More supermarket debt: Schembri and ‘Maksar’ ruse to claw back millions

More Supermarkets investor accused Ryan Schembri and Adrian Agius of attempting to create ‘fake’ debt to extract €3.5 million from bankrupt chain

Ryan Schembri leaving the law courts where he was charged with fraud and money laundering
Ryan Schembri leaving the law courts where he was charged with fraud and money laundering

The businessman who acquired the More supermarkets chain from Ryan Schembri claims the fugitive supermarket boss conspired with ‘Maksar’ gang suspect Adrian Agius to bleed the company of €3.5 million, by using two name-lenders to file bogus claims in court.

Darren Casha, the owner of the Medasia restaurant in Gzira, claimed in a December 2014 affidavit that Schembri and Agius had roped in two men to create a constitution of debt for €2 million and €1.5 million against the supermarket chain, without having such authority.

But Casha also says the alleged loans to Ryan Schembri, ostensibly for the supermarket’s expansion into Libya, were made by the two men, Edmond Mugliett and Alexander Farrugia, in the name of other mystery lenders. Yet, their identities or their legal interest has so far, not been established.

“It seems other companies gave Mugliett and Farrugia instructions to pass on the money, without us knowing who they are or for what. How have these companies not presented themselves personally to claim their dues?... there’s nothing in More’s records of dealings with either Mugliett or Farrugia,” Casha stated.

“To me this was another confirmation that this was Schembri’s ruse, and that Mugliett and Farrugia are involved with him in a bid to take from More Supermarkets something they are not entitled to.”

The extradited supermarket boss Ryan Schembri sold his chain of six supermarkets to Casha for just €94,000 in May 2014. Casha and other associates of his, including several investors, appear to have been creditors for €5.7 million loaned to Schembri’s operation before the supermarket crashed that same year.

But after the More share transfer to Casha, Ryan Schembri and Adrian Agius – who were retained as directors of More’s Hamrun outlet – created a constitution of debt with two men for €3.5 million in June 2014, unbeknownst to Casha.

Casha only found out about the ‘new’ debt in October 2014, when Schembri fled the island. Although Casha acquired the entire chain of six More supermarket outlets, he assumed the directorship of five outlets but not that of the most lucrative of operations, the Hamrun store in the Daniels mall. Instead, the directors of that store were left in place, namely Schembri, Adrian Agius, Chris Delia and Kurt Camilleri.

“It was the start of summer and I was only just getting the hang of the business, with a new store about to open,” Casha claimed in his affidavit. “I planned to keep the old directors in Hamrun so that they help me out, so that I get a proper handover as indeed I did from Camilleri and Delia particularly.”

Mystery investor

In his own affidavit, Farrugia said he had travelled to Libya with Ryan Schembri to discuss how to expand his own textile retail together with More’s expansion in the war-torn country, particularly at the Palm City complex in Jumeirah, outside Tripoli.

It was during one of these visits that Farrugia, while attending a construction fair together with Schembri, met an Indian entrepreneur named Abdul Rahman.

Farrugia said that six months prior to the 2012 opening of More’s outlet in the Daniels shopping complex in Hamrun, he had assisted Schembri on various aspects of the business and pricing.

That year, Farrugia says he and Schembri travelled to the Sial food business fair in Paris together with Darren Casha.

“Schembri wanted me to assist him in the sale of meats... this is where Casha entered the picture. I learnt he was Schembri’s partner in Sorriso, which sells meat.”

Sorriso Foods was a trademark owned by a Libyan company, Copacabana Investments Group, represented by Libyan national Mohammed Emhemmed, a trader of meats and fish products.

According to an agreement presented in court, Copacabana appointed Cassar & Schembri Marketing as its agent for a €8.4 million financing deal that included Darren Casha as a guarantor, with shares in Cassar & Schembri pledged in his name should the company fail to repay its financing.

Additionally, Adrian Zammit of AZ Investments had also forwarded the company €2.2 million in loans. Farrugia then said that in 2013, Schembri approached him to source a €1 million innever handled the money, nor did he have any written agreement with said Rahman, or a power-of-attorney from Rahman to appear on a constitution of debt with Schembri.

According to Farrugia’s affidavit, Rahman’s investment stayed with More Supermarket’s parent company, Cassar & Schembri Marketing – a claim he could not verify – and that at some point, Schembri tried to rope in Farrugia as a shareholder to protect the investment.

Farrugia claims he refused, insisting on loan notes for the investment. But even at this point, the enigmatic Rahman had accepted to advance another €500,000 to Schembri.

Strangely, it was not Rahman who was angling for the shareholding in More Supermarkets, as Casha’s lawyer pointed out in his cross-examination of Farrugia. Neither has he appeared as a witness in the case.

Croatian ruse

In the first months of 2014, Schembri started telling his creditors that a Croatian criminal investigation could snowball into Malta and lead to an asset freeze.

Casha claims he disputed these claims, later realising it was a ruse. Farrugia, in his affidavit, says it was at this point that he learnt of Casha’s extensive claims on the supermarket business and the investors that had tagged along with him.

At a certain point, Schembri had been floating the idea of crafting a bond issue for the More supermarket chain, and held meetings with representatives from KPMG together with Darren Casha and his associates Adrian Zammit and Ray Camileri, and Schembri’s own business consultant, Edmond Mugliett.

The public offering never came to fruition, nor a potential sale of the business to another supermarket investor.

Farrugia says that after Schembri was admitted to St James Hospital with heart problems, he suggested to him that he safeguard the Rahman investment with a loan note.

“He told me of a certain Edmond Mugliett who had loaned him money for the supermarket furniture. He said he had requested a constitution of debt and suggested that he includes me in this constitution of debt,” Farrugia claimed in his affidavit.

Farrugia claimed in his affidavit that Schembri and Casha were transferring ownership of the supermarket’s shelving and furniture to another company, with the intention of misappropriating a VAT refund to settle the Copacabana debts.

“I was a nominee. When I saw this fiddle on the VAT refund... I wasn’t pleased, especially seeing that the money was being used to pay off the Copacabana debts... a company nobody knows about,”

Farrugia told the court under cross-examination. Darren Casha disputed this claim in court, saying nothing in the books for the supermarket chain show the €3.5 million claimed by Farrugia and Mugliett reflected.

Additionally, the constitution of debt was signed before a notary, together with Schembri’s father Mario, and More Hamrun’s director Adrian Agius, whom Casha said had no authority to appear on such a contract.

In another court sitting in which More’s financial consultant and accountant Dennis Francalanza was questioned, he disputed suggestions that Farrugia – who ran the supermarket’s ‘Sock Corner’ outlet – could have poured in €1.5. million into the enterprise.

He said Schembri “disappeared for some time” in May 2014 to Croatia, and Cassar & Schembri Marketing stopped operating. The office was suddenly taken over by Darren Casha, Ray Camileri and Adrian Agius.

Upon his return to Malta, Schembri constituted Erom Trading (‘More’ spelt backwards) and informed Francalanza that Edmond Mugliett would start doing the company’s accounts.

“On 17 October, as we were just about to wind up the Paceville outlet, a court marshall presented us two garnishee orders, one of €1.5 million from Alex Farrugia, and the other of €2 million from Mugliett. We were surprised at the origin of these orders.”

Adrian Agius: phantom director?

It is unclear what role Adrian Agius had in the running of the More Hamrun 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, 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.

Agius’s brother Robert Agius is also accused together with Jamie Vella of having supplied the bomb used to kill the journalist Daphne Caruana Galizia. The information, including that on the Chircop murder, was supplied by one of the triggermen, Vince Muscat ‘il-Koħħu’, who witnessed the events.

But prior to his arrest, Agius appeared in court to be questioned over the alleged €3.5 million debt he had signed off on. Agius in fact had told the court in 2020 that although he was a director of More’s Hamrun supermarket, he had no effective role in the running of the outlet. “I trusted Schembri with my eyes closed.”

In his answers to Casha’s lawyer, it seemed his knowledge of Schembri’s affairs or business decisions, was wantonly limited. “I passed on my shares to Darren Casha without 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, but was easily convinced that More Supermarkets owed Schembri and Mugliett €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 Mugliett-Farrguia loan.

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

“Maybe Mugliett and Farrugia would be in Ryan’s office, speaking of the money... don’t you remember that?” Casha’s lawyer asked in cross-examination.

“They did come to speak to Ryan about the money but I never gave it much notice. I just kept myself busy with the laptop (Ifhimni, għaddast rasi fil-laptop tiegħi)... I trusted Ryan blindly. My fault.”