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Josie Muscat: 'I was not aware of any involvement by Shaukat Ali in cancer treatment machine procurement'
Former Prime Minister Joseph Muscat, his Chief of Staff Keith Schembri and former minister Konrad Mizzi are amongst a group of defendants pleading not guilty to corruption-related charges emanating from the inquiry into the Vitals hospitals deal
19 June 2024, 9:59am
Matthew Agius
Matthew Agius
5 min read
Medical doctor and former politician Dr. Josie Muscat has told a court that he was not aware of any involvement by Shaukat Ali Chaudhry or Vitals Global Healthcare in the procurement of cancer treatment machinery during the time he had been involved in the process.
The St. James Hospital Group chairman and founder was called to the witness stand in criminal proceedings against former Prime Minister Joseph Muscat and others, filed as a result of the inquiry into the sale of three State-owned hospitals to Vitals Global Healthcare.
The court was told today that one of the inquiry’s conclusions was that all the participants in the project to purchase a cyclotron - a machine used to create radioactive isotopes for medical imaging and cancer treatment- Josie Muscat, amongst them, were simply frontmen, and that Pakistani businessman Shaukat Ali, who was also behind the VGH concession, was the real ‘promoter’ of the cyclotron project. The text of the inquiry reads "...the real Promoter of the cyclotron project may well have been at all times ‘Shaukat Ali and the VGH investors (working in tandem with the support of government ministers)."
“I didn’t know Shaukat Ali and as far as I know he had never been involved in the cyclotron project. I can’t say whether he was [involved] after I left,” Muscat told the court today.
Dr. Muscat told the court that he had been part of the cyclotron procurement committee, but had not led it. Brian Bondin and Andre Chetcuti, CEO and CFO respectively, of Roots Integrated Services Ltd, a company which Muscat said he owned, had handled the issue.
He insisted that Vitals was “absolutely never mentioned” during the period that Dr. Muscat had been a part of the procurement committee.
He gave Magistrate Rachel Montebello a timeline of his involvement in the project on Wednesday.
“Many years ago. Malta Enterprise had sent for me because they wanted to install a cyclotron for [the treatment of ] animals. It seemed strange to me, as it didn’t seem necessary and I wasn’t interested.”
He said that subsequently, in 2008, St. James’ Hospital had decided to purchase a PET scanner, which required the procurement of radioactive tracers, which are difficult to transport. The scanner was eventually installed in 2011 and after that, Dr. Muscat said he was invited by Malta Enterprise to travel to Israel to strike a deal with a prospective supplier of radioactive medical tracers.
He told the court that he had found it odd to try and obtain tracers from Israel, when there was a more straightforward option of importing them from Italy.
He had later withdrawn from the project, he said.
When Dr. Muscat was confronted on the stand with the inquiry’s conclusion that he had not been the cyclotron project’s promoter but had merely been a front for Shaukat Ali, he denied this was the case.
He insisted that he had negotiated on his own behalf and on behalf of his company, Roots.
“I didn’t know Shaukat Ali and as far as I know he had never been involved in the cyclotron project. But I can’t say whether he was [involved] after I left.”
The witness insisted that Vitals Global Healthcare was “absolutely never mentioned” while he was part of the cyclotron committee.
Joseph Zammit, Chief Officer for Corporate Services at Malta Enterprise told the court today that the cyclotron was currently up and running. Malta Enterprise had been involved in the latter stages of the project, he said.
“In 2015, Dr. Josie Muscat had recommended the introduction of a cyclotron…but had informed Malta Enterprise that he was withdrawing from the project, after it had already been approved and had obtained a soft loan of 60% of the €69 million project.
Vitals Global Healthcare had failed to invest directly in the project, Zammit said and when Steward took over the hospitals, they had declared that they were not interested in continuing with the cyclotron project.
What are the charges?
In addition to money laundering, fraud and conspiracy charges, Muscat and Mizzi face charges of accepting bribes and corruption in public office, while Schembri will be charged with offences relating to the solicitation of bribes and abuse of his office to exact an unlawful advantage.
Nexia BT’s Brian Tonna and Karl Cini are charged alongside their firm with having knowingly assisted Muscat to accept bribes.
READ ALSO: Vitals inquiry: Grand Theft Malta
Who is charged:
Steward Malta Management’s legal representative, lawyer David Joseph Meli, is charged in both his personal capacity, as well as in representation of Steward Malta Management Ltd, of corrupting public officials – namely Muscat, Schembri and Mizzi.
Steward’s British IT manager, Clarence John Conger-Thompson and its auditor, Christopher Spiteri, are also charged with bribery-related offences.
Spiteri alone is further accused of acting with grave dishonesty in carrying out the professional activity of auditor or accountant, as well as with making false declarations to a public authority, breaching professional secrecy and omitting or making false tax declarations for Pakistani entrepreneur Shaukat Ali Chaudhry and members of Chaudhry’s family. He is also accused of perjuring himself before the magisterial inquiry.
Spiteri in his personal capacity as well as that of auditor, together with Jonathan Vella, medical equipment supplier Ivan Vassallo and his business partner Mario Victor Gatt are charged with false accounting, both in their personal capacities as well as in representation of Technoline Ltd and Eurybates Ltd.
Spiteri is also accused, in his personal capacity as well as that of auditor, together with Jonathan Bondin and David Meli, as representatives of MTrace p.l.c. and Gateway Solutions Ltd, with having knowingly made false declarations to a public authority to obtain an illicit advantage.
Matthew Agius is Senior Reporter on Law and Court Affairs at MaltaToday.
He is also a Leg...
Thanks for following today’s liveblog from court. We will also be liveblogging tomorrow’s session. A writeup to summarise today’s proceedings will follow shortly.
The magistrate asks whether everyone has a copy of the inquiry. The absence of complaint would indicate that they do.
The court asks whether they will be contesting prima facie. Azzopardi says that he will be doing so on behalf of his clients.
Tomorrow we will be hearing witnesses, says the court. Azzopardi and Cilia confirm that they will be in a position to make submissions on behalf of their clients tomorrow. Further submissions will then take place in another sitting on the 25th.
The court directs the prosecution to prepare to rebut tomorrow’s submissions in the same sitting.
The sitting is adjourned to tomorrow 10:30am.
A BOV representative is called to the stand to exhibit statements relating to accounts held for Taumac Ltd.
Lawyer Veronique Dalli cross-examines the witness.
She suggests the bank has serviced the company since 2012, which opened an account on 30 Jan 2012.
“The balances speak for themselves,” says the lawyer, stating that “the €64,400 amount is covered.”
Cilia is not allowed to ask whether, with regards to the cyclotron, had he spoken to Shaukat Ali.
The lawyer is ordered to pipe down by the court, after he shouts that the inquiry had said that Muscat had simply been a front for Shaukat Ali.
Muscat denies this was the case, saying that he had appeared on his own behalf and on behalf of his company Roots.
The prosecution asks no questions to Muscat and he steps off the stand.
St James Hospitals owner Dr. Josie Muscat is called to the stand as the next witness.
Lawyer Chris Cilia asks him to state his involvement in the cyclotron project.
“Many years ago. ME had sent for me because they wanted to install a cyclotron for animals. It seemed strange to me as it didn’t seem necessary and didn’t interest me.”
He explains that in 2008, St. James’ hospital decided to purchase a PET scan and needed radioactive tracers, which were difficult to transport. Eventually it was installed in 2011. He was later invited by ME to travel to Israel to purchase tracers. “They invited me but I paid my way.” He found it odd to obtain tracers from Israel, when it was more straightforward to import them from Italy.
This was in 2011/12, he says. >br>
He met with Andrea Marsili, CEO of IBA (Milan), who had then appointed someone in Malta to represent him, who then apparently tried to usurp him and involve another company, Muscat says. He later withdrew from the project.
Cilia asks whether he had ever formally filed any documentation on this.
Muscat says he had been part of the committee, but had not been leading it, he said. Brian Bondin and Andre Chetcuti CEO and CFO of Roots, a company which Muscat owned, had dealt with the issue.
The witness has difficulty remembering details, explaining that he had not been told what to testify about and had not been able to prepare. Cilia says the inquiry said that Muscat had not been the promoter but Shaukat Ali.
“I didn’t know Shaukat Ali and as far as I know he had never been involved in the cyclotron project. I can’t say whether he was after I left.”
Vitals was “absolutely never mentioned” during Dr. Muscat’s involvement in the cyclotron committee.
Lawyer Chris Cilia asks what ME had done before buying the shareholding. “It had engaged RSM to carry out due diligence, on the €2.05million project,” replied the witness. RSM was part owned and managed by the Labour Party’s former auditor, Deo Scerri.
The witness leaves the stand. Arthur Azzopardi informs the court that he is renouncing the necessity of hearing two of the witnesses summonsed for today.
With regards to two other witnesses, (Emanuel Baldacchino and Owen Cuschieri) had not been notified for today’s sitting. The court orders that they testify in tomorrow’s sitting.
Joseph Zammit, Chief Officer at Malta Enterprise (ME) is the next witness. Arthur Azzopardi asks about the cyclotron project. Had the apparatus been bought? “The apparatus is fully installed at the Life Sciences Park in San Gwann.”
ME had become involved to finalise the project, which aims to create isotopes and tracers used for MRI scans in the treatment of cancer patients.
In 2015, Dr. Josie Muscat had recommended the introduction of a cyclotron for this purpose, but had informed ME that he was withdrawing from the project after it had been approved and had obtained a soft loan of 60% of the €69 million project. An Italian investor took his place.
VGH had failed to invest directly in the project, he said. When Steward became involved, they had declared that they were not interested in continuing with the cyclotron project.
When Steward withdrew, ME had bought Steward’s shareholding and is presently still a shareholder, he said.
He confirms that his company had worked with Terracore ltd on the Life Sciences Park project.
They were asked to construct reinforced concrete structures to contain the radiation from the medical apparatus.
Prosecutor Francesco Refalo asks about the suppliers they had been in contact with. “We had been speaking to Philips, the company for the cyclotron project. But after the shareholders changed, they had dealt with Andre Chetcuti and then Guiseppe Mottarella finally, Brian Bondin.”
The firm had started working on the project. “At a point, the shareholders changed and a cyclotron operator had to be found.” The accelerated charged particles by the cyclotron are used to bombard the atomic nuclei in the nuclear physics experiments. Cyclotrons are also used in the treatment of cancer in radiation therapy.
“We had applied for a permit, and it had been issued by ERA [for the cyclotron machine to operate] but things had stopped there and the permit ended up not being issued.”
The Planning Authority and Medicines Authority had both issued the required permits, he confirms. Azzopardi asks whether the ERA permit had been issued. “I don’t know if it was issued. We had applied for it but up till the time my involvement ended, it was not paid for.
Perit Karl Farrugia takes the witness stand and is asked about any professional engagement with Life Sciences Park.
In 2014, the company had been approached by shareholders as consultants for the structural work on the park. Nothing had come of it, and neither in 2016.
In 2018, they had been asked to reconsider the brief.
The project was intended to make cancer treatment products, he says.
The civil works at the site, near Mater Dei Hospital, had been carried out more or less completely, he said.
Lawyer David Bonello, for Sciacca Grill, asks the witness about a 2020 transaction. Was Keith Schembri involved after that date, asks the lawyer.
As a shareholder he was definitely involved up to 2013, also as director. Share transfer agreement effective March 2014.
Magistrate asks about any changes in names.
The witness confirms that it had originally been called Kasco Foods Ltd in 2010 and changed to Sciacca Grill in March 2014.
A representative from the Malta Business Registry (MBR) takes the stand to testify and exhibit all documentation it held with regards Sciacca Grill Ltd.
The representative also confirms the involvement of Steward’s Maltese companies and Nexia BT and David Meli’s involvement. “I confirm that Mr. Meli has never had any involvement in these companies,” says the witness.
She confirms this when asked by lawyer Giannella De Marco.
Neither was Mario Gatt involved in Eurybates or Nexia BT, she says.
The court now proceeds to try and initiate a video conference with three representatives of Technoline Ltd, but the calls are not answered. Magistrate Montebello notes that although the witnesses had been notified by email with a link to the video call, none of them had answered.
The magistrate instructs Technoline’s lawyer Arthur Azzopardi to try contacting them in order to call later.
Unlike the magistrate, he did not have access to enough information to justify Spiteri being administered a caution. “I never saw anything to cause me to suspect Spiteri.”
After the last session, the magistrate instructed him to conduct a search at Spiteri’s offices, Xerri says.
Grima asks whether Spiteri had been administered a caution and allowed a lawyer before he testified before the inquiry.
“I had already said in the last sitting that if you want to establish this, look at the recordings. If he was allowed a lawyer, it would be said on the recording before questioning begins.”
Xerri would be present and observing the questioning sessions conducted before the inquiring magistrate, he said. If he felt a question was needed to clarify any points, he would suggest it to the magistrate. But he was not involved in the investigation, beyond suggesting those questions, Xerri explains.
“I was never aware of what was in the inquiry, I didn’t have any documents in my possession… I could never have investigated myself.”
“The instructions from the magistrate would be… we would show the files to the experts and if they say they appear relevant we would tag them and take them into evidence.”
Xerri confirms that he had not seen the contents of the files.
Asked by the lawyer whether he had checked whether any of the files seized were subject to professional privilege before seizing them he said he hadn’t. “I personally did not analyse any of the files,” repeated the witness.
The lawyer moves on to the charges related to false tax declarations, asking whether the witness was aware of any liaison with the Tax Commissioner or related authority. Xerri replies that he was not.
Grima makes reference to an application by the Commissioner of Police, which states that on 7 and 9 July 2020, Spiteri had been called to testify. After his testimony, a request for a search warrant was made by the police. Grima asks whether the police had been analysing the testimony and investigating, because a previous witness had said they had not.
Xerri says the magistrate had asked him, after having examined the witness’ transcript of testimony herself, to search Spiteri’s residence. Those instructions had been given verbally and so he had filed the application in order to be procedurally correct.
“The inquiring magistrate instructed me to search a person’s property. I cannot search a person without a warrant, so I filed an application and she issued that warrant.”
The witness points out that there appears to be a mistake with the date. After the July sitting, he carried out the search.”
“The police, if they search a person’s property. The word ‘investigation’ has a very wide meaning, said the witness. A search is part of an investigation, but always as part of the magisterial inquiry.” The police did not decide to do it by themselves.
The magistrate interrupts repeated questions from Grima, about the application. “Why didn’t he mention this on the application?” “Irrelevant,” says the magistrate, instructing the witness not to reply.
Lawyer Jason Grima cross-examines, asking about which interrogations he had attended. Xerri confirms the dates.
Grima suggests that the witness had not been present for the interrogation of Christopher Spiteri.
The first interrogation had been conducted by Rennie Stivala. Xerri attended the second, but his presence was not recorded in the notes for the next two sessions before the inquiring magistrate.
The witness insists that he had been present. Magistrate Montebello points out that his presence or absence is not going to always emerge from the notes.
Today’s first witness will be Inspector Anthony Xerri from FCID. He has since left the force.
The magistrate enters the courtroom and the court is now in session. The court takes attendance, ensuring that all the defendants are accounted for and legally represented.
Senior court reporter Matthew Agius tells us journalists have been allowed to enter the courtroom. The lawyers on both sides and the defendants are already seated. The sitting will start shortly.
During the last sitting, it emerged that the Police Commissioner, on the advice of the Attorney General, had instructed his officers not to investigate or question the suspects before issuing the charges. Instead, the court was repeatedly told that the police had relied solely on the inquiring magistrate’s conclusions when charging the suspects.
In doing so, the prosecution have, at best, made their job exponentially more difficult and at worst, undermined their case completely.
This is because in money laundering cases, unlike other criminal proceedings, the prosecution does not have to prove their case - instead, it is up to the defendant to prove that the money suspected of being laundered had come from a legitimate source.
That comes with an important caveat, however: in order for this so-called "inversion of the burden of proof" to apply, the suspects must have first been given the opportunity to explain to the police how the funds had ended up in their possession. Last sitting we heard that the police did not investigate at all, much less question any of the suspects, which means that the prosecution cannot make use of this vital legal tool.
Good morning. We are back in court today as the corruption case against Joseph Muscat, Konrad Mizzi, Keith Schembri and others continues today before magistrate Rachel Montebello.