Court halves costs for More Supermarket’s bogus creditors in ‘Maksar’ debt claim

A Court of Appeal has halved the legal costs borne by two defendants who claimed to be owed €3.5 million from the defunct More Supermarkets chain.

The supermarket chain became national news in 2014 when former owner Ryan Schembri fled Malta leaving behind millions in debt. Schembri is still in prison while waiting to face charges for fraud.

Effectively this most recent court decision confirms one of the more mysterious aspects of the supermarket chain – criminal suspects like Adrian Agius, currently in jail awaiting trial for the murder of a More Supermarkets lender, had a hidden interest in the operation’s cash flow.

Right before Schembri fled Malta, it was another of his creditors – Darren Casha – who stepped in to take over the chain. Casha, of the Medasia restaurants, had himself loaned Schembri at least €5.7 million, before taking over the entire supermarket operation for just €94,000 in 2014.

But months later, Casha was fending off the pretensions of two men, Alex Farrugia and Edmond Mugliette, who claimed they were owed €3.5 million by Ryan Schembri.

They claimed they had a constitution of debt which they signed with Schembri, but also the director of the More Ħamrun outlet – Adrian Agius ‘tal-Maksar’, the man accused of ordering the murder of More Supermarkets lender, lawyer Carmel Chircop; and whose brother Robert Agius and associate Jamie Vella stand accused of supplying the bomb that killed Daphne Caruana Galizia.

Casha challenged their claims, leading to a magistrate to request an FIAU investigation into the share transfer of the five More outlets to Casha, and into the alleged debt claimed by Farrugia and Mugliette. The defendants’ claims that there was a €300,000 VAT refund ruse were also referred to the Tax Commissioner and Police Commissioner for action. The notary who sat in for the false constitution of debt, Claire Camilleri, was also referred to the Notarial Council to examine her role in facilitating the constitution of debt.

Appeals Court decision

The Court of Appeal last week partially upheld Farrugia’s and Mugliette’s appeal regarding costs borne on the first case, decreeing they would be liable in equal parts with the defendant company Cassar & Schembri Marketing (CSM), which is being liquidated. CSM was the company which financed the products on sale inside the More chain.

The first court had found that both Schembri and Adrian Agius, as one of the supermarket directors, had fraudulently constructed the €3.5 million constitution of debt, by fabricating the claim of having borrowed money from Farrugia and Mugliette.

Farrugia pleaded with the Court of Appeal that he too had been a victim of Ryan Schembri’s fraudulent actions, and queried why Adrian Agius had not been made to pay any legal costs.

The Court of Appeal ultimately upheld Casha’s original challenge to the false debt constitution, finding that Schembri had committed fraud, ordering the rescission of the debt agreement and the cancellation of the general hypothec and promissory note associated with it.

Mysterious debt ruse

As the new owner of five of the six More Supermarkets outlets, Darren Casha had challenged the €3.5 million claim from Mugliette and Farrugia, accusing Schembri of conspiring with ‘Maksar’ gang suspect Adrian Agius to bleed the company dry with the bogus debt claim.

He accused Schembri and Agius of roping in Mugliette, who acquired the remnants of media house WE Media, and undergarments retailer Alex Farrugia to create a constitution of debt for €2 million and €1.5 million respectively, without having the authority to represent the business which he had already taken over.

Crucially, the two strawmen could not identify how they had procured the money they had lent out and where it had been spent on. “This was Schembri’s ruse, and Mugliette and Farrugia are involved with him in a bid to take from More Supermarkets something they are not entitled to,” Casha told the court.

Casha must have been aware of Schembri’s mounting debts before absconding in 2014.

He was acting as a guarantor of enormous loans made out to Schembri, one of them an €8.4 million credit from a Libyan food supplier called Copacabana Investments, or another with developer Adrian Zammit for €2.2 million. These debts too have been the subject of criminal complaints to the police, because they were unconnected to the supermarket business.

Then after Casha took over More in May 2014, Schembri and Adrian Agius – who had retained the directorship of one More supermarket not transferred to Casha – created the €3.5 million constitution of debt, with Mugliette and Farrugia appearing as the creditors.

Schembri absconds

Mugliette’s alleged €2 million loan, from companies he claimed to be their ultimate beneficial owner – All Seas Management and Blue Finance – lacked all proof that any money loaned was used for equipment purchased by Cassar & Schembri Marketing. No money, it seems, was ever received from the company.

Farrugia claimed he had met a mysterious Indian entrepreneur named ‘Abdul Rahman’ at a construction fair in Libya, to which he had travelled with Ryan Schembri. He then became a representative of Rahman, who invested €1 million paid to Schembri’s company Cassar & Schembri Marketing. Yet neither a written agreement nor a power-of-attorney had been signed or included on the constitution of debt with Schembri.

In court, Farrugia claimed that as he got wind of More Supermarket’s debt problems, he approached Schembri about securing his position. Schembri suggested that he enters a constitution of debt, together with Mugliette.

Eventually, the constitution of debt was signed without Schembri even being present. Instead, it was his father Mario, together with Adrian Agius, who at that point was a registered director of More Ħamrun, who inked the debt agreement.

In court, Farrugia’s claims were challenged by More Supermarket’s accountant Dennis Francalanza, disputing the claim that Farrugia – who ran the supermarket’s ‘Sock Corner’ outlet – could have poured in €1.5. million into the enterprise.

But Francalanza also said when Schembri left the island, the operation was suddenly taken over by Darren Casha, Ray Camilleri and Adrian Agius. Mugliette was also introduced to the company as an accountant.

Months later in October 2014, two garnishee orders were filed against the company, one of €1.5 million from Alex Farrugia, and the other of €2 million from Mugliette.

Adrian Agius’s role

It remains unclear what role Adrian Agius had in the running of the More Ħamrun supermarket.

Today, Agius is in prison facing charges of having ordered the murder of lawyer Carmel Chircop, who had loaned a substantial sum, €750,000, to Ryan Schembri. Agius also appeared as one of the debtors on the Chircop loan.

Further cementing the Agius connection was the fact that both him and Cassar & Schembri Marketing were shareholders in the company InterAA Holdings, of which Ryan Schembri was a director.

When prior to his arrest in 2020, Agius testified in the €3.5 million More debt case, he claimed having had no effective role in the running of the Ħamrun outlet. “I trusted Schembri with eyes shut,” he said, suggesting his disinterest in the running of the business he was a director of, was wantonly limited.

“I passed on my shares to Darren Casha without even collecting a cent, because until then I expected that those shares would return once things get back on their feet... I just rested on Ryan’s word, because I don’t understand anything about supermarkets. Schembri would lead. But I did work from Ryan’s office basically. My office was his, and I would hear about things going on.”

And yet despite this kind of proximity, Agius claimed he was unaware of Schembri’s plans for a bond issue with KPMG, and was easily convinced that More Supermarkets owed the ‘unknown’ Farrugia and Mugliette €3.5 million. “Schembri told me I had to sign as a guarantor for their debt. In truth this did not suit me... apparently it was money to Ryan for projects he was investing in.”

Casha’s lawyer pointed out to Agius that he had been a shareholder from day one at More Supermarkets, yet right up until the share transfer to Casha, he had no idea of the Mugliette-Farrugia loans.

“Look, I didn’t know because... I would just hear them talk in the office. I never cared much. My fault really...” Agius replied.

The Maksar-More connection

As a director for the holding company of the More Supermarkets outlet in Hamrun, Adrian Agius ‘tal-Maksar’ appeared as a debtor on a contract that took a €750,000 interest-free loan from the lawyer Carmel Chircop in March 2014.

Chircop’s contract was with Ryan Schembri, then appearing as director of the company Erom Limited. Also 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, and later released on police bail. Together, Schembri and Cassar, and Agius, owned shares in another joint company called InterAA Holdings.

The contract suggests that the loan had already taken place, and was constituting the repayment schedule: a €50,000 repayment happening the day of the contract signing, with a further payment expected by 31 March 2014, and a further €50,000 by 30 April 2014. The final €600,000 should have been paid by February 2015.

Schembri and Cassar, who together owned Cassar & Schembri Marketing – the company that acquired and supplied foodstuffs to the More Supermarket chain – issued two loan notes to Chircop, personally in their names for the debt. But it was Agius who was guarantor on the debt, presenting as a special hypothec agrand villa property on Engineer Street, Madliena heights.

Chircop then exempted the notary, Malcolm Mangion, from carrying out the usual searches on the title and the property guarantee.

Three months later, Schembri started transferring his supermarket business to a new investor, the restaurateur Darren Casha, who was then under the impression that the More Supermarkets chain was in excellent financial health.

Chircop was killed in the morning of 8 October 2015 as he walked to the Birkirkara garage complex, where he died from four gunshot wounds to his upper body. Six months later, Adrian Agius took recourse to the law courts in a bid to cancel the notarial deed that had locked in his property as guarantee for the €750,000 debt. At first, Chircop’s widow refused the claim, insisting Agius himself had informed Chircop “to take his villa in Madliena as repayment for the loan to Erom. If what he now claims is true, [Agius] would have not put the villa up… the business that was to take place with Carmel Chircop never did happen because the agreement was that either Erom or the loan guarantor, pay back the money loaned to them.”

Neither party ever made it to court to take a stand on the alleged claim. In 2017, the Madliena house was sold for €1.8 million, and in January 2018 the Chircop heirs told the court that an out-of-court settlement had been reached.