Technoline was fraudulently acquired using concession funds, court hears

Prosecutors have claimed that Technoline Ltd, which was granted an exclusive procurement contract by Vitals Global Healthcare, had been fraudulently acquired by another company using concession funds illicitly loaned to it by Steward Healthcare.

This emerged during the compilation of evidence against disgraced former politicians Joseph Muscat, Konrad Mizzi, as well as Muscat’s Chief of Staff Keith Schembri, eleven others and nine companies which continued this morning, picking up from where it left off yesterday.

A number of witnesses gave evidence before magistrate Rachel Montebello today, their testimony being largely focused on one aspect of the fraudulent hospitals concession to Vitals Global Healthcare - the construction of a cyclotron to simplify the supply chain of medical radioactive isotopes.

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Towards the end of the sitting, prosecutor Francesco Refalo made submissions on whether the court should declare that it had seen sufficient prima facie evidence to justify the defendants being indicted and eventually tried by the Criminal Court.

The inquiry conducted by magistrate Gabriella Vella had examined the involvement of Technoline and Gateway in detail, said the prosecutor.

Gateway had been loaned €5 million by Steward to acquire GAE Holdings and Technoline. Refalo told the court that the €5 million had been fraudulently paid using funds intended for the concession.

Technoline was then made the sole provider of medical equipment to the hospitals, which meant that there was a prima facie ground for indictment, argued Refalo.

MaltaToday has previously reported that public funds from the Governments’ public-private partnership with Vitals Global Healthcare (VGH) had been used in the acquisition of medical equipment supplier, Technoline, and that investigators believed that the company which acquired it, Gateway Solutions Ltd was intended to be owned by former OPM chief of staff Keith Schembri and disgraced former minister Konrad Mizzi.

Auditor Jonathan Vella had, together with fellow auditor Chris Spiteri, created false documentation and made false declarations to a public authority, added the prosecutor.

The evidence showed that Vella had been in contact with several individuals, including some of the accused in these and connected proceedings, and had been assisting Spiteri in some cases. “He was aware of the crimes and had been assisting their commission,” the prosecutor submitted.

Taumac Ltd’s lawyer slams ‘dangerous’ prosecution practices

The court was told today that Taumac had sold its shares in MTrace to the concession - to Vitals Procurement Ltd in Jersey, for the same price that it had acquired them. This fact indicated that Taumac had been holding the shares on behalf of third parties, which was identified as a Jersey-registered company related to Vitals.

“We have a voluminous inquiry, a detailed report by the inquiring magistrate, detailed reports by the experts in the inquiry. All this had led the inquiring magistrate to say not ‘investigate further,’ but ‘prosecute,’” Refalo said.

But Taumac's lawyer, Veronique Dalli, condemned what she said was the haste with which the charges had been filed. “Someone abdicated their responsibilities. Had anyone sent for a representative from the company, they would not be here today, but neither the experts, nor the inquiring magistrate had sent for them and strangely neither did the police,” said Dalli. 

The company was facing a solitary charge: money laundering and the AG had requested a freezing order of €62,500, said the lawyer, questioning how the AG had arrived at this figure. “There is nothing in the evidence about it. Taumac is only mentioned in an expert’s report, stating the dates that it was set up and the dates it was closed. 

“Had the investigators done their job, they would have sent for Taumac and asked them about this odd-looking transaction, ” said the lawyer.

“Had anyone bothered to investigate, they would have seen that Malta Enterprise had ordered Taumac to withdraw from the deal.”

This was because Taumac’s representative had informed Malta Enterprise that the company was being investigated in Italy over illegal dumping of waste, of which it was later acquitted, Dalli said.

Malta Enterprise had suggested that Taumac transfer its shareholding to another company in order for it to retrieve the sums it had already invested. 

“There was a simple explanation for the transaction and had the AG done its job properly and bothered to ask Taumac about it, the explanation would have been immediately apparent.”

Dalli argued that there was “no tangible evidence” against Taumac, which had only been mentioned en passant in the inquiry and had been “completely extraneous” to VGH , having left the project.

“It is extremely dangerous to press charges in this way,” warned the lawyer. “Did nobody bother to check the company’s accounts on the MBR, order a search at its offices?…I submit that with respect to Taumac, there is no case to answer.”

The case will continue on June 25.

13:41 The sitting is over.

The compilation of evidence will continue on June 25 at 9:30am. Matthew Farrugia

13:40 Dalli argued that there was no tangible evidence against Taumac, which was only mentioned en passant in the inquiry. Taumac was completely extraneous to VGH and had been asked by ME to leave the project which it had been involved in since 2008.

“It is extremely dangerous to press charges in this way,” said the lawyer. “Did nobody bother to check the company’s accounts on the MBR, order a search at its offices?…I submit that with respect to Taumac, there is no case to answer.”

Matthew Farrugia

13:39 Vella had worked with Spiteri to create false documentation and made false declarations to a public authority, argues Refalo.

The evidence showed that Vella had been in contact with several individuals, including others accused in these and connected proceedings, and had been assisting Spiteri in an audit capacity and company secretary in some cases. He had been aware of the crimes and had been assisting their commission, says the prosecutor.

Taumac had sold its shares in MTrace to the concession - to Vitals Procurement Ltd in Jersey, for the same price that it had acquired them. This indicated that Taumac had been holding the shares on behalf of third parties, in this case, Vitals’ Jersey company.

“We have a voluminous inquiry, a detailed report by the inquiring magistrate, detailed reports by the experts in the inquiry. All this had led the inquiring magistrate to say not ‘investigate further,’ but ‘prosecute.’”

Taumac's lawyer Veronique Dalli makes submissions, arguing that the proceedings showed haste and that someone had abdicated their responsibilities. Had someone sent for a representative from the company, they would not be here today. Neither the experts, nor the inquiring magistrate had sent for them “and strangely neither did the police.”

It is facing a single charge : money laundering, and nothing else. The AG had requested a freezing order of €62,500. “How was this amount reached?” asks the lawyer, telling the court that there is nothing in the evidence about it. Taumac is only mentioned in an expert’s report, stating the dates that it was set up and the dates it was closed.

“Had the investigators done their job, they would have sent for Taumac and asked them about this odd-looking transaction.”

Dalli makes reference to Dr. Josie Muscat’s testimony, who said that Malta Enterprise had approached him to join the cyclotron project. He had withdrawn in 2015 after feeling something was off.

“But if anyone had bothered to investigate, they would have seen that ME had ordered Taumac to withdraw from the deal.”

Financial institutions continuously request updated due diligence. One of the standard questions is whether they have been convicted or are under investigation. Taumac’s representative had informed ME that it was under investigation in Italy for illegal dumping of waste. It was eventually acquitted in Italy, added the lawyer.

After being asked to withdraw, Taumac asked ME what would happen with the investment it had already made in the project.

“There was a simple explanation for the transaction and had the AG done its job properly and bothered to ask Taumac about it, the explanation would have been immediately apparent.” Matthew Farrugia

13:16 Prosecutor Francesco Refalo begins his submissions on prima facie, reminding the court that a decree of prima facie simply means that there appears to be a case to answer. The magisterial inquiry had consulted with a large number of experts in order to establish what had taken place with the hospitals concession.

He cites a number of judgments on the subject of when a court of compilation can decree on prima facie.

With regards to Technoline and Gateway, the inquiry had gone into some detail, says Refalo.

He refers to the loan given to Gateway by Steward so Gateway could acquire GAE Holdings and therefore acquire Technoline in the process.

This, including the €5 million loan, was all paid fraudulently, using the funds which were meant for the concession, he says.

Technoline became the sole provider of medical equipment to the concession, and this means there is a prima facie ground for indictment, argues the prosecutor.

Matthew Farrugia

13:01 The court says it will now proceed to the issue of prima facie. Joseph Muscat’s lawyers declare that he is not contesting prima facie, “solely for the purpose of ensuring the proceedings are resolved as quickly as possible.”

Edward Gatt informs the court that Konrad Mizzi, Keith Schembri are leaving it up to the court.

Lawyer Shazoo Ghaznavi informs the court that Clarence Conger Thompson is not contesting prima facie.

However, Sciacca Grill will be contesting prima facie, announces lawyer Franco Debono.

Karl Cini and Nexia BT announce that they will be submitting to the court’s judgement too, as does Ivan Vassallo in his personal capacity, Pierre Sladden and Eurybates Ltd. Matthew Farrugia

12:53 He is shown a set of documents which he confirms to be addenda to the loan agreement, consisting of private agreements between Steward and Gateway, which would confirm when instalments of the loan had been set off. Matthew Farrugia

12:51 An MBR representative is now called to the stand and exhibits accounting records for Gateway Solutions Ltd. Some of the accounts had not been submitted, says the witness.

Gateway Solutions’s auditor Malcolm Mifsud testifies next. He had been appointed from 2021 onwards, he says.

He confirms that the accounts show the company had an outstanding loan balance of €690,325 out of over €5 million. That was paid in full by 2023, and interests of €814,511 on the €5 million loan had also been paid.

The magistrate asks who had provided the loan.

After leafing through the file for a few minutes, the witness reads from the documents in front of him: “Steward Malta Ltd.” An addendum refers to Steward Health International Ltd, he says.

The outstanding amount was €785,073 in 2020.

He confirms that the loans had been against interest.

The loans had been repaid, in full, to Steward by the end of last year, he confirms. Matthew Farrugia

12:43 Next witness is Joseph Cremona a representative from the Radiation Protection Board, which has oversight on the use of radioactive materials in Malta. In 2016 they had received a notification from MTrace asking the Board to evaluate whether a request is viable or not. The notification from MTrace was for the use of radioactive material in a cyclotron, he says.

“What happened after that notification?” asks the lawyer.

Clarification and documentation starts being collected. A subsequent notification was also filed about technical matters.

“The process is that a permit is issued to construct the building. Then another for testing and finally one for production.” The initial go ahead was given in April 2017. No authorisation was issued for installation of equipment. It was not requested, he says.

In April 2017 an expert was brought in from overseas, but then everything seemed to stop. There were meetings. The inspections were carried out on the structure only. “Not the cyclotron?” asks Azzopardi. “The cyclotron was still in boxes…To us the process had stopped.”

Later works were noticed as going on at the site, which turned out to be remedial works to prevent the ingress of water. No further work on the cyclotron was carried out, he says. Matthew Farrugia

12:31 Serracino Inglott says he had checked and the authorisation had been applied for in 2017 and issued in 2019 on behalf of Jean Francois de Luis. He says another company might have applied for market authorisation because they might be making preparations to produce the product in Malta. “Might be?” asks the court. The witness says the application had been filed in France, listing Malta as one of the countries in which the authorisation would be in force. The witness says that it might be the case that the authorisation was issued in preparation for the development of a specific product like the one that was imported from Urium (to substitute for the chemicals which the cyclotron was not yet able to produce at the time). Urium can be used for many things, says the witness. One of them is to make cancers visible to surgeons. Azzopardi asks whether other people were mentioned in the application process. “It is difficult to say. The process began in France and goes into great detail. But personally I don’t speak to these people [applicants] because I have staff for that. But yes, many people are involved.” Matthew Farrugia

12:23 Court is back in session Matthew Farrugia

12:08 The sitting has been adjourned for 15 minutes to allow an interpreter assisting one of the defendants to perform other court-related duties in a separate sitting. Matthew Farrugia

12:07 Alexander Camilleri, ERA deputy director, testifies next and gives a timeline of the permitting process for the cyclotron. ERA had issued a confirmation that an EIA is required and set a timeframe for a follow-up. The applicant had not followed up, he says. This was in June 2017, he says. There is no data after that, he says, when Azzopardi suggests that the witness is not aware of documentation mentioned by a previous witness as having been filed. Matthew Farrugia

12:05 The court authorises the professor to make a phone call to confirm whether a marketing authorisation had been applied for by MTrace. His testimony is suspended while he leaves the court to do so. Nicole Meilak

12:04 The magistrate streamlines the question, asking whether a cyclotron needs authorisation from the Medicines Authority.

“It depends on the use. If you are going to export the product or sell to a wholesaler, you need a permit from us. If you’re producing it as extemporaneous preparation for Mater Dei patients only, you don’t.”

The court asks whether a permit had been applied for. “I don’t believe so.” Nicole Meilak

12:02 Azzopardi asks about a particular marketing authorisation applied for by Urium International Ltd. “Does the name Andrea Marsini remind you of anything?” “It does not.”

Witness continues: “When operating a cyclotron you might need marketing authorisation. You might not have a licence but fall under the rules of extemporaneous preparations.” Nicole Meilak

12:02 Azzopardi asks about marketing authorisation. It permits a medicinal product to enter the market, explains the witness. The witness lists a number of different processes through which this can happen. Nicole Meilak

12:01 As soon as a cyclotron starts working the authority would check whether it had the capacity to carry out the necessary inspections and if it did not, it would build the capacity.

The Magistrate asks what had actually been done at this stage.

“The only thing done was a long time ago, my people told me that there might be interest from Malta Enterprise in the production of radiopharmaceuticals and as an authority we ensure that we have the capacity to provide this service to the country.” Nicole Meilak

12:00 Prof Anthony Serracino Inglott, CEO of the Medicines Authority takes the witness stand. He is asked whether any permits relating to a cyclotron had been applied for with the authority. He replies that there hadn’t.

Prof Serracino Inglott had never heard of MTrace, he said, when asked whether the name was familiar. Nicole Meilak

11:43 The court denies the request for a site visit, telling the defence that it was only hearing evidence for a decision on prima facie at this stage. “And while it does have the power to order the production of all the evidence it deems necessary at this stage, it feels that this evidence (which is not witness evidence) is not required for it to give its decision.”

The magistrate added that she had given this decision in view of the testimony that it had heard in today’s and yesterday’s sitting. Nicole Meilak

11:40 He says that the time had come for the court to hold a site visit to prove that the structure had been built. The court replies that it had already given the defence till last Monday to file such requests, but allows him to make the request.

Azzopardi formally asks the court to hold the site visit, with the stated aim of proving that the cyclotron had been built, contrary to that stated by the inquiry. Nicole Meilak

11:40 Asked for the permits by Azzopardi, Livori replies that he had not brought copies, but tells the court that they would be available on the website. He explains that he had been notified with his summons on Tuesday evening and did not have the time to go through the documents.

The magistrate points out that at this stage, the court was looking at prima facie and did not require the details Azzopardi was requesting. Nicole Meilak

11:40 The next witness is Roderick Livori, a legal officer at the Planning Authority. Livori is asked about permits issued in relation to the cyclotron. This would not be stated in the proposal description, but would probably emerge from the plans, he says. “There are around ten permits issued over the site,” he says. “From what I saw, there were a number of applications filed over the Life Sciences Park.” Nicole Meilak

11:32 Asked by Refalo how MTrace had paid him, he said “through a court case”. He had dealt with project manager Joe Brincat, he says. The court case had to be filed because MTrace had not stuck to the agreed terms of payment, explains the witness. The case was eventually settled out of court. Nicole Meilak

11:31 Besides the concrete works, he had built the roof of the garage he says. Azzopardi asks whether there had been any layers between the concrete and the roof. He explains to the court that he is trying to prove that the structure had been built and still stands, contrary to what the inquiry stated. He confirms that he had seen the exterior tanks for the cyclotron but had not seen the machine itself. Nicole Meilak

11:30 Emanuel Baldacchino testifies now. When asked what he did for a living, he replies : “construction.”. He’s been working in the sector for around 15 years, he says. In reply to a question from Azzopardi, he explains that Mtrace had engaged him to build a laboratory.

“When you were engaged, what state was the site in?”

“Garage, like shell form.” Nicole Meilak

11:20 He exhibits a set of documents drawn up later, showing the cyclotron. In 2017 further discussions had taken place and ERA had requested further environmental impact assessments because of the cyclotron. The court asks whether the project had been completed. “It led nowhere because the cyclotron project appears to have been aborted.” Nicole Meilak

11:18 The original plans had allocated space for a cyclotron, but this appears to have not been set in stone.

He had attended a meeting with Mtrace who had been representing St. James Hospital and Brian Bondin.

On 15 July 2015, the statement was completed and eventually presented to the Environmental and Resource Authority. He had been instructed to invoice Mtrace. The only invoice issued to Mtrace was for €650, which had been settled two years later. Nicole Meilak

11:18 Adrian Mallia from ADI Associates - a consultancy company established in 2005 – takes the witness stand. ABI Associates had been engaged by MTrace and Malta Enterprise in 2009 to carry out environmental and traffic impact assessments for the park’s permit application. In 2011, there was a full development application for phase one of the park. ERA requires any deviations from the permit requested be declared in a statement which says whether a new impact assessment was required. This was for Malta Enterprise, he says. Nicole Meilak

11:10 A representative from TS Containers Agency Ltd testifies next. The company had received a shipment in 2017 around 14 November for Mtrace. The shipment of two 40 foot containers had originated from the port of Ravenna in Italy, sent by Comecer SPA. The containers weighed in the region of 3000kg each, he said.

Refalo asks whether he was aware of what was in the containers. Radioactive isotopes for research activity, he says, reading from the paperwork. Sealand SPA had paid for the service, he says. Nicole Meilak

11:05 Mario Ciantar, managing director of White Brothers Limited, testifies now. The company provides freight forwarding services, he says. From his records, he says, his company had once provided services to MTrace to unload cargo from a trailer and used a crane to deposit it on an upper floor at the Life Sciences Park.

Answering a question from Refalo, he says the cargo was hospitals-related and that the company had been paid by MTrace. Nicole Meilak

11:04 A Health and Safety Practitioner who had worked at Life Sciences Park between May 2019 until February 2020 testifes next. He would ensure workplace health and safety and carry out inspections, he says. “There were structural alterations, plastering works and the like.”

The Cyclotron facility structure had already been built when he started working there. He said that on 15 December 2017 he had seen packaging outside the building which he was told contained the cyclotron machine.

Answering a question from prosecutor Francesco Refalo, he said that Brian Bondin had spoken to him on behalf of Mtrace and engaged his company to carry out the works. Nicole Meilak

10:56 He specifies that the site in question is the Life Sciences Park in San Gwann and that the works had taken place on the ground floor and floors beneath it. Asked about Perit Karl Farrugia, who testified yesterday, he confirmed that Terracore had cooperated on a number of projects with the architect. Nicole Meilak

10:56 Third to testify is a director of Terracore Ltd, which provides concrete and materials testing services. He recalls that the company had carried out testing of concrete and opened some drains for MTrace. Some concrete surfacing works were also carried out, but not for MTrace, he says. Nicole Meilak

10:56 The second witness is a director of Firetech(not sure I got the name right). MTrace is not a client, she says. The company had been involved in the Life Sciences park since 2014, and in 2017 they had completed their duties in terms of the contract. The company still provides occasional services on an ongoing basis, she says. Nicole Meilak

10:47 MTrace representative Jesmond Silvio had signed the contract, he says, which was finalised in late January 2024. The witness confirms, when asked by the magistrate, that this was the date when the service was first connected. Nicole Meilak

10:46 The first witness is a representative from telecoms service provider GO plc. There’s a brief moment of levity in court as the witness says his name: Arthur Azzopardi. His namesake on the defence bench asks him questions about internet services installed at the Malta Life Sciences Park. Nicole Meilak

10:43 The court is now in session. The magistrate has taken her seat. Nicole Meilak

10:39 Our court reporter Matthew Agius is back in Hall 22, where lawyers and journalists are awaiting the arrival of Magistrate Rachel Montebello. Nicole Meilak

10:29 Good morning and welcome to the MaltaToday liveblog. Today we're covering the corruption proceedings against former prime minister Joseph Muscat, ex-minister Konrad Mizzi and former chief of staff Keith Schembri. Nicole Meilak