Zenith: Prosecution earns reprimand over 'fishing expedition'

The prosecution in the compilation of evidence against Zenith directors Matthew Pace and Lorraine Falzon have been told off by the court for summoning witnesses who had already testified in a magisterial inquiry into the money laundering allegations made against the pair.

Pace and Falzon were among 11 people arraigned in March. They are being charged with money laundering, corruption, and other financial crimes.

During the sitting held on Tuesday morning, the court heard several police officers involved in Pace’s arrest testify. MFSA’s representatives also testified about their findings regarding the company’s history and past transactions.

The uneventful sitting sparked briefly to life when it transpired that one of the witnesses who appeared on behalf of MFSA was presenting documents which she had not prepared herself. The witness was not allowed to exhibit the report in court as she did not know what it contained.

Another witness, the director of Capital Transfer Duty department within the Commission of Inland Revenue, who was tasked with bringing ‘all’ the information the department has on the accused and which also included information on third parties was also not allowed to testify.

The court objected to the dragnet approach adopted by the prosecution who had apparently summoned representatives to present all the transactions from the year 2000, when the relevant period was from 2008-2018. “This is not a fishing expedition,” remarked the court, urging the prosecution to only present evidence relevant to the case at hand.

Lawyers Edward Gatt and Mark Vassallo are appearing as defence counsel for the accused.

The case continues on May 12.

10:13 Lawyer Elaine Mercieca Rizzo asks to be allocated 2 hours for next sitting. Next sitting is on 12 May, at 1pm. Matthew Vella

10:09 AG lawyer is Andrea Zammit. The court is now thrashing out the date for the next sitting; the Court insists that the clock is ticking... Matthew Vella

10:07 Lawyer Claudette Fenech from the Malta Business Registry presents a certified copy of Zenith’s registration certificate as MFSP and other documents relating to the present day and the involvements of Falzon and Pace in the company. There was no change in the UBOs of the company. However, Pace and Falzon resigned from Zenith in 2021. The witness also presents documentation about their involvement in other companies. The witness steps off the stand.

There are no further witnesses for today. Matthew Vella

10:03 Galdes is not allowed to testify and is dismissed. Gatt draws the court's attention to the fact that they are to have a fair hearing due to a level playing field between the prosecution and the defence. The prosecution clarifies that the prosecution is aware of the evidence it is bringing and will bring in future as this is the compilatory phase. “It is not acceptable that the work of the prosecution and investigators are brought into doubt.” Gatt points out that it’s his job to do so; the court says that the prosecution is bringing its own work into doubt. Matthew Vella

10:01 “You don’t summon people to present all the transactions from 2000 when the relevant period is from 2008-2018. This is not a fishing expedition.” Matthew Vella

09:58 The AG lawyer is given a dressing down by the court for asking open ended questions. “It’s a question of style,” says the lawyer.
Gatt raises a point of law. The court cannot permit irrelevant evidence to be presented. “We want to hear about the illegality committed by Hillman et al, otherwise we are just filling files.”
Witness says she was summoned to present “all the data relating to the companies”. The court is livid. Matthew Vella

09:57 Next witness is Josette Galdes, Director Capital Transfer Duty with the Commissioner Inland revenue. Matthew Vella

09:55 The court is incredulous. It does not allow Magri to present the report as she does not know what the pen drive contains. Laura Calleja

09:53 The witness explains to the court that she had not extracted the data herself, nor had she compiled the report. This had all been done by FTI consultants. Laura Calleja

09:53 Magistrate warns that costs of duplicated work will not be at the cost of the defendant. "Duplication of work is unacceptable." Laura Calleja

09:53 The lawyers argue over each other after the court is told that the witnesses have already testified in the inquiry. Laura Calleja

09:47 The court is unhappy that it was not given hard copies and that the data is protected by two passwords. Karl Azzopardi

09:44 Magri presents a password protected pen drive containing client lists and other data to the court. Karl Azzopardi

09:41 Sara Antonia Magri from Conduct Supervision unit of MFSA takes the stand. Before testifying she declares that lawyer Mark Vassallo is her cousin. Karl Azzopardi

09:41 MFSP was later rebranded as Zenith, Camilleri says. Karl Azzopardi

09:40 There were a number of attachment orders on MFSP's BOV account. MFSP tried to open accounts in foreign jurisdictions. During the MFSA visit it was found that MFSP was using cash transactions to bypass the attachment orders. Karl Azzopardi

09:40 He tells the court about how the companies were licenced. MFSP was fined by the FIAU over money laundering breaches. Karl Azzopardi

09:38 Lawyer Chardian Camilleri from the MFSA testifies next. Karl Azzopardi

09:32 He steps off the stand. Karl Azzopardi

09:32 For 2019 and 2020, there were no documents and instead there is a tax estimation done by the Commissioner. In the case of Falzon and her husband, there was also some rental income. Karl Azzopardi

09:31 Debono says Falzon has been married since 1997. He was asked for documents on her income and the joint tax return. The documents are for the period 2008-2018. Karl Azzopardi

09:31 He also exhibits documentation related to Falzon. Karl Azzopardi

09:30 Joseph Debono for the Commissioner for Revenue takes the stand next. He reads from Matthew Pace's tax registration form and tax return from 2008-2019. He also possesses documentation showing rental income and the deed of sale relating to a capital gain. On Zenith Finance Ltd, Debono exhibits documentation on its income and tax incurred for the period 2008-2019. Karl Azzopardi

09:26 Following an inspection, the report was sent to the FIAU. Scicluna presents a copy of the report to the court. Karl Azzopardi

09:25 He is asked about the history of the licences granted and transactions made by Zenith Finance Ltd. Karl Azzopardi

09:22 A representative of the MFSA takes the stand. Matthew Scicluna takes the oath and says he is representing the Financial and Compliance department. Karl Azzopardi

09:21 She says neither Lorraine Falzon or Matthew Pace were registered for VAT. She lists the companies they are directors of. Karl Azzopardi

09:19 Lawyer Vincienne Vella representing the VAT department takes the stand. Karl Azzopardi

09:18 The court asks who else is summoned to testify today. It appears that we are 15 minutes ahead of schedule. Karl Azzopardi

09:17 He presents the employment history of Matthew Pace and Lorraine Falzon. Karl Azzopardi

09:17 Joe Saliba from Jobsplus takes the stand and is administered the oath. Karl Azzopardi

09:17 Alfred Parnis steps off the stand. Karl Azzopardi

09:16 Pace was a legal and judicial representative, he also served as a company secretary, and had 16.7% of the shares at MFSP. Karl Azzopardi

09:16 Lorraine Falzon was a shareholder, judicial representative and director for MFSP. Karl Azzopardi

09:16 Zenith Finance Ltd was trading on investment services. Zenith Fiduciary Services Ltd. was opened to provide insurance intermediary services. Karl Azzopardi

09:15 MFSP Financial Ltd, a tied insurance intermediary opened on January 2008, was struck off on 17 Sept 2018 due to a reorganization by the shareholders. It was renamed Zenith. Karl Azzopardi

09:14 He explains the involvement of Pace and Falzon in various companies. Karl Azzopardi

09:13 Alfred Parnis from the MFSA takes the stand. Karl Azzopardi

09:13 Inspector Joseph Xerri has finished testifying. Karl Azzopardi

09:08 Andre Micallef who was a director of MFSP was also questioned. He had explained that they would constantly update their clients' profile and that Lorraine Falzon was in charge of compliance. He had explained that the source of funds would be questioned before opening accounts with the company. Karl Azzopardi

09:07 When he was called in for questioning the third time, Pace said he would not be replying to any questions as there were indications that he would be arraigned. Karl Azzopardi

09:07 Pace, in a second statement released the next day, said that the company had a continuous due diligence process and that he assumed KYC was ongoing. Karl Azzopardi

09:07 During his interrogation, he emphasised that he was not the compliance officer. Karl Azzopardi

09:06 Pace told the police that he had been told that the payments between Schembri and Hillman were payments for "consultancy fees on media" to Hillman. Karl Azzopardi

09:06 Brian Tonna had introduced Pace to Keith Schembri. Later Schembri had introduced him to Adrian Hillman and Vince Buhagiar, said the inspector Karl Azzopardi

09:06 Pace told the police he didn't own any cars because he had a company car. Karl Azzopardi

09:05 Inspector Joseph Xerri gives an overview of his role in the investigation. Pace had confirmed that he is a director of some three or four companies in his statement to the police. Pace had told the police that he had an income of around €90,000 per year plus director's fee. He had a mortgage of €120,000. Karl Azzopardi

09:05 Good morning. The compilation of evidence against Zenith Finance owner Matthew Pace and director Lorraine Falzon continues today. Karl Azzopardi

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