Bitten investor recounts how More Supermarket debacle ‘drove him to insanity’

A 68-year-old retiree has told a court how he was driven to “insanity” after former More Supermarkets boss Ryan Schembri disappeared with over €140,000 that he had invested in his business.

Criminal proceedings continued on Tuesday against Schembri, 43, from Mellieha, who stands accused of money laundering, misappropriation, fraud, making fraudulent gain, offering financial investment services without a licence and knowingly making use of forged documents.

Retired plasterer Thomas Gravina was one of several witnesses to take the stand in the compilation of evidence against Schembri before magistrate Donatella Frendo Dimech.

Gravina explained that he had previously invested with a financial planning firm but had been convinced by his friend, Joe Difesa, to invest in Ryan Schembri’s ventures.” 

“I invested €20,000 and then another €123,000 in 2014-15. “Four months later he [Schembri] disappeared with the money. It drove me insane.”

The witness explained that he had handed these large sums of money over to Schembri personally, in cash and had only received interest payments on the sum invested, never recovering the sum he had invested.

Gravina told the court that he would receive interest payments in the form of cheques, which he would never deposit in an account. “I would return the cheques to him when they were going to expire and he would pay me the interest in cash. I never went to the bank.” 

“My friend Joe Difesa had introduced me to him. He had invested with Schembri before me and encouraged me to do the same.”

Pressed on what had convinced him to part with his cash, the elderly witness said he was unable to remember what had been said to encourage him to invest.

Asked why he had invested the cash, the witness simply replied “to earn some extra money, you know?” 

Gravina told the court that Difesa had quoted Schembri as having claimed that “his cousin, Keith Schembri, worked at Castille and… he had a lot of power.”

The witness struggled to explain how the system adopted with Schembri worked. With considerable difficulty, it eventually emerged that he would hand over cash to Schembri in return for a post-dated cheque, which he would return a month later, in exchange for a sum of money representing his interest.

Asked by prosecuting lawyer Francesco Refalo whether he had ever cashed the cheques, the man replied that he hadn’t. “No, just the interest,” Gravina said. Asked how much money he would receive in these interest payments, he replied: “maybe €3,000, €4,000, in three months.”

Pressed on the degree of the defendant’s involvement, the man replied that “everything I did was through my friend, I didn’t meet Schembri much.”

Cross-examined by defence lawyer Roberto Montalto, the witness said that the first time he had invested any money, €25,000 in this instance, he had accompanied Difesa to Schembri’s factory.

“What were you going to invest in?” Refalo asked. “I didn’t know him,” replied the witness.

Looking at the document presented in evidence, the court noted that the investment note, which had been signed only by the accused, mentioned ‘investment: portioned beef.’ “What is ‘investment: portioned beef’?” asked the magistrate. “I don’t know,” replied the witness.

Montalto then confronted the witness with six cheques issued by Banif Bank. “Had you ever deposited them in the bank?” asked the lawyer. “No, I never took them to the bank,” Gravina replied.

Also testifying today was Dennis Francalanza, who had been HSBC Bank’s relationship manager for Schembri Marketing Ltd, and who has since retired.

The court released the witness from banking privilege, allowing him to testify about the case. “At the time, the most important function [of Francalanza’s role] was to take care of the borrowings of the client company. Overdrafts and loans,” he said, adding that he would deal exclusively with both directors of More Supermarkets Ltd, Ryan Schembri and Etienne Cassar, and the company’s auditors.

“At the time [2004 to 2011], the company was in a growth stage, with increasing sales and profits. There were some reservations about the figures being presented but there were no red flags,” he said.

Francalanza told the court that after leaving his job at the bank, he had worked as a consultant with Schembri’s company, “on budgets feasibility studies, break even analysis, explaining bank correspondence.” 

“I worked with them until 2014 when a new director joined, Darren Casha.”

Pre-2012, Cassar & Schembri Ltd had seized the opportunity to expand into the supermarket business, setting up what eventually became More Supermarkets. “I was part of a small group, known as the pre-opening team. My task was to liaise with banks and ensure that there were loan facilities available.”

Schembri and Cassar had also appointed Francalanza to carry out a feasibility study on More Supermarkets, he said.
APS and Banif had agreed to grant More Supermarkets (Hamrun) Ltd what was called a general banking facility, essentially a large overdraft, added the witness.

“PCC was the auditor…Patrick Camilleri. I presented the audited accounts to the banks, who were satisfied that the company was going to generate sufficient profit to pay back the loans.”

Magistrate Frando Dimech asked the witness to explain what the business’ plans were. “Here we are talking about a new business in a new complex - a rarity at the time- in Hamrun, a good catchment area.”

“There was also the strategy of this supermarket - differently from other supermarkets, they wanted lower prices to compete with bigger supermarkets. They wanted to be price leaders, it was a new strategy at the time.”

The big draws to the Supermarket were to be the prices, the on-site parking facilities and the size. “The place was very, very big,” he remarked.

Other supermarkets had eventually been bought by the company, but this was after the witness’ retirement in 2014 he said, telling the court that Edmond Mugliette had taken over from him on June 26, 2014. “At the time there was a change in shareholding and Darren Casha joined the company. I was asked to help with the transition and I did so, but on 15 November that year I hung up my socks.”

Asked about More Supermarkets Hamrun Ltd’s ownership structure, Francalanza told the court that 30% of the shareholding was held by Cassar and Schembri, with another 30% held by Imora Holdings. Panelix Supplies held another 26% of the shares. “A certain Delia held 10% and K Consult Ltd another 10%.”

More witnesses are expected to be heard when the case continues on Friday. 

Ryan Schembri was brought to Malta in April this year on the strength of a European Arrest Warrant after being discovered to be residing in the UK. As boss of the bankrupt More supermarket chain, Schembri was connected to the supermarket debt which had led to the murder of lawyer Carmel Chircop in 2015. Chircop had loaned €750,000 to More Supermarkets in March 2014.

Appearing as debtors in the contract were Schembri’s business partner Etienne Cassar, as well as Adrian Agius, one of the men first arrested by police in December 2017 in connection with the assassination of Daphne Caruana Galizia. Together, Schembri and Cassar, and Agius, owned shares in another joint company called Interaa Holdings.

Agius, known as ‘tal-Maksar’, was also previously a director linked to the More Hamrun supermarket. Agius had been a director of Interaa Holdings, with the shareholders consisting of Schembri’s own Cassar & Schembri Marketing (40%), M&R Construction (15%) and Panelix Supplies (25%), and Agius’s Imora Holdings (20%).

Lawyer Francesco Refalo from the Office of the Attorney General is assisting the prosecution.