Deputy Central Bank governor casts doubt on source of Mid-Med corruption story

Outgoing deputy governor of the Central Bank Alfred Mifsud has told a court this morning that his estranged partner had sent him a text, saying “Daphne will now come in handy,” after he had informed her that their relationship was over.

Mifsud took the witness stand before magistrate Francesco Depasquale, in a libel case he filed against blogger and newspaper columnist Daphne Caruana Galizia over a story alleging that he had received a Lm150,000 backhander from businessman Ronnie Demajo for replacing Mid-Med Bank's bank management software system with Eastpoint – a system for which Demajo was an agent.

Anna Zelbst, 62, had been the source for the story on Daphne Caruana Galizia’s blog, in which she said that she had witnessed Mifsud accepting cash bribes. 

Zelbst had declared that when Mifsud was chairman of Mid-Med Bank in 1997 and 1998, during the Labour administration of the time, Ronnie Demajo from the M. Demajo business group had visited her Balzan residence “at least three times, and each time he brought with him Lm50,000 in cash.”

This morning, Caruana Galizia testified that she had been surprised and initially suspicious when Zelbst had contacted her, as she had never had a good relationship with her, but had struck up a friendship of sorts after the story's publication and would talk often. “I give a lot of support. I understand women who find themselves in that situation,” Caruana Galizia said. “In my long, 30-year experience in journalism, when someone is inventing a story, he wouldn't invent a story that could potentially land him in prison.”

Zelbst had given her specific details, she said and had also gone to the police in 2006 to report her partner to the Commissioner. “She didn't come to me with a story she invented - she gave me the same information that she had given to Commissioner Michael Cassar in, I think, 2006.”

Caruana Galizia explained that she had known Mifsud for 20 years and their relationship had always been good. “But if such a story comes my way, I'm not going to say 'I've known him for many years'- I'm a journalist at the end of the day.”

“Daphne will now come in handy”

Alfred Mifsud also took the witness stand this morning. “There was a build up with Zelbst,” Mifsud told the court. “We used to live together from 1995 to 2006 and then we broke up. Today, I found that she had gone to the police, but they had never told me about it.”

The couple were never married, he confirmed.

“We had started living together again after about six years in 2012. There was no intimacy - it was for the children, a mistake in my opinion. In February 2016, I had an affair and she found out and we broke up again. There was a build up, hot and cold, peace and war and then, when she realised that I had no intention to return, she started to blackmail me, threatening to reveal information that would stop me from becoming governor if I didn't give her a sum of money.”

The morning that the story broke, Mifsud had been in a meeting with the Prime Minister discussing his possible appointment as governor, he said.

He said that two days before the story's publication, on 8 June, he had told Zelbst that he didn't want to go back to her and she had texted him back, saying “Daphne will now come in handy.”

“Daphne Caruana Galizia had later called me to tell me that she had this story about me and I denied it immediately. I warned her that it was a personal vendetta, by someone who is unstable and goes to extremes and to be careful. She said that she had other sources. I explained that there would be far-reaching consequences if she published the story.”

He had been questioned by the police on the basis of Caruana Galizia's article, he said.

“The consequences were clear,” Mifsud continued. “The allegations are serious - allegations of money laundering - they are character issues. I was on the cusp of achieving a lifelong ambition and I had to pull out of the race, to protect the position. I had initially also offered to step down as deputy governor, too but was dissuaded from taking this step.”

Mifsud had announced in a previous court sitting that he would be stepping down at the end of June.

“I didn't really know Ronnie Demajo. Anna knew him a lot better than me,” Mifsud said. “At the beginning of our relationship, he had invited Anna and I to his house.”

When asked about the Lm50,000 payments, Mifsud said that to the best of his knowledge, Demajo had never visited his home, “but today I can't exclude that he went there when I was away, because the police showed me deposits that Zelbst had made into her own accounts.”

The police had not found any deposits in Mifsud's account, he said, but had found two payments by BOV cheques of LM20,000 in an account belonging to Zelbst.

“So can I doubt that he visited when I wasn't at home? After what she did to me, she is capable of anything. Look. If you weren't happy to let someone become governor, wouldn't you also not have been happy with him becoming deputy governor a year before? So you let him pay for your daughter's wedding and then a year later, your conscience starts to prick you and you reveal something that happened 20 years ago?” Mifsud asked.

“We had never married because I had insisted that we sign a separation of assets and she had refused to. There were certain situations in the past that showed me that I couldn't trust her.”

After the article was published on Caruana Galizia's blog, Mifsud had asked the police to give him a copy of their investigation file. The Police had furnished him with all the information on people, travel records, reports. “The whole court file.”

“I told the police that they had screwed me over by not taking action in 2006, because I would not have gone back to the same person who had done this to me.”

Mifsud explained how he had become chairman of Mid-Med Bank 1996. In 1997, the bank had issued a tender to replace its core banking system after a management consultation exercise. He had sent representatives all over the globe to evaluate the systems uses in other banks, he said.

“These evaluation teams had gone to everyone, where the system was working in other countries.”

Two systems were shortlisted, the majority wanted Eastpoint and the minority had wanted an Australian-made system. The Australian system, he said, had been nearing the end of its support cycle, which would have made it harder to maintain after two years. The board had decided for Eastpoint by eight votes to one. The vote against it was a bank representative who had been involved in the minority report, he said. “The decision wasn't mine, it was the whole bank's.”

The Eastpoint system was replaced when Mid-Med was taken over by HSBC. “When you are a global bank, it's normal to bring your own system with you,” he said.

“I can confirm what Daphne would write about her [Zelbst]. She would write disparagingly about her...because she 'became a high ranking official on the coat tails of Alfred Mifsud' and had 'previously been a chamber maid' and so on.”

In his cross-examination of Caruana Galizia, Mifsud's lawyer Pawlu Lia asked the defendant whether she had asked Zelbst for any proof or evidence. “What proof could there be if he comes with cash in your house?” she replied. “The best proof is the witness. This is a witness who opened the door. Ronnie Demajo came inside and handed him cash, before her own eyes and counted them in her presence.”

Before publishing the article, Caruana Galizia said she had spoken to Mifsud, as well as former officials of Mid-Med Bank, whom she did not identify. Under his chairmanship, the bank had bought banking software which had to be removed completely when HSBC took over because it wasn't fit for purpose, she said, adding that officials had told her that Mifsud had been advised not to introduce this system but that he had insisted on it being adopted.

Lia asked the defendant whether she stood by all the claims she had made in her articles. “The only thing that is in doubt is the sum which Mifsud received in cash, because Ms Zelbst had given me an approximate number, based on what she had assumed.”

“I felt it was newsworthy because at the time Mifsud was about to become governor of the Central Bank and in a civilised country you cannot have a chairman who was involved in bribery...He didn't have a right to become governor,” Caruana Galizia said, explaining that she had wanted to avoid further harm being done to Malta, by Mifsud being appointed as the governor of the Central Bank.

The case continues in October.