Prosecution, defence make their cases in Vitals proceedings against Chris Fearne and others
Magistrate continues to hear evidence against former deputy prime minister Chris Fearne and former finance minister Edward Scicluna, and 13 others
17 July 2024, 9:19am
Matthew Agius
Matthew Agius
1 min read
Defence lawyers representing a group of 15 people charged in connection with the fraudulent hospitals concession to Vitals Global Healthcare have queried, amongst other things, the quality of work carried out by the international experts appointed to assist the magisterial inquiry into the Vitals Global Healthcare hospitals concession.
They also questioned the costs and method of their appointment, in multi-pronged attempt to discredit the inquiry’s conclusions and avoid a trial before the criminal court.
The court will now decide whether there is sufficient evidence to merit their indictment or, indeed, their discharge.
Magistrate Leonard Caruana heard over eight hours of lengthy and often overlapping submissions as prosecutors and defence lawyers assisting former deputy Prime Minister Chris Fearne, former Finance Minister Edward Scicluna and the 13 other defendants made their final prima facie submissions on Wednesday.
Alongside the two former cabinet ministers in the dock were 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. Several of the defendants are also accused of money laundering.
The group are charged with fraud and misappropriation, with Fearne and Scicluna being also accused of making fraudulent gain through abuse of their office.
A decision on prima facie will be delivered on July 24.
Matthew Agius was Senior Reporter on Law and Court Affairs at MaltaToday from 2014 to 2024...
"DF Advocates cannot answer to any case because it does not fall within the terms of this law, it's like a case of mistaken identity when one person is asked to testify instead of another," Psaila insists.
DF Advocates was not a body corporate entity nor a law firm at the time, as has already been confirmed by the MBR and the Chamber of Advocates, he says, arguing that there is no case for them to answer.
“All you will find is a false statement that Robert Borg is the owner of the newspaper MaltaToday. I am sure that Saviour Balzan has something to say about that.” “Let us say that Borg has an affinity with certain people, but how is this affinity relevant?”
He invited the court to listen to the brief arguments made by the prosecution, saying that they had not distinguished between the evaluation committee and the negotiating committee. Borg, like Camenzuli, is also charged in connection with the period 2013 to 2023, although his involvement was only in the evaluation process from May to June 2015.
The evaluation committee did not select anyone, because that decision was the Cabinet's responsibility. Cabinet had every right not to accept the committee’s report.
The fit and probity test had a pass mark of 65, the winning bidders had obtained 85. The marking scheme had been drawn up by Ganado Associates, he points out.
In 2015, Castagna had been appointed to participate in the evaluation committee, which was tasked with evaluating the different bids to ensure that they were compliant, explains the lawyer.
Psaila submits that the evaluation committee had worked backwards, comparing their results to those obtained by VGH, to ensure the same results were obtained.
Castagna had been appointed on the evaluation committee at the eleventh hour instead of Brian Tonna, after Tonna declared that he had a potential conflict of interest, says the lawyer.
Castagna had done his job, within the constraints dictated by the RFP.
The lawyer said he disagreed that it was right to accuse Castagna in hindsight. “And do you know who agrees with me? PWC, which dropped Steward Healthcare as a client because of bad press.”
"In reality, Camenzuli was actively involved in the process from May to June 2015 - for a month and five days in total," says the lawyer.
Making reference to the PN’s civil case which had led to the hospitals deal being rescinded on grounds of fraud, Farrugia Sacco argues that the NAO had also noted that the MoU had prejudiced the concession’s viability. It also showed that the concessionaire's decision to hide the MoU clearly indicated their fraudulent intent. That fact also showed how James Camenzuli had been unaware that this MoU even existed, Camenzuli having been appointed after the MoU was signed, Farrugia Sacco submits.
"This is extremely serious. What we have is someone, who is not a lawyer, commenting on an email sent by Dr Gatt to someone seeking advice," Sciriha underlines. "The lawyers are the defenders of the rule of law.”
"It is a very serious situation that we are here defending a lawyer who wrote up an email which was an assessment of the law. Bradley Gatt was never questioned and he is here because of an email from 2015. He got to know from the newspapers that he was among the persons who would face charges," Sciriha tells the court.
The “potentiality of a crime" did not amount to the "possibility of a crime", argued the lawyer, adding that the prosecution ought to have investigated further and that Chappell had no case to answer.
So this transaction, which she was not involved in, could potentially represent a crime, said the lawyer, reminding that court that “potentially” was even less than “probable.”
They didn’t even know the basics of financial law, scoffed Filletti. “An in-house lawyer is not subject to the PMLFCR.”
The experts declared their expertise as having assisted in precious similar inquests. “By that logic I am a mechanic because I drive a car.”
When, how and where was a document forged, asked the lawyer, “did she knowingly make use of it? About this, I have heard nothing….Not even in the conclusions of the experts in the inquiry.”
Filletti asks how Chappell’s drafting of a contract on the instructions of a client can be construed as a crime. “Deborah Chappell is the worst hit. Both with the largest freezing order €40 million, but also with all the crimes of fraud, criminal conspiracy, money laundering, forgery of documents, creating false documents, using false documents and VAT fraud.”
“These are basic tenets of the rule of law, said the lawyer, warning against “tampering with fundamental rights”.
At some point in time, before the charges were issued, they must have been suspects, argues the lawyer, asking whether they had been afforded the apposite rights. “I doubt someone just decided to charge them five minutes after the inquiry was concluded.”
Psaila told the court that he cringed when he read the report state that AML due diligence searches had returned “negative results”. “What were they supposed to do then? Every lawyer in the same situation would have done the same thing.”
‘Dr Jean Carl Farrugia - Senior Partner of DFA - was copied into all emails concerning the concession process. Acted as an intermediary with the OPM on occasion. Engaged with Brian Tonna and Pilatus Bank prior to DFA’s opening of an account with the latter.’
“So if I correspond with the OPM on behalf of my client, does this mean that I am acting as an intermediary?” the lawyer says, dismissing the argument as conjecture.
In order for a crime to subsist, there must be the elements. For fraud, one is the presence of a mise en scene. Psaila insists that out of the boxes of evidence collected and the inquiry report, there is nothing to show that his clients, Deguara and Farrugia, had committed fraud, because the constituent elements of that offence were absent.
Had the police sent for Kenneth Deguara, he would have been able to immediately show them that this is an incorrect conclusion. Debono says it is a bizarre situation where the defence had to bring witnesses for the purpose of deciding on prima facie.
No only was there no evidence of a crime committed by Deguara, but the experts had made statements about him which were “completely untrue”, he argues.
This was unacceptable, Debono said. “And if there needs to be a legislative intervention to afford everyone arraigned in court the opportunity to give their version of events in court, then it should happen.”
Debono raises the possibility of constitutional proceedings on this point.
“With the excuse that they weren’t suspects, we heard the inspector say, Kenneth Deguara, who is not a lawyer, was never given his rights. Had there been a minimal respect to his rights, he would have been called in for questioning and would have been able to refute the claims about him.”
“If I send a letter bomb to someone, is the postman who delivers it an accomplice?” asks the lawyer.
Then came the negotiations, after which the concession was concluded. The concession agreement was drafted by Ganado Associates. Although the final agreement was changed somewhat in the course of negotiations, the main points and guidelines established by Ganado remained.
“Mifsud Bonnici’s role emerges from the evidence itself. He had engaged a firm, a reputable firm, Ganado Advocates.” He had done so because he felt the matter required more specialised expertise, said the lawyer, adding that Ganado Advocates had then engaged an Irish lawyer Patrick McGovern from the firm Arthur Cox, which specialises in public procurement.
The lawyer said he didn’t want to be even “a hair on the head” of the prosecutor. “He does not believe his own case. His body language betrays this.”
“The real experts who understood this case were this constituted body, the NAO. They examined every detail and transaction that took place. From these, they certified that those authorised by Rapa, within the framework he works in… found no irregularity,” Sciriha said.
Distilling the evidence results in no evidence of wrongdoing by Rapa, Sciriha insisted.
It was the court’s responsibility to do justice by Rapa, he says. “Is it right that a person, who simply attends a meeting, who occupies a post, must be brought here to fight to understand what he is supposed to have done wrong? Is it right that the prosecutors are brought here to defend the indefensible?”
“Stop splitting hairs! Where is the evidence? Where is the case to answer? The gossip email on the basis of which Camilleri is in the dock today, neither I nor my colleagues have managed to trace in the evidence.”
“There is no prima facie, in fact there is nothing at all. It is pointless for me to go on about it, because there is nothing. Much reference had been made to the “voluminous” nature of the inquiry and the “several” experts consulted, but insofar as evidence is concerned there is nothing.”
He cites a decree from the 1980s issued by Magistrate Joe Filletti, in response to a police practice of releasing suspects from arrest and rearresting them as soon as they turn the corner, to reset the clock on arrest.
“Is it acceptable in 2024 for a person to be arrainged without first being questioned?” asked the lawyer.
“With all due respect the AG should have taken this report and shredded it. She had no authority to use it,” Filletti says. The expert report states that it is not expressing a legal opinion and that it should not be used as such, says the lawyer.
So the question arises, if Ronald Mizzi is an accomplice with someone who is not identified, how did the AG in her wisdom, arrive at the conclusion that he is the principal offender and not an accomplice, in the space of just 5 days?”
Citing British legal scholars, Filletti said “a case to answer” is a decision of whether the evidence adduced, stood alone, could be accepted by a jury and find guilt, so at least it must be probable.”
He tells the court that all crimes relating to fraud share an essential element: unjustified enrichment. The money made must not be due.
“The AG had to prove that there was a case to answer for the charges she has burdened my client with. Where are the elements? When did he receive this object? How did he convert it into gain?”
Referring to Cabinet minutes showing that an additional payment of €10 million requested by Steward Healthcare had been blocked, Tonna Lowell insisted that it was not true that Scicluna had not acted, arguing that his intervention to block the payment to the new concessionaires who took over from VGH was evidence of this.
The report by inquiry experts Harbinson et, agreed with what the Auditor General had said, argued the lawyer. He reads from the report, which notes that ministers who were not easily swayed had been sidelined. “Scicluna was not consulted in advance about the hospitals concession, they noted,” argued the lawyer, pointing to an email in which Scicluna asked Konrad Mizzi for access to documents relating to the concession. “They were clear in saying that he not only did not know but was completely extraneous. He was kept in the dark.”
"We've heard Superintendent James Grech, who told us that Fearne filed a criminal complaint following the publication of articles in foreign press," Tonna Lowell says. The lawyer says that these articles were part of a smear campaign revealed by OCCRP, the Times of Malta and the Boston Globe, and states that the financial investigation carried out by the police had not found any transactions.
He suggests that even the inquiry experts had noticed that Fearne's involvement in the deal was 'non-existent'. There was no evidence that Fearne replied to, nor was he copied in the email chain discussing the deal, argues his lawyer.
“The AG told us, with respect to Christopher Fearne, that the experts corroborate his argument that he should be found guilty. This is nowhere to be found in the inquiry.”
“If the court looks at the conclusions of the inquiry, in the inquiry, although there is no explanation at all, Christopher Fearne should be accused as an accomplice not a principal.”
He questioned why the police had chosen to charge Fearne in that manner, particularly in view of the statement that the police had not investigated the matter and had relied on the inquiry.
“The police have stated that they did not investigate anything. The Attorney General refuses to explain how they reached the decision to indict these individuals… Nowhere is there any form of reference, at least with regards to my clients.”
He refers to a decree handed down a few weeks ago by Magistrate Caruana in the case against Shaukat Ali. “Here, the court is making a distinction between the words ‘reasons’ and ‘evidence.’” This distinction had also been raised by Magistrate Rachel Montebello in the case against Joseph Muscat, he says.
The RFP had been issued on the basis of discussions between Mifsud Bonnici and DF Advocates to iron out the problems created by the MOU, Refalo states.
The lawyers at the firm had links to the OPM and used them to facilitate these crimes, he says.
Lawyer Kevin Deguara is also accused of money laundering. “He had started doing work for the consortium, in full knowledge of its shortcomings. He was aware of the existence of the MOU and the problems and the illegality it brought with it when it became an RFP.”
Mizzi had appointed the board that assessed the RFP, despite knowing that some of the people he was appointing had a conflict of interest. “He carried out, regardless, as if nothing happened.”
Scicluna had the power to put a stop to all this, but had failed to do so, says the prosecutor. This view was also taken by the magistrate when she ordered that Scicluna be charged.
When Konrad Mizzi was asked by Tonna whether Fearne was aware of what was happening, Mizzi replied that he was going to bring Fearne up to speed on everything, adds the prosecutor.
He points out that at the prima facie stage, if there is even the slightest shadow of a doubt that the accused may be guilty, this must automatically lead to the next stage of the proceedings.
“We have to look at how we got here. We began with a voluminous magisterial inquiry that was presented to this court, along with the inquiring magistrate's conclusions. Those conclusions were clear, and in these conclusions, several persons were indicated as the accused we see here today and in other separate cases.”
“So there are no checks or balances? Nothing?”
That is the practice adopted by the courts, Bugeja answers.
Giannella De Marco refers to the Code of Organisation and Civil Procedure which lists the rates. It states that if different rates are to be applied, it must be agreed with the magistrate beforehand, confirmed by a decree.
The CSA paid Harbison Ltd a total of €10 million, spread across several invoices over the duration of the four year inquiry. €775,000 was paid to another forensic accounting firm, Ansell Limited and €160,000 to another supplier.
The defence asks, and the court orders, the witness to return with all the relevant invoices.
Chris Fearne - Stephen Tonna Lowell
Edward Scicluna - Stephen Tonna Lowell
Ronald Mizzi – Stefano Filletti and Maurice Meli
Alfred Camilleri - Stefano Filletti, Maurice Meli, Franco Debono
Joseph Rapa - Stefano Filletti, Maurice Meli, Michael Sciriha
Kenneth Deguara - Ezekiel Psaila, Franco Debono, Jonathan Thompson, Marion Camilleri
Kevin Deguara - Psaila, Debono, Marion Camilleri, Jonathan Thompson
Deborah Chappell - Stefano Filletti, Roberto Montalto, Maurice Meli, Joseph MIzzi
Bradley Gatt - Franco Galea, Franco Debono, Michael Sciriha
Aaron Mifsud Bonici - Giannella Demarco, Charles Mercieca
James Camenzuli - David Farrugia Sacco
Manuel Castagna - Ezekiel Psaila
Robert Borg - Arthur Azzopardi, Marion Camilleri and Franco Debono
Today's hearing starts at 9:30am in front of Magistrate Leonard Caruana.