advice to the contrary. “Were you involved?” Kurt Sansone
11:36 Grech says Victoria Buttigieg and himself would pass on their advice to the ministry of finance in this case. “The negotiations into the Electrogas contract took over three years and I cannot recall every detail,” he says. Kurt Sansone
11:32 “That is the problem; it binds the government,” Comodini Cachia says. Kurt Sansone
11:31 The AG dealt with this counsel to provide a legal opinion to avoid trouble further down the line, Grech says. It was “common practise” in international loans, he adds. “Sending draft advice to the lender is not sinister. After all, it is his money,” insists the former AG. It is indicative of a process of negotiating a legal agreement which binds the government, he says. Kurt Sansone
11:29 Comodini Cachia quotes from correspondence with the lender's legal counsel in which the counsel suggested wording. Kurt Sansone
11:28 Grech says he doesn't think he gave advice, but it is normal for the ministry running the project to have a representative. Kurt Sansone
11:25 Comodini Cachia notes that Ronald Mizzi, the permanent secretary at the energy ministry, was also copied in some of the correspondence. She asks what was the role of the energy ministry in obtaining the advice. Kurt Sansone
11:24 Grech says the contract was complex and involved many companies and banks. He explains that the government had engaged a private law firm. Camilleri Preziosi were the lawyers for the ministry of finance. “There was an army of foreign lawyers advising the other parties… Stephen Jurgensen was advising the lenders, corresponding with Ron Galea Cavallazzi from Camilleri Preziosi. Kurt Sansone
11:22 Comodini Cachia says that witnesses testifying about the Electrogas contract had said that they depended on the AG's advice. She asks who the AG would give advice to. Kurt Sansone
11:21 Grech: “I read that on the media. I checked whether there was written advice but it was not found at the office.” Kurt Sansone
11:21 The board asks about advice Grech gave to the Accountancy Board. The inquiry had heard how the Accountancy Board had not taken action against Brian Tonna and Nexia since the AG advised that it was best to wait for the end of the criminal proceedings. The board notes that one of the items discussed was a purported loan made by Keith Schembri to his accountant and whether it was sinister. This is a breach of the Accountancy Act and punishable by a fine and administrative sanction. Grech had also been asked for advice regarding whether to withdraw the warrants of Nexia BT. Kurt Sansone
11:08 The Caruana Galizia family had sought a court order to have Valletta removed from the investigation, citing a conflict of interest given his marriage to a Cabinet minister and his role on the FIAU board. The court had acceded to the request and ordered Valletta off the case. Kurt Sansone
11:06 Asked about Valletta's removal from the Caruana Galizia murder investigation, Grech says the court had said that the work done so far was still valid. “Our principal fear was that this would annul all the work we had done,” he says. Kurt Sansone
11:04 Comodini Cachia pounces on this, asking whether it was stranger that the police had gone straight to him for advice on the Nexia servers. Grech says he had never refused anyone advice. Kurt Sansone
11:03 The lawyer asks whether he had discussed FIAU business with Valletta. He says that it was usually dealt with by his underlings. Kurt Sansone
11:01 Grech says he had no personal friendship with Valletta but had a long working relationship with him. Valletta was later placed on the FIAU board. Kurt Sansone
11:00 Grech says it would be a bit oppressive - even on the journalist - if the police acted on every writing of a journalist. Kurt Sansone
10:59 He continues that later that day when he returned home at around 9pm, he received a call from Valletta who asked him to confirm that he was against a magisterial inquiry. “I had confirmed that the blog post was not enough to initiate a magisterial inquiry. I didn't know that there was a person seen leaving the bank and so on. The PM's lawyers had made a request to the duty magistrate to open an inquiry.” Kurt Sansone
10:57 Grech says Silvio Valletta had approached him on 20 April 2016, near his office and said that they were thinking of requesting a magisterial inquiry. “I had said that on a simple blog post I wouldn't start a magisterial inquiry,” the former AG says. Kurt Sansone
10:56 Comodini Cachia asks him about Pilatus Bank. The ex-police commissioner had said that his deputy, Silvio Valletta had been advised by Grech that all the police had was a blog and no disclosure and this didn't justify a raid. Kurt Sansone
10:55 The system had changed since Dom Mintoff's time, he says, after it is pointed out to him that Mintoff and then AG Edgar Mizzi were often in each other's company. Kurt Sansone
10:55 He says that as AG, contrary to the general perception, meetings with the prime minister are few and far between. “The main relationship with a person in Cabinet is with the justice minister,” he adds. Kurt Sansone
10:54 The AG’s advice was “flexible” he says. Grech says he had suggested that the police should ensure they have strong suspicion before taking action. “This was misinterpreted by the media as a ‘go slow’. This was not true,” Grech protests. Kurt Sansone
10:52 Lofaro says that they had come to him for advice but asks why this advice never varied despite the circumstances changing for the worse. Kurt Sansone
10:52 Grech: “The suggestion is that the AG takes on a function of a counsellor to government.” Kurt Sansone
10:51 Comodini Cachia: “Your first obligation is to the public interest. So when there is all this evidence about the Panama Papers, you didn't feel the need to draw the attention of government to it?” Kurt Sansone
10:51 The attorney general gives advice when it is requested of him, Grech adds. “The AG doesn't have the authority to investigate of his own accord.” Kurt Sansone
10:50 Comodini Cachia points out that the AG was advising clients who were mentioned in the Panama Papers. He interjects: “They aren't clients per se, they make part of government.” Kurt Sansone
10:49 Grech says that shortly after Caruana Galizia was murdered in October 2017, he had received an email from the German prosecutor's office, suggesting that the crime could have been linked to the Panama Papers leak and the German authorities were willing to co-operate on the matter. Grech had passed the information to then-inquiring Magistrate Anthony Vella. Magistrate Aaron Bugeja, who led the Egrant inquiry, had also travelled to Germany to check out that information. Kurt Sansone
10:45 Comodini Cachia points out that the two issues are punished exactly the same way. Kurt Sansone
10:44 Grech says there was a question as to whether it was money laundering or an attempt at money laundering. Kurt Sansone
10:44 Despite Grech pointing out to the local context, the board points out that this is not just a local issue but one of global importance. Mallia says that of all the countries affected, only Malta had held back. Kurt Sansone
10:38 Comodini Cachia says that in Panama the authorities had gone and seized the computers of the law firm Mossack Fonseca. “Have you seen any time this happened in Malta?” Grech asks. Kurt Sansone
10:36 Grech: “I am ready to explain the circumstances of every advice I gave… This was a particular request for the seizing of servers. I didn't say it couldn't be done...” Kurt Sansone
10:35 The board says this is not the case. Kurt Sansone
10:35 Grech insists that advice remains advice. “Not because it has no value... it is no refuge to ask for advice to hide behind it,” he says. Grech points out that the argument being made seems to be that had everyone been in prison in 2017, the assassination would not have taken place. Kurt Sansone
10:31 “No,” replies Grech. The investigation of crimes is in the hands of the police, he insists. “You give advice when you are asked… I don't know of any lawyer giving advice unprompted. When you give advice you are trusting that the client came to you in good faith. It is not the function of advice to transfer guilt on to the advocate.” Kurt Sansone
10:30 Said Pullicino asks about the Panama Papers. “When nothing happens, this creates a system of impunity,” he says. Said Pullicino asks Grech whether he spoke to the minister or the PM in the circumstances. Kurt Sansone
10:28 Grech says he doesn't believe that he was shown any files from the investigation before giving his advice. Kurt Sansone
10:28 Comodini Cachia asks whether he had taken the news on the Panama Papers into account when he gave his advice. Kurt Sansone
10:27 Grech: “I don't know what they had and didn't have, but the details of the investigations... many details emerged a year or two later.” Kurt Sansone
10:26 Lofaro insists that the issue is what would have been found had the servers been gathered immediately. Kurt Sansone
10:25 Grech says that on 16 May, he had been asked for advice by the FIAU. “The argument of going there and looking at the servers and hoping to find something there was still not good,” he says. Kurt Sansone
10:24 Grech: “On 2 March 2016, the FIAU had asked Nexia BT for documents, which were handed over, but it became suspicious that not all the information was received.” Kurt Sansone
10:24 Lofaro says she can't know if the servers were tampered with. “Doesn't advice change according to the circumstances?” she asks. Kurt Sansone
10:20 Grech: “I gave legal guidance. No examination of what is there was done... I think that is the job of the investigator… I don't think it is the job of the AG to investigate.” Kurt Sansone
10:19 Lofaro points out that the police had gone to him for guidance. “Don't you ask them exactly what evidence they have as their lawyer?” Kurt Sansone
10:19 Grech says he skimmed through the FIAU report. “It is not the duty of the AG to scrutinise the reports of the FIAU and the decision to arrest was a police one,” he says. Kurt Sansone
10:18 Judge Abigail Lofaro asks how, if there was reasonable suspicion, the servers were not taken before and held for just a week. Grech says he doesn't know what evidence the police had. Kurt Sansone
10:17 Lawyer Peter Caruana Galizia enters the courtroom. Kurt Sansone
10:17 Grech says he is a cautious lawyer and it was important to have evidence that justified stopping an accountancy firm from operating, if challenged.
 Kurt Sansone
10:14 He continues: “The advice says this is a drastic measure and you must have a strong ground of reasonable suspicion.” Kurt Sansone
10:13 Grech refers to a 2 March 2016 blog post by Daphne Caruana Galizia titled ‘Michael Cassar CoP should have ordered an investigation last week’. Grech says that the police had then raided the Nexia BT premises and seized the servers. The request for advice was about the legal consequences of collecting the servers. “I had advised them, which was spun and did me a lot of harm, that going to an accountancy firm and taking the servers is a very intrusive measure,” Grech says. Kurt Sansone
10:08 Judge Abigail Lofaro chastises the lawyer saying “don't blame us for these delays”. Questions will focus for now on Grech's advice as AG that is in the public domain. Kurt Sansone
10:07 Grech says he has no problem testifying about facts in the public domain. Cordina says that there are permission issues with whoever he had given advice to. Kurt Sansone
10:04 The rule is that professional secrecy applies, says State Advocate lawyer Maurizio Cordina. Kurt Sansone
10:03 He hadn't, Grech says. Kurt Sansone
10:03 Therese Comodini Cachia asks if the prime minister had dispensed him from legal privilege. “Had you asked the PM to exempt you from this?” Kurt Sansone
10:02 The inquiry board asks Grech to justify this advice. Kurt Sansone
10:02 Mallia: “Do you realise that thanks to that advice the police did nothing. Over a year was lost in which action could be taken. The servers could have been tampered with in the meantime.” Kurt Sansone
10:01 Grech's lawyer stands up and says that his client cannot be asked about advice he gave government as attorney general. The board says it will not. Judge emeritus Michael Mallia reads the advice Grech gave on 16 May 2016, in which he said the gathering of servers from Nexia BT was highly intrusive. Kurt Sansone
09:59 Comodini Cachia asks the witness when the FIAU started investigating Keith Schembri and Adrian Hilman. Grech says he will testify about that behind closed doors. Kurt Sansone
09:58 Chief justice emeritus Joseph Said Pullcino says it is crucial that the board is made aware of whether the FIAU is investigating certain people. Comodini Cachia appears annoyed. “It is not a state secret and the witness can speak of things in the public domain,” she says. Kurt Sansone
09:57 Grech says that at times the director draws attention and gives an outline of what to do in investigations, but are very careful to protect the autonomy of the board. Grech is unwilling to divulge further detail in view of the secrecy of the proceedings and functions of the FIAU. Kurt Sansone
09:54 They are discussing fines and how they are imposed. Grech says that at the time he was there, it was not possible to appeal from FIAU fines. Today this is appealable, he says. These are administrative and not criminal fines, he explains. Kurt Sansone
09:53 Grech says that FIAU reports highlight “reasonable suspicion” and not if there is a prima facie case. Kurt Sansone
09:51 Grech: “I became AG in 2010 when my predecessor Silvio Camilleri was appointed judge. He was also chairman of the board of governors of the FIAU so I took over from that too. I was not privy to FIAU investigations. This emerges from the law. The general supervision of the FIAU is in the hands of the board, but the investigations are the responsibility of the director and the staff. Members to the FIAU board are nominated by the AG, the Central Bank governor and the police commissioner, who submit names to the Finance Minister and the minister selects members from these lists. The chairman and deputy chairman are selected by the Prime Minister. This was to avoid people from outside the public administration being selected.” Kurt Sansone
09:44 He is asked about his service on the board of Financial Intelligence Analysis Unit. Kurt Sansone
09:43 Peter Grech takes the witness stand. Kurt Sansone
09:43 Therese Comodini Cachia speaks about an application filed by murder suspect Yorgen Fenech which the board has received. She said that it is nothing but a scare tactic, especially as it has been repeated. “It is meant to intimidate those who are assisting this court. In my view it is a clear contempt of court,” she says. Kurt Sansone
09:42 The judges emerge from chambers and the sitting begins. Kurt Sansone
09:36 Good morning. Kurt Sansone