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Lawyers demand explanation for gargantuan Vitals-related freezing orders
Court continues to hear criminal case against former deputy prime minister Chris Fearne and Central Bank Governor Edward Scicluna, as well as 13 others
21 June 2024, 10:53am
Matthew Agius
Matthew Agius
4 min read
Defence lawyers representing a number of defendants accused of fraud and misappropriation in relation to the fraudulent hospitals concession have demanded prosecutors provide an evidential basis for the multi-million euro freezing orders imposed at their request, urging the court not to allow itself to be reduced to “a rubber stamp” in that regard.
Former Deputy Prime Minister Chris Fearne, Central Bank Governor Edward Scicluna, and 13 others, amongst them former and current permanent secretaries and lawyers, are facing charges relating to fraud arising from the concession of public hospitals to Vitals Global Healthcare. Fearne and Scicluna face additional charges of misappropriation and fraudulent gain. Other defendants are charged with money laundering.
Charged alongside Fearne and Scicluna are former permanent secretaries Alfred Camilleri and Joseph Rapa, current permanent secretary Ronald Mizzi, adjudication committee members James Camenzuli, Manuel Castagna, and Robert Borg, financial controller Kenneth Deguara, and five lawyers: Kevin Deguara, Jean Carl Farrugia, Aron Mifsud Bonnici, Deborah Anne Chappell, and Bradley Gatt.
The 15 defendants are charged with fraud, with Fearne and Scicluna being additionally accused of misappropriation and making fraudulent gain by abusing their position. Money laundering is also amongst the charges facing other defendants.
Magistrate Leonard Caruana heard three witnesses today: Deborah Farrugia, Secretary to the Chamber of Advocates and Legal Procurators, who gave evidence about the registration status of law firm DF Advocates; Franklin Calleja, Registrar of Criminal Courts, provided digital copies of the Vitals inquiry and discussed the handling of evidence; and Former FCID Inspector Anthony Xerri testified about the police's role in seizing evidence during the inquiry.
Xerri, who had since left the police force, was unable to recall certain aspects of the investigation and will testify again at a later stage after the court upheld a request to grant him access to the relevant parts of the inquiry in order to refresh his memory.
Perhaps the most striking thing which emerged from today’s sitting was the prosecution’s reluctance or inability to explain the calculation process which had resulted in the outsize amounts seized by the freezing orders it had requested.
The defence lawyers contested the €20 million and €40 million freezing orders issued against the defendants, questioning the justification and calculation of these amounts.
The prosecution argued that the law did not demand detailed evidence to justify the freezing orders, citing the relevant legal provisions.
“So a prosecutor in the Republic of Malta, in 2024 is objecting to being asked to justify a freezing order.” observed lawyer Franco Debono, telling the court that the law placed an obligation on the prosecution to substantiate the amounts frozen.
Lawyer Stefano Filletti added that the law required that “reasonable cause” be shown before such an order could be issued, otherwise the court’s role would have been reduced to that of “a rubber stamp.”
“Before the law would seize everything you had. Today it can seize that and can also seize more than you have,” Filletti said.
“Before they confirmed those orders on oath, I surmise that they were certain of the figures,” argued the lawyer, pointing out that the figure of €40 million frozen from Deborah Chappel did not emerge from the inquiry, adding that Chappell certainly didn’t have it in her bank account, either.
“One presumes that this exercise has already been done,” said the lawyer, but observed a “total reluctance on the part of the prosecution to explain how they had reached that figure.”
Debono submits that the UK’s 2002 Proceeds of Crime Act, which is the basis for recent amendments to the equivalent legislation in Malta, requires “a detailed examination of the material put before it,” and that the court must find reasonable cause.
“A freezing order for €20 million, €40 million here…I expect the prosecution to come here and provide evidence to support those amounts, that we are allowed to question it and the court examines it.”
Lawyer Franco Galea added that case law had established that the higher the amount of money to be seized, the greater the burden of proof on the requesting party
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Matthew Agius was Senior Reporter on Law and Court Affairs at MaltaToday from 2014 to 2024...
“The prosecution and the police had much more in their possession, when they told the court they had no more, because today we know that they had not only the report of the inquiry report, but also the entire proces verbal. Why hide all this? To hide that there was no reasonable cause?”
Debono counter-argues, saying that in his 24 years in these courts, the fundamental principle is that “this is the court of evidence.” It is the first thing explained to jurors, he says. The prosecution’s request was “a subtle attempt to undermine this rule”. They could have gone about it differently, the defence had suggested alternatives, but insisted on going down this route, he says.
Sometimes the freezing order leaves harsher and more irremediable consequences than the sentence handed down on the merits.
“Before they confirmed those orders on oath, I surmise that they were certain of the figures.”
He asks what witnesses the defence wished to bring. Debono says that the defence will be calling at least two witnesses, but also wants whoever signed the freezing order to testify about it. “We are talking about millions of euros. It cannot be done lightly.”
“The law says that in order to issue a €20 million freezing order you must have reason to believe, which is not the same as reasonable suspicion…. we are saying that the prosecution took an oath on a €20 million freezing order,” says the lawyer, arguing that now that the prosecution had decided to take that course of action, it had to be in a position to justify it.
Lawyer Arthur Azzopardi appearing for Robert Borg, asks the court to instruct the witness to ascertain the date when the devices were seized, to establish which came first: the keywords or the devices.
The witness confidently replies that "the list came first".
Lawyer Joe Mizzi asks the court to grant the witness access to the police file he had mentioned in his own testimony, in order to refresh his memory before his next court appointment.
Xerri replies that he had joined the investigation two years after it started and that the discussion would have been made before then. In reply to another question from Filletti, Xerri confirms that the Commissioner had never instructed him to investigate.
“Before I left the police force, I made a formal request for the files I had prosecuted. This was never upheld.” He explains that he had asked for them because he would still have to testify about them.
Filletti asks about Ronald Mizzi’s summons and establishes that Mizzi had been summoned as a witness, not a suspect
Franco Debono asks the witness whether inspector Shaun Frendo had also been involved. He might have been, Xerri replies.
The magistrate points out that the witness had said he doesn’t remember.
“Then why didn’t he prepare himself beforehand?” says Mizzi angrily. “The only witness who can testify about this comes here and says he doesn’t remember.”
“First of all I don’t remember talking to her.”
“Because the inquiring magistrate instructed us. The orders were clear: to retrieve the items, hand them over the experts. I never had access to their contents.”
“The police had no instructions or grounds to analyse [the devices]...” he says, adding that the warrant would simply order him to conduct a search.
The lawyer refers to Chappell’s testimony the following month. “Am I correct to say that at that point, Deborah Chappell was a suspect?”
“No we did not have suspects.”
“Was there a particular list of names indicated by the inquiring magistrate to look for during the searches?” the lawyer asks.
The foreign experts would indicate the names, replies the witness, adding that he is unable to recall whether Chappell’s name was one of them.
Usually a police inspector, the magistrate and the foreign experts would be present during her deposition to the magistrate.
“My role [during testimony] was nothing more than asking questions to clarify points that I wouldn’t have understood, in preparation for probable questions in subsequent proceedings.”
“Can you check?”
“No.”
The records of questioning sessions would be held by the police, he says, but he was no longer in the force.
Lawyer Joseph Mizzi asks whether he had discussed Deborah Chappell. The name vaguely rang a bell, said the inspector. Asked whether he had been told that Chappell was a suspect, the witness replies that he was never told who was considered a suspect.
“I was not involved in that process,” replied the witness, adding that he was not involved in that search. He explains that his superior, Superintendent James Grech, had decided that four searches were to be carried out on the same day.
None, replies the witness. The police’s work was to seize the evidence indicated by the magistrate and place them in evidence. The inspector said that he had no access to the evidence seized after that.
The court upholds the request, in deference to the principle of equality of arms. The magistrate reserves the right to decree on the confirmation or otherwise of the inquiry experts.
In his reply, Refalo points out that the experts had been appointed in terms of section 550 of the Criminal Code and is therefore valid. The prosecution reserves its right to reply to the defence’s objection at the opportune stage.
“The defence, jointly, objects to and reserves its position on, the appointment of all of the experts in the magisterial inquiry for several reasons. But in view of the stage of these proceedings, this issue will be raised at the opportune moment. This note is intended to indicate the position of the defence in a timely and immediate manner.”
Filletti amplifies: “The wording of the appointment, as seen by us and published in the newspapers, shows that these accountants and financial analysts who are not lawyers, were asked to identify every crime or illegal activity that they saw. This means that you have a foreign, non-legal person, interpreting the Criminal Code.”
The defence tells the court that it was exempting him from having to print the inquiry in view of the massive volume of documents which form part of it. The court authorises the parties to access the contents of the devices which had been formally exhibited, as required.
Franco Debono asks how the inquiry experts had been paid. The prosecution questions the relevance of this question. Calleja says this should also emerge from the acts of the inquiry and the court agrees.
“At one point the magistrate concluded the inquiry and sent it to the police. After that was there any communications between the recipient and the magistrate who sent it?”
The witness says he will look for any records of notes being registered, but says he does not have access to their contents.
The registrar tells the court that he consulted with the registrar for Magistrate Gabriella Vella and confirmed that a hard copy and a soft copy of the proces verbal had been handed to the Commissioner of Police, in April.
The court responds: “She is not the right person to answer.”
Witness suggests the other members of the committee are in a better position to answer the questions.
“Once they go through all the law firms, and see that they are all compliant, they will put them online. But this is a task being done by someone else,” the witness says.
“I can’t say. What I can say is that it has applied and that there is a register.”
“So to date no law firms are registered?” the prosecutor asks.
Those who have applied are in this list, this excel sheet, and are being processed, the witness says.
Spiteri points out that the witness repeatedly mentioned registration, which implies that there is a list of registered law firms.
Prosecutor Rebekah Spiteri points out the date of the email is April 2022 and suggests that if not registered, applicants would not be allowed to practise law. “I’m not here to interpret the law,” says the witness. The court agrees.
The April 2022 date emerges from the law, as the law gives law firms a year to register, explains the witness.
The witness responds: “I have already said so several times.” The document is not the final one in the procedure, the witness replies to a question from the court.
“I don’t think I’m the qualified person to say, but eventually this information will be online when there is a final list.”
Debono insists that this is not the actual application. He says there is a process which then follows, before the professional is registered.
He suggests that from the application form it does not emerge that DF Advocates is registered as a law firm.
“I received an emailed request from Inspector Wayne Rodney Borg, in which he asked for information.” It is not clear what the information was at this stage.
In an attachment to the email there was a letter urgently requesting the registration information relating to DF advocates as provided to the Chamber.