Allied's accounting was ‘convoluted’ but 'above board', auditor tells court

As the money laundering case against former Allied Newspapers CEO Adrian Hillman continues, the court hears how the company’s accounts were ‘convoluted’ but ‘above board’

The new printing press at Mrieħel is at the centre of the money laundering and bribery charges filed against former Allied Group CEO Adrian Hillman and others
The new printing press at Mrieħel is at the centre of the money laundering and bribery charges filed against former Allied Group CEO Adrian Hillman and others

A PWC representative told a court that Allied Newspapers’ accounting was correct and full disclosure given to Malta Enterprise, as the case against former director Adrian Hillman continued.

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

Hillman stands accused of serious offences, which include money laundering and bribery. Inspector Joseph Xerri from the police’s anti-money laundering unit had previously testified that experts who were appointed by the inquiring magistrate to analyse money transactions had concluded that backhanders were disguised as commissions. He said that the machines were overvalued with several people, including Hillman and Schembri, benefitting from the ‘profit’.

Today, Simon Flynn, a partner at audit firm PriceWaterhouseCoopers (PWC), testified before Magistrate Donatella Frendo Dimech, telling the court that Progress Press had made the necessary corrections after Malta Enterprise flagged a mistake in the company’s accounts regarding the purchase of the printing machines and consumables.

Flynn told the court that there was a difference between an auditor and an accountant, with the auditor being independent and having oversight of the accountant’s work.

“When the Malta Enterprise matter was incorrectly reflected in the company’s accounts and there was no segregation between the machines and the consumables, Progress Press had corrected the situation,” he testified.

Accounts are published after review by an auditor, he explained, saying that he was comfortable that the accounts were correctly segregated and presented. 

Asked by defence lawyer Stefano Filletti as to whether he had seen any evidence of fraudulent accounting or money laundering, he said he hadn’t, although it was “not his job to”.

Filletti asked the witness about a scheme of credit notes which the prosecution said amounted to double invoicing.

Flynn replied that the system was “convoluted” but was above board. Consumables were invoiced for €1 million en bloc. When they were delivered, a second invoice was issued, so a credit note was then issued to cancel out the credit, explained the witness.

“I can confirm that ultimately everything was properly done from an accounting perspective.”

Former ME chair testifies

Earlier, former Malta Enterprise chairman Mario Vella testified that the invoicing was only for the machines but that PWC had said the invoices were correct and so were the accounts.

In the heated cross-examination that followed, the court was told that Progress Press satisfied the requirements.

Vella said he did not know the reason why Progress Press was not allowed to cash its tax credits, although he had “heard of that before.”

The case continues on Wednesday.

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.