Court upholds €5 million asset freeze on Technoline citing public interest

A court has denied the medical supplies company Technoline – accused in the Vitals PPP corruption case – a request to revoke a €5 million asset freeze.

Technoline stands accused of money laundering, apart from other corruption-related charges in the hospitals’ concession saga.

In its submissions, the company claimed the prosecution had not indicated which assets or cash were directly originating from any criminal act, and that its €5 million valuation was not based on an exact estimation of the alleged proceeds of crime.

Madam Justice Edwina Grima turned down the request, saying the voluminous magisterial inquiry carried out by Magistrate Gabriella Vella and court experts had led to a wide array of criminal charges against companies as well as businesspeople and former politicians - among them former prime minister Joseph Muscat - and that there was “the supreme interest of society at large in seeing that the alleged criminal proceeds are seized.”

The company’s asset freeze is part of a series of monetary and asset freezes ordered by the magisterial inquiry on various individuals and companies. “The wide implications this case has concerns the allegedly criminal use of monies from public funds, so the prosecution’s request for the asset freeze is justified and proportionate to the alleged criminal proceeds that run into the millions of euros,” Grima said.

Madam Justice Grima said the State was duty-bound to recover any possible criminal proceeds, and to see that none of this alleged wealth can be dissipated, especially due to the fact that it was paid out from the public coffers.

“It stands to reason that Maltese society is justified in expecting that these monies are returned to the State should the accused be found guilty, and this public interest supersedes that of the accused society’s enjoyment of private property.”

The judge pointed out that the acquisition of the company Technoline by one of its employees, was carried out using a loan from the hospitals’ PPP concessionaire Vitals Global Healthcare, which VGH planned to use for the exclusive supply of pharmaceutical and medical supplies.

The €5 million loan was paid back with €815,511 interest back in December 2023, members of the Technoline defence team told MaltaToday.

VGH’s former CEO Armin Ernst told the inquiry, that “the cash to buy Technoline was wrong taken from the funds provided by the Government of Malta to VGH for the running of the Maltese hospital concession”, with court experts saying that this created a legitimate claim for the government to ownership of Techoline and all its accumulated profits.

The transition to a new legal regime introduced on 9 February regulates, amongst other things, freezing orders and the problems faced by defendants in financial crime cases whose entire asset bases are frozen by court orders, often for years, until their case is decided.

Under the new legal regime, prosecutors applying for freezing orders must now specify what property or how much money is to be frozen, within a 90-day period starting from the arraignment, which may be extended twice at most, only if the court deems it necessary.

One predictable upshot of this is that prosecutors are now faced with the additional, often complex and difficult task of establishing the provenance of every asset belonging to a defendant, and to do so within a restricted time.