Enough prima facie evidence to indict Adrian Hillman with financial crimes, court rules

Adrian Hillman received more than €1m in backhanders from a 'vitiated' printing press deal involving Keith Schembri, the court hears as the compilation of evidence against him gets underway

Adrian Hillman
Adrian Hillman

Adrian Hillman received more than €1 million in backhanders through complex money transfers involving offshore companies belonging to Keith Schembri, a court heard today.

In today’s first sitting of the compilation of evidence against him, Magistrate Donatella Frendo Dimech ruled there was enough prima facie evidence to indict Hillman on various financial crimes, including money laundering and bribery.

Hillman was managing director at Allied Newspapers when the group decided to build a new printing press in Mrieħel and source the equipment from Schembri’s Kasco Group.

Inspector Joseph Xerri from the police’s anti-money laundering unit testified that experts who were appointed to analyse money transactions by the inquiring magistrate concluded that the backhanders were disguised as commissions.

He said that the machines were overvalued with several people, including Hillman and Schembri, benefitting from the ‘profit’.

A spreadsheet had been found on the servers of the Kasco Group, detailing how the money would be split between the beneficiaries. 

According to a blueprint, Hillman, a Noel Galea from Progress, and Kasco’s Simon Poulton and Malcolm Scerri had to receive funds from the sale of a particular machine to Progress.

Xerri said Hillman’s investment account with MFSP, later renamed Zenith, only received funds from Schembri.

During cross-examination, Hillman’s defence lawyer Stefano Filletti asked the inspector whether he was aware that the decision to buy the printing machines was taken by several boards at Progress and not by Hillman alone.

“Yes, but the process was vitiated,” Xerri replied.

The inspector explained that Nexia BT’s Brian Tonna and Karl Cini fabricated documents to justify certain payments with the magisterial inquiry describing them as “professional money launderers”.

The magisterial inquiry started in 2017 when then Opposition leader Simon Busuttil filed a criminal complaint on claims that Hillman had received backhanders from then OPM chief of staff Keith Schembri over the purchase of printing equipment.

At the time of the printing press investment, Schembri was not a public official.

Hillman was extradited from the UK last week and charged in court. He was granted bail.

Magistrate Donatella Frendo Dimech is presiding. Stefano Filletti and Maurice Meli are defence counsel, while lawyer Maria Claire Ellul is parte civile for Progress Press and Allied Newspapers.

Inspector Joseph Xerri is prosecuting, aided by lawyers Antoine Agius Bonnici, Andrea Zammit and Sean Xerri DeCaro from the Attorney General's office.

14:21 That's it for today. Thank you for following. A summary will appear shortly. Kurt Sansone
14:21 "No" replies the inspector. The cross-examination is suspended. The court issues a decree of prima facie, which means it is convinced there is enough evidence for the bill of indictment to be issued. The next sitting will be held on 15 July between 9am and 11am. Kurt Sansone
14:17 Xerri: “Yes, but the process was vitiated.” Filletti: “Are you aware that there was a shareholder of Allied who prior to approving the project appointed an external auditor to verify all the pricing and the cost to confirm that the figures presented to Allied are correct Kurt Sansone
14:17 Filletti: “In the course of the investigation, did it emerge that for the approval of these projects, they had to pass through several boards, and it was not simply up to Hillman to decide?” Kurt Sansone
14:16 Xerri: “No.” Kurt Sansone
14:16 Filletti: “Did Malta Enterprise make a police report about fraud in his regard?” Kurt Sansone
14:15 Filletti says there is a passage in the report where the experts say there are a number of transactions in dollars, which appear to have been the “fruit of this plan or blueprint for commissions”. The inspector says there were amounts received by Hillman that could not be linked to the sale of the machines. Hillman received more funds than mentioned in the blueprint. Kurt Sansone
14:13 “Good or bad, the conclusion of the inquiry rests on the opinions of experts,” says the lawyer, adding that every paragraph mentions them. Kurt Sansone
14:12 Defence lawyer Stefano Filletti begins cross-examination. The lawyer points out that the police had never sent for Hillman during the inquiry. The inspector confirms this. Kurt Sansone
14:11 He presents a copy of the audio-visual statement by Adrian Hillman and other documents relating to his arrest and extradition. A Huawei mobile phone with a broken screen was also handed to the Maltese authorities by the UK police, he says. Kurt Sansone
14:10 The inspector says police were informed that Hillman had moved to England and the process was started to extradite him. Proceedings were delayed by Brexit. “In his three-hour statement, Hillman answered questions about his financial position and other issues but did not answer questions about the printing press,” Xerri says. Kurt Sansone
13:57 The court hears how police also spoke to engineers who carried out the site inspection at Progress Press as part of the grant process. There were small variances in the three machines but these were not drastic changes that required further action. The Progress Press board heard a presentation by engineer Noel Galea, comparing the different machines that could be bought. The board concluded that the HP 76 machines was 20% cheaper than the HP 56. Xerri says that Progress Press paid upfront some €2.5 million covering consumables. Kurt Sansone
13:56 Xerri says the police spoke to officials at Malta Enterprise regarding the grant application process. The grant covered only capital expenditure and consumables were not meant to be included. George Francalanza from Malta Enterprise had said he ignored consumables because he considered them as peripheral but issued a recommendation to the Malta Enterprise board to accept the application. Kurt Sansone
13:46 The inspector says that according to a blueprint found on Kasco servers, Hillman, Noel Galea, Simon Poulton and Malcolm Scerri had to receive funds over the sale. Kurt Sansone
13:46 Xerri continues to testify that in August 2016, Progress Press sent a letter to Malta Enterprise informing them about the purchase of a different machine to that which had been approved. Malta Enterprise accepted the change and reduced the amount of the grant. The term ‘consumables’ was never mentioned. Hillman had to be paid €151,000 in commissions over this machine. Kurt Sansone
13:43 QUICK REMINDER: Agora was filmed in Malta in 2008. The Maltese company that serviced the production was Cinebiss Ltd, which included Keith Schembri as a shareholder. Kurt Sansone
13:37 Malta Enterprise recommended that the request for conversion of tax credits be refused. But the government agency accepted a request for investment aid to the tune of €1.6 million. Xerri says that Malta Enterprise paid €1.6 million to Progress Press as part of the assistance. Progress Press presented two invoices – €2 million for the HP Indigo machinery and €3.5 million for the Komori machine. Kurt Sansone
13:36 The inspector continues to testify about how Hillman was a consultant for Keith Schembri, including on the film Agora which was shot in Malta. Xerri adds that the police investigated the Progress Press digital project over the purchase of the last machine. He explains that Progress Press had to invest €5 million and at the same time made a request to convert €12 million in tax credits into cash. Kurt Sansone
13:32 QUICK RECAP: Adrian Hillman, a former managing director at Allied Newspapers, publishers of Times of Malta, is charged with various financial crimes, including bribery and money laundering. The case revolves around printing machinery that Allied Group subsidiary, Progress Press bought for its new printing press in Mrieħel. The company bought the machinery from Keith Schembri’s Kasco Group. The accusations state that Hillman benefited from backhanders, disguised as commissions, from the deal. He received money from Schembri through offshore companies. Experts concluded that Hillman received in excess of €1 million from the deal he negotiated on behalf of Progress Press. Kurt Sansone
13:26 He says that Hillman’s investment account at Zenith only received money from Keith Schembri. The inspector says the word ‘commissions’ was used to cover up for corruption. Kurt Sansone
13:23 The conclusion was that Brian Tonna and Nexia BT were professional money launderers, the inspector says. He says Adrian Hillman received “much more” than €650,000 from Keith Schembri. “The experts had concluded Hillman received in excess of €1 million,” Xerri says. Kurt Sansone
13:21 He explains that the machines were bought directly but the transactions were processed through three different jurisdictions. “The conclusion of experts was that this was money laundering,” Xerri says. Kurt Sansone
13:20 Money transfers from an account held by Malmos Ltd at JYSKE Bank took place. Xerri says that commissions exceeded €5.5 million. “These were planned before the invoices to Progress Press were issued. These were backhanders, processed by Karl Cini’s and Brian Tonna’s companies,” Xerri testifies. Kurt Sansone
13:18 Xerri says that according to the blueprint, Hillman received €230,000 in commissions. Several offshore companies were created, including Networks Overseas Ltd, which is owned by Hillman. The inspector says that Networks Overseas half-owned RS Paper Supplies, while the other half was owned by Halfort Ltd, belonging to Schembri.

RS Paper Supplies would be used to cover up payments to Keith Schembri and Adrian Hillman.
Kurt Sansone
13:15 The court hears how in 2013, Progress Press decided to buy another machine for which it received three offers, including an HP machine represented in Malta by Kasco. The inspector says that Adrian Hillman and others received commissions on this machine. Kurt Sansone
13:13 Hillman's Networks Overseas Ltd holds 50% ownership of RS Supplies Ltd, while the other half is owned by Halfort Ltd. Xerri says that this indicated that the accused and Keith Schembri were business partners. Kurt Sansone
13:08 Xerri says that what had to be a straightforward purchase became a complicated process to cover up backhanders. He adds that Matthew Pace from MFSP, later renamed Zenith, created a backdated document signed by Nexia BT’s Brian Tonna, saying the funds were for consultancies. The inspector says that the inquiry concluded that these documents were fabricated. Kurt Sansone
13:04 Xerri says that in August 2009, Keith Schembri created another spreadsheet on payments as a result of this deal. Schembri and Hillman were on the spreadsheet as beneficiaries, he says. Kurt Sansone
13:02 The inspector says that the price of the GWS machine was USD13.5 million, payable in 13 instalments. “The procurement process was vitiated,” he adds. Kurt Sansone
12:59 The inspector continues reading from his notes. Kurt Sansone
12:58 The court orders that all the testimony, which give a complete picture of the investigations conducted by the police and their results are to, at this stage, be given as it is necessary for the court to understand and exercise its competence on the relevance of the testimony. The magistrate says that for the purposes of a decision on prima facie, it will be for the court to weigh the probative value of what will be said. Kurt Sansone
12:56 The magistrate says that at this point she cannot ask the prosecution to be selective. Kurt Sansone
12:56 Defence lawyer Stefano Filletti stands up and interrupts. He objects to the quoting of references made by the co-accused. “A co-accused is not an admissible witness,” he points out. “So, it makes no sense to try and circumvent the law's prohibition, by citing what the witness said,” the lawyer insists. Kurt Sansone
12:55 The inspector is speed-reading a set of transactions worth millions involving various companies linked to Keith Schembri and Adrian Hillman. Kurt Sansone
12:54 The deal cost €5.2 million of which €4.7 million was profit. Xerri says there was no mention of Malmos and Halfort to the Maltese authorities. The machines were at a 73% mark-up. Kurt Sansone
12:53 He says that a spreadsheet by Keith Schembri showed how the buying of the GWS machine, was bought by Malmos Ltd in Gibraltar, owned by Schembri, and then bought by Halfort, another Schembri company, and then imported to Malta. Xerri says this was done to hide commissions from Malta. Kurt Sansone
12:52 The police inspector gives an overview of Adrian Hillman's career. Kurt Sansone
12:52 Inspector Joseph Xerri from the anti-money laundering squad takes the stand. He explains that the investigation started on 24 March, when he was ordered to investigate and prosecute following the conclusion of the inquiry by Josette Demicoli. The inquiry had started on a criminal complaint made by then Opposition leader Simon Busuttil. Kurt Sansone
12:50 Filletti informs the court that the parte civile are also co-accused in separate proceedings. Kurt Sansone
12:50 Magistrate Donatella Frendo Dimech is presiding. Stefano Filletti and Maurice Meli are defence counsel, while lawyer Maria Claire Ellul is parte civile for Progress Press and Allied Newspapers. The court sees the note filed by Progress and Allied in which they asked to join the case as parte civile. The court upholds the request. Kurt Sansone
12:49 The compilation of evidence against Adrian Hillman starts this afternoon. Kurt Sansone
12:48 Good afternoon. Kurt Sansone