Nexia, Hillman lawyers claim ‘witch hunt’ in arguments against freezing orders

The defence lawyers argue that the freezing orders should have been imposed on the illicit proceeds, and not over their entire wealth

Defence lawyers have attacked a law granting the prosecution “absolute discretion” in obtaining freezing orders over all assets belonging to their clients, as two high-profile money laundering cases continued on Monday.

Magistrate Donatella Frendo Dimech presided the sittings in the compilations of evidence against Nexia BT officers Brian Tonna, Karl Cini, Manuel Castagna and Katrin Bondin Carter, as well as former chairman of Allied Newspapers Adrian Hillman in separate proceedings.

Nexia BT lawyer describes freezing orders as "carpet bombing" 

Tonna, his fellow Nexia BT partners Karl Cini and Manuel Castagna, and office manager Katrin Bondin Carter are facing charges relating to money laundering, forgery and other crimes uncovered in inquiries into former OPM chief of staff Keith Schembri.

The court heard arguments on the requests to reduce the amounts seized by freezing orders imposed over the accused’s wealth. Lawyer Stephen Tonna Lowell, appearing for Tonna and Cini, argued that freezing orders imposed on persons accused of money laundering should be limited to the amount allegedly obtained through criminal activity and not over all of their assets.

However, prosecuting lawyer Antoine Agius Bonnici from the Office of the Attorney General told the court that such amounts are hard to quantify when illicit funds are mixed with legitimate ones. “We do not follow the doctrine of precedent, but the majority of recent decisions on requests for variation of freezing orders have been rejected.”

Magistrate Frendo Dimech pointed out that these decisions had also emphasised the importance of proportionality. “That is why prosecution should be fast. Proportionality is directly correlated with how long the case is to remain pending. Otherwise it will lose its objective and start breaching rights… When is there an end in sight?”

The prosecutor argued that the delays encountered were “not pointless ones”, but the court remarked that it didn’t matter, adding that it had heard the prosecution say this many times.

“Proportionality will lose substance the more proceedings protract… The evidence should be collected and ready before a person is arraigned.”

“When a freezing order is issued it is issued over all the assets of the accused,” insisted the prosecutor. “There is no legal disposition to reduce the amount,” said the prosecutor. "Only in exceptional circumstances, such as to cover extraordinary expenses, can it be justified.”

The law assumes that all the accused’s property is obtained through criminal means, Agius Bonnici said, adding that it was up to the accused to file a civil case after the conclusion of criminal proceedings, in order to establish what was and what wasn’t illicit. “This is the system which we have at the moment. Whether it is not in line with human rights does not fall within the competence of this court, which is compiling evidence with a view to criminal proceedings.”

Tonna Lowell accused the police of having made “absolutely no investigations” before arraigning his clients, resting entirely on magisterial inquiries. The Progress Press arraignment was made on the basis of piles of evidence which had not been sifted through, he said. “They cannot put the onus on us to investigate.”

“The indiscriminate carpet bombing with attachment orders has led Nexia to lay off hundreds of workers,” the lawyer said, arguing that the superior courts had established that freezing orders should be limited to the amount of alleged illicit gain.

The prosecution’s arguments were extremely dangerous, Tonna Lowell argued. The prosecution was saying it had absolute discretion to request freezing orders, which the court has no power to change, he charged. The prosecution never replies to questions sent to it by defence lawyers, the lawyer said. “And what do they say, instead? ‘The court has no right, because I am in charge here, not the court.’”

Lawyer Giannella De Marco recalled the prosecution as saying that every case is different. “The cases may be different but the principles remain the same. So if this court, as presided, ruled as it did in the Bondin Carter, Yorgen Fenech and Vincent Buhagiar cases, and emphasised the importance of proportionality then this principle remains the same for every person accused before the court.”

If not, the court would simply be paying lip service to human rights, said the lawyer and would be failing to take into account the damage caused by unlimited freezing orders. 

The magistrate will hand down a decree in chambers. The case continues on June 20.

'Witch hunt' against Adrian Hillman

Magistrate Frendo Dimech will also decree a similar request made by lawyer Stefano Filletti, who is representing Adrian Hillman in separate criminal proceedings against the former Progress Press director.

Hillman is accused of money laundering, conspiracy to commit a crime, defrauding Progress Press, making fraudulent gain, making a false declaration to a public authority and accepting bribes as a managing director of Allied Newspapers and Chairman of Progress Press.

Unlike the Nexia BT case, the amount of illicit gain had been quantified at €1.4 million, said the lawyer.

Filletti explained that he was not contesting the legality of the prosecution’s freezing order. “It has the right to request it, now we hope the prosecution will take it to port, as we are not seeing a port yet.” It was also useless to argue the innocence of the accused, as this was not the right forum, he said.

But, the lawyer submitted, the unlimited amount of the freezing order was “immoral and above all disproportionate.”

The lawyer stressed that the court was “not a blinkered horse” and had discretion to reduce the amount, in spite of the prosecution's insistence that the court was “bound by a legal straitjacket” to uphold the freezing orders. “God forbid this is true… A court cannot permit a breach of fundamental rights to take place under its watch.”

The freezing order is an absolute prerogative of the AG, as was the wording of the indictment, said the lawyer. The AG knew the actual amount yet insisted on freezing all the man’s assets. “So it just wants to break him.”

Hilman’s inheritance was definitely not proceeds of crime, yet was frozen, as was his salary from a job which he started after being charged, Filletti argued. “This is the exercise of a witch hunt.” 

The lawyer submitted that at this stage, the potential maximum €2.5 million fine that the accused could eventually face was only a possibility and not yet quantified. “The Republic of Malta has absolutely no right to freeze the maximum amount of the fine as a precaution. This isn’t a civil court. As these are criminal proceedings, if the amount due is not paid, the alternative is prison.”

“The law cannot be used to oppress an individual,” Filletti went on. “If, Lord forbid, he suffers another death in his family, anything he inherits will also be frozen under the order. This cannot be allowed.”

“The indiscriminate freezing of everything is wrong,” the lawyer said.

It would not be correct for the court to speculate on how the illicit funds could be reinvested, when the police have themselves declared the actual amounts, added the lawyer. “If you have a limited charge, you cannot secure it with an unlimited freezing order.”

“In the face of this situation, the court must be proactive. In dubio pro reo. It must understand that the accused is suffering a disproportionate denial of access to all his funds…It is certainly excessive, as the prosecution had stated the amounts.”

Inspector Joseph Xerri informed the court that the amounts suspected to have been made illegally amounted to “just over €1 million for the Progress Press deal, €110,000 from Leister Holdings, €240,000 Networks, Sparkasse €10,000 sent to Pilatus.” 

Agius Bonnici interjected, arguing that the competence of this court was to decide whether to vary the freezing order and not decide the merits. “The presumption in money laundering cases is that all possessions of the accused are the result of crime, and he must prove the contrary.”

Filletti said the prosecution had started on the wrong foot as parliament, the legislator, first speaks of enjoyment to property without disproportionate interference and then issues another law which interferes with this right. The Attorney General tells the parliament to issue the law and it stipulates that the court has no right to scrutinise.

“The law is wrong, not the AG. The law is completely wrong.”

The court announced that it will be issuing a decree in chambers.

The case continues on June 21.