LIVE: Compilation of evidence against Muscat & Co

13:00 | The sitting ended. Thanks for following.

---

12:50 | The defence moves to another document from the ACCA’s website which they wish to confront the witness with, a reference which notes that a forensic accountant is an accountant who is in charge of analysing and establishing facts. She agrees with this definition.

Buying himself time, Galea switches back to Maltese to address the court, claiming that he is being misrepresented by activists and journalists who are noting his conduct in court. He is probably referring to Robert Aquilina who is regularly present in Hall 22, commenting on the case in social media.

Answering further questions from the defence, the witness notes that she previously held a warrant to practice which was no longer in place when she was hired as a court expert. Nobody asked the witness about these qualifications when she was appointed as a court expert in this inquiry.

“Did you feel the need to inform the magistrate that you are not an accountant?” the defence asks.

“I am an accountant!” she insists.

The defence seems to be trying to argue that she is not an accountant because of the lack of university-recognised certification that is specifically and directly related to forensic accountancy, while she is clearly and repeatedly pointing out all the certificates and relevant work experience which do mean she is a qualified accountant who was able to assist in this inquiry accordingly.

---

12:40 | The expert is asked whether she knows Sam Sittlington, and she confirms that she knows who he is. The court immediately intervenes to ask Galea how this is relevant, and the defence yet again switches to Maltese to argue with the court.

The court blocks this line of questioning as the witness did not mention Sittlington at any point in her testimony today (meaning that subsequent cross-examination does not allow for such questioning).

Verging into the surreal, the defence now asks whether the witness agrees with the statement that the ACCA is a world authority in accountancy, and the witness says she agrees. The defence confronts the witness with a document that notes what the ACCA says about forensic accountancy. The ACCA notes that a forensic accountant must be qualified, and the defence asks the witness how she can describe herself as a forensic accountant when the ACCA notes one must be qualified with a degree.

The court now asks the expert to explain how she obtained ACCA qualifications, and she explains that she entered as a chartered accountant, sat for the relevant exams, and then acquired the qualifications accordingly.

“I worked as an accountant ALL my life!” the exasperated witness insists.

---

12:30 | Galea asks the witness about the modules in the course material which outlines what the masters’ consists of. She notes that forensic accountancy at the time was not a part of the modern curriculum which the defence is quoting today. The witness indignantly protests again about how her credentials have never been questioned in this manner, and the magistrate reminds her to answer questions as factually as possible. The defence insists on asking about whether she covered accounting in this masters’ course, ignoring that she is also saying she is a chartered accountant and that she has served as a senior financial analyst for several years.

The defence asks the witness about the fact that the same university in Belgrade also has a masters’ course in forensic accountancy, and the witness immediately notes that she was the one who had designed that course and that it was not there beforehand.

Galea now asks the witness to talk about what degrees she has in forensic accountancy specifically, and she reminds everyone that she is a chartered accountant who needed to pass several exams to achieve her status. She also did ACCA and finished a diploma in financial reporting standards. She is a certified fraud examiner. She did not, however, do a specific degree in forensic accountancy.

The court asks again about her qualifications after the defence’s protestations to her answers, and she relists them briefly while the defence bristles.

---

12:20 | Her masters’ was about terrorism and financial crime at the university of political sciences in Belgrade, Milenovic continues (after a brief, heated exchange between the magistrate and the defence as the court reminds every party about the procedures to be followed). Galea – again switching to Maltese to address the court and excluding the witness – now asks for permission to ask her about the modules which she followed in the course.

The defence claims that within the module notes of the course the expert witness claims to have completed, there was no reference to forensic accountancy in the course she had followed. Lawyer Vince Galea gets reprimanded by the court yet again for implying that the court is not understanding the relevance of the court’s line of questioning.

The prosecution intervenes, pointing out that the witness has already committed herself to submitting all relevant certification and documentation. The court, noting the documents which the expert already stated will be submitted, briefly nods in approval before moving on with the process of cross-examination.

---

12:10 | The defence asks the witness about whether she was aware of the fact that PWC was roped into the concession as a legal advisor to the government.

The defence asks whether she had flagged the fact that she worked for PWC for two years in the past to the inquiring magistrate, and she says she did. She had asked the inquiring magistrate about whether she should remove herself from the investigation, and the inquiring magistrate had explicitly told her to stay.

The defence now asks about Milenovic’s qualifications, beginning with a degree in geophysics and referring to a. post-graduate degree.

Milenovic attempts to tell the magistrate that she is feeling humiliated by the defence’s line of questioning, which is becoming increasingly mocking in its tone.

The magistrate reminds the expert that she is under cross-examination and cannot make submissions to the court at this time.

---

12:00 | Milenovic notes that “it was obvious” that Joseph Muscat, Keith Schembri, and Konrad Mizzi were completely in charge of how the concession went and that they were very clearly aware of how bad things were with the concession, pointing repeatedly to email exchanges between the three which proved so.

The expert witness concludes that Muscat’s decision to keep Schembri and Mizzi in place clearly signified he chose to do nothing about the concession. The defence objected strenuously and out of turn while the witness spoke

The defence starts its cross eximination: Veronique Dalli (obo Taomac Ltd) asks the witness to confirm whether there were any red flags in connection with Taomac Ltd and Giuseppe Musarella, one of the shareholders of the company at the time. The witness notes this was not the case.

Vince Galea (obo Joseph Muscat) asks the court to tell the witness to submit authenticated copies of the qualifications she claims to have. He is doing so in Maltese, making it impossible for the witness to understand what his request is. He says that he is doing so to prepare for cross-examination.

Vince Galea now asks his question directly to the witness. The witness laughs at the request, and says that it is not a problem at all.

The courtroom’s poor audio is as notable as ever, with microphones screeching in everyone’s ears as they strain to carry the defence’s requests to the rest of the courtroom. Meanwhile, Milenovic formally submits her CV as part of the acts of the case, and notes that she will bring all other relevant documentation as requested.

---

11:50 | The expert witness briefly notes that this secretive takeover was another red flag that the expert investigators noted in her report. Moving on, she further notes that “this concession could not happen” without all the high-ranking Cabinet members and other relevant enablers who were mentioned in the report.

“According to the FATF, huge money laundering operations and complex offshore structures are not possible without the help of professional intermediaries. According to my best knowledge, Nexia BT, Mario Gatt, Accutor AG, Chris Spiteri, and Deborah Ann Chappell all helped to make this happen,” she insists.

The prosecution seems to be spot on with their line of inquiry today, flowing seamlessly from one relevant paragraph of the expert’s inquiry report to flesh out the experts’ arguments clearly for the benefit of the court.

Lead prosecutor Francesco Refalo, who has been carrying out questioning throughout this whole hearing so far, now asks her to elaborate about the findings of Greg Gillespie, a UK-based private investigator who had previously submitted relevant information in the inquiry after he had been originally contracted to investigate VGH’s network of companies.

She notes that the dossier submitted by Gillespie had highlighted suspect transactions linked to Muscat, naming Accutor AG in particular as the source of funding for most of the payments that were monitored.

---

11:40 | The prosecution asks Milenovic about VGH’s secret takeover of MTrace plc and why the expert thought it was significant.

The acquisition occurred just 13 days after VGH’s procurement arm was incorporated in Jersey, fuelling the experts’ suspicion that MTrace was a part of the criminal conspiracy surrounding the concession.

MTrace had, in fact, submitted an invoice request with Accutor AG, another hidden arm in the deal which was linked directly with payments made directly to disgraced former prime minister Joseph Muscat.

The expert witness now speaks about other relevant red flags which she noted in the banking transactions between this massive web of companies.

One example is how an invoice showed that companies like MTrace and Technoline carried out transactions in in British pounds, even though none of them were operating in jurisdictions which used the British pound.

She is now specifically asked about a suspicious loan which was granted to Technoline and how Ivan Vassallo clearly could not have afforded taking over the company without external financing (since he was merely an employee at the time).

---

11:30 | The prosecution asks Milenovic about how she had concluded that the change of ownership in the concession was of a “cosmetic type”.

“When proper due diligence is not performed, you do not know what you are buying. Usually, change of ownership in this case is merely cosmetic. To be completely fair, it could be something else, but this is really very strange, including (the fact that) the same auditor was asked to audit these companies”, she says.

The court expert is now asked about a section of the report which notes Ram Tumuluri’s misappropriation of the concessionaire’s funds when he had attempted to sell his shares to another investor, Ambrish Gupta.

Milenovic lists the long list of assets which Tumuluri was known to have acquired through the misappropriation, including offshore property and personal spending which was totally unrelated to the deal.

She also briefly refers to the millions of euros in questionable payments which were made to the offshore companies owned by the investors, including Mount Everest in Dubai as one of the key funnels.

The witness emphasises that VGH had not submitted audited financials and that nobody asked for them from the government’s end, which led to the possibility of such misappropriation of funds to begin with.

By November 2017, Assad Ali and Shaukat Ali were aware of Tumuluri’s misappropriation of funds. KS was aware of this misappropriation of funding (proven by email exchanges). In spite of all this, none of this was reported to the authorities in Malta, the witness correctly notes.

The only reason we got to know of all this was through the NAO’s reporting on the subject and internationally coordinated media efforts to uncover the corruption surrounding the deal.

---

11:20 | The prosecution refers to VGH and the expert’s notes about VGH’s offshore structures and the jurisdictions in which they were registered. The witness notes that on 13 October 2016, there were ten companies registered offshore in New Jersey, all registered through the same company services provider.

“What is crucial is how they were formed – they were incorporated as no-part value companies, which means that they could be structured to meet a wide variety of purposes. The most important thing is that all these companies were used to be contracted instead of Vitals. They ran contracts with MTrace and all other companies mentioned in the report.”

She explains how this was crucial in the process with which an additional layer of secrecy was imposed on the deal. The complexity of the structure means that it shielded the ultimate beneficial owners of the companies, with the investors holding shares in the different companies that formed part of the layers.

“This is a classical complex structure. To find out the money trails will be quite impossible. The structure imposed there was a red flag of money laundering”, she emphasises.

The prosecution further notes that ministries involved in monitoring did not perform their duties, according to the expert’s report. She is asked to elaborate. Milenovic says that the government and relevant institutions should not involve secretive offshore companies in such public procurement processes to begin with. There was no data to audit and there were no financial statements available for the offshore companies which were awarded the concession.

“Nobody asked them for statements, no one asked them for audited financials”, the expert says. It is simply not according to best practice to be seen dealing with a company without knowing anything about their financial status.

---

11:10 | The prosecution refers to an email exchange between Joseph Muscat and Keith Schembri, in which Joseph Muscat forwarded an email to Keith Schembri and asks the witness why it was considered significant enough to be included in the report.

The disgraced former prime minister had forwarded an email referring to the facts of the case, and had passed on the email to his former chief of staff without adding a single word. She notes that this email established that Joseph Muscat was clearly aware of the issues surrounding the concession.

The prosecution now asks about companies which the expert mentioned in her report and about the role she believes they played in the concession.

Medical Health Management Consulting (MT – November 2014): company set up to take over hospitals.
MTrace plc (MT): connected directly with the cyclotron project as well as other health-related government tenders. Bluestone Special Solutions – also set up before the RfP.

Well over an hour after the prosecution’s questioning began, the witness seems to be slightly irritated about the detail of the questions she is being asked, noting that she has already included all the relevant information in her report. Undeterred, the prosecution continues to ask about the details of the case.

When questioned about the overlap between the original ‘sales pitch’ and the final concession, she notes that experience taught her to “strongly suspect” the way in which the investors had expressed great confidence that the deal was in the bag months ahead of the request for proposals.

She is asked about Armin Ernst’s involvement in the whole process, noting that everything connected to his behaviour in the deal “was quite strange,” noting that he had quit VGH one day and joined Steward Healthcare the very next, right in the middle of the transition negotiations.

“It’s also very strange for him and Ram Tumuluri to be involved since it originally seemed he was not employed with Bluestone, even though he appeared very early on in May 2015 and was registered with Jobsplus later on in 2016. I don’t know whether this was significant or not – but it was very strange.”

---

11:00 | The court expert is asked to elaborate about “initial assumptions” which were made at the beginning of the investigation. Milenovic explains that this consisted of outlining what starting assumptions they had at the beginning, later proceeding to substantiate or eliminate the plausible conclusions which they were asked to investigate.

The prosecution asks about a note in which the expert had highlighted Malta Enterprise’s refusal to provide information.

She explains that some documents were not accessible at the beginning of the inquiry. The MoU was not traceable for years on end. There was no due diligence carried out by Malta Enterprise in any aspect of the concession.

She further says that they couldn’t find any information about due diligence and whether it was done (Malta Enterprise). She notes that Projects Malta fared slightly better in this regard.

“For me, it seems like these two entities didn’t work together, even if they had a mandate to work together on a very big concession”, she adds.

The expert emphasises that because of the lack of cooperation of these institutions, it took a while to figure out how the concession came about, noting again that crucial data from the original MoU was only unearthed at a later stage.

Milenovic elaborates on how the same actors which we are now seeing in court today were already actively pushing the deal before a request for proposals was issued. She says that the similarity between the original MoU and the request for proposals was a key example of this.

The expert further notes that all three companies that submitted a bid for such a massive procurement contract had no experience and no credentials related to any major project anywhere in the world.

“All of that was, for me, enough to prove that there was significant activity before anything was even published,” the expert says.

Generally, her testimony has been very focused so far and it seems clear that the witness does have the level of expertise which she claims to have.

The expert witness notes that Shaukat Ali – one of the prime behind-the-scenes movers in this deal – was at the epicentre of the activity which occurred before this concession was issued.

---

10:50 | The prosecution now turns its attention back to the NAO’s reporting on the subject. In her report, the expert witness also refers to the two judgements which rescinded the deal on the basis that it was deemed fraudulent.

Miroslava Milenovic explains that the NAO’s reporting was the starting point of her investigation. As for the judgements issued in relation to the concession, she thought that the court’s decision also needed to be taken into account.

The witness notes that when the court’s judgement was finalised, she was in the process of finalising her own reporting on the case, meaning that any references to the court’s verdict were included in the final phase of the drafting process.

Lead prosecutor Franceso Refalo asks the witness about how she had defined the concept of “institutional corruption” in her report.

“Why did you feel the need to go into this point and please also explain why you felt the need to define political corruption and kickbacks,” he adds.

The expert says she elaborated about different types of corruption in the report. She defined institutional corruption as the kind in which certain state institutions act against the influence of other branches of the state.

“In this inquiry, a lot of government institutions and/or authorities made it almost impossible to discover what actually happened in this concession”, she notes, quoting herself and referring to a list of instances of obstruction and non-cooperation from the local authorities.

Milenovic says that she was given incorrect data, and was told that certain transactions did not exist only for then to be later told the opposite.

Identità resisted providing data, tax authorities were reluctant to provide data, Malta Enterprise was reluctant to provide data, the witness says. She explained all of this in great detail in her original report, and she says that these instances led her to the conclusion that this consisted of institutional corruption.

To substantiate the argument, Milenovic refers to an email exchange between Steward Healthcare CEO Armin Ernst and Accutor AG, referring to the political support contract which was secretly established between Steward Healthcare and Accutor AG.

As for “political corruption”, she notes that high-ranking politicians were involved and that this is the key signifier which led her to that specific conclusion. Quoting again from her own report, she notes that “various conditions facilitate this form of corruption, and can be seen in weak institutions, poor corporate governance, easy access to unregulated offshore entities, established money laundering practices, and limited risk of detection.”

---

10:40 | Lead prosecutor Francesco Refalo now asks the court expert about the investigation methods which were used.

“This is a by-the-book investigation, like any other investigation”, Milenovic says. She explains that she did an analysis about all following aspects – the procurement process, the bank accounts which were uncovered, and the relationships between relevant individuals.

Answering a question about how the experts concluded that the individuals they highlighted should be among the accused, the witness explains that according to the evidence that she saw, the most important companies and persons are included in her analysis.

She further adds that anything produced by the NAO got special attention due to the nature of the institution’s work.

“If we assume that there is corruption in this hospitals concession, then that happened within the state. To prove any corruption, you need internal knowledge, internal audits”, Milenovic explains.

“The auditor general is the internal auditor of the state, and because of that I must say that those three reports (by the NAO’s office) were the most important thing for us”, she adds.

“To identify corruption, you mean?”, Magistrate Rachel Montebello asks. The witness nods in the affirmative.

Refalo now asks about Joseph Muscat, Keith Schembri, Konrad Mizzi, and the companies they opened in Panama and New Zealand – a matter which the expert had previously ascribed a lot of importance to.

Milenovic notes that there was no punishment for Konrad Mizzi and Keith Schembri for establishing offshore companies. This was considered legally acceptable but nonetheless suspect due to the secrecy with which these accounts were opened.

“I need to understand why you chose to highlight specific articles related to Panama and New Zealand and how these would correlate to this specific case”, Refalo says.

The witness says that, to her understanding, establishing a shell company overseas through the Panama Papers system led to severe political consequences in other countries, but not in Malta. She found this anomaly to be a significant point of note in her analysis.

“This concession started in 2014, 2015, and the hospitals were transferred in 2016. I looked for corruption and money laundering, and I saw the pattern of shell companies as such. We look for complex offshore structures. For me, it was an important event”, the witness explains.

---

10:30 | Refalo now refers directly to the evidence gathered in the inquiry. The lead prosecutor refers to a report drafted by the witness and asks the witness to explain how the report’s table of contents was created.

Milenovic explains that she followed the standard practice for such a report, including the provision of key information in summary form before elaborating further on the merits of the inquiry’s analysis.

Magistrate Rachel Montebello asks the witness to explain how her analysis was carried out.

Milenovic explains that she was granted access to all relevant evidence which was seized as part of the inquiry, including bank transactions and other sensitive data necessary to build up the case.

“My focus on this report was the bigger picture: analysing what happened with this concession”, the witness explains.

She further explains how her analysis went over every aspect of the concession, from the very initial request for proposals stage and early pre-drafting of the concession to the execution and eventual rescission of the concession.

---

10:20 | Today’s first witness is Miroslava Milenovic, one of the key experts in the magisterial inquiry which led to this criminal case. Lead prosecutor Francesco Refalo starts today’s questioning.

Milenovic explains how she got involved in the inquiry: the inquiring magistrate, Gabriella Vella, had called on Milenovic for her expertise back in 2019.

The witness explains she has over 40 years of experience in the field of forensic analysis, and briefly lists her qualifications.

She mentions some high profile roles which she has taken on throughout her lengthy career. The expert served with the United Nations, the European Commission, the OSCE, and with the U.S. Department of Justice.

Milenovic says that the company she worked for in 2018 was contacted by Malta’s police commissioner, which is how she was asked to become involved in this role. Magistrate Gabriella Vella then asked her to meet her and formally take on the role.

---

10:10 | Good Morning, live from Hall 22. The compilation of evidence against disgraced former prime minister Joseph Muscat and his associates and colleagues continues. Magistrate Rachel Montebello does the roll call.