Vitals inquiry expert’s qualifications probed by defence in freezing orders hearing

The court hearing challenges to the freezing orders issued on the back of the Vitals Global Healthcare fraud case today stopped defence lawyer Franco Debono from probing one of the court-appointed experts about her qualifications for the role.

Debono challenged the witness, forensic accountant Miroslava Milenović, while she was being cross-examined as to how she had quantified the alleged amounts of money that had been laundered in the VGH and Steward deal.

Milenović told the court that she had a first degree in an unrelated field: geophysics, and subsequently a Masters degree in political science, financing of terrorism and money laundering. That was in 1984, she said.

Milenović then spent 20 years working with PwC as an accountant and as a certified fraud specialist, as well as director of that firm. She had also worked with the United States’ Department of Justice as a fraud investigator for many years.

The judge stopped the lawyer’s pointed line of questioned towards the witness. “This is not the place where you can contest the expert’s  qualifications. I don’t want to hear anymore.”

The judge proceeded to dictate a note in the acts of the proceedings herself, recording that the court felt that for the purposes of this application – which was to challenge the freezing orders – the expert had already explained her qualifications and was therefore rejecting the defence’s request to continue with this line of questioning.

Debono shifted his questions to asking Milenović about her work with PwC, in Serbia, but was shut down by the court. “PwC assisted with the [Vitals Global Healthcare] investigation. She used to be a consultant there,” the lawyer said.

Madame Justice Grima asked Milenović whether she had been aware of the firm’s involvement in the inquiry. “I had searched at the very beginning but saw nothing significant,” replied the expert witness.

“So you’re telling us that your involvement with the firm is not significant?” asked the lawyer. Milenović pointed to two specific paragraphs in her report which dealt with PwC and explained that she had not found the firm’s involvement significant at that stage.

The court stopped Debono from probing the witness further, remarking that “the law doesn’t even contemplate you cross-examining the witness, which the court is allowing in the circumstances, but attacking the qualifications of the expert is a stretch too far. Even if I were to conclude that she is not qualified, I would still proceed on the basis of what I have before me,” remarked the judge.

“How she was appointed in the inquiry was irrelevant,” said the judge. “Admissibility of expert evidence is a subject that must be tackled at a later stage, before the court that will be deciding that issue.”

Franco Debono grills witness

Debono asked Milenović to identify other instances in her report which mention the defendant Kevin Deguara

The court pointed out that Deguara did not feature in the application before it, except as a representative of DF Advocates. The witness confirmed there was no direct mention of Deguara in her report.

Deguara was indirectly mentioned due to his connection with DF Advocates, acting as TCSP and professional intermediary. 

At that point Debono’s agitation increased, accusing the witness of trying to obscure the truth and insult the defence’s intelligence.

Milenović said a lot of different entities had been involved, with several related emails and communications in which Kevin Deguara had received or sent.

The judge asked Milenović whether she was aware of the distinction between DF Advocates and DF Consulting. That was not the expert’s focus, she replied. “My focus was more on the role of the different advocates, consultants – legal and financial – who gave assistance to this scheme being structured.”

“I didn’t indicate amounts in my reports related to either Deguara or Farrugia. With regards to DF Advocates, the only involvement [I saw] was in structuring and participation, helping..in that respect.”

When asked whether Kenneth Deguara had been mentioned in her report, she replied that he hadn’t mentioned him.

Asked whether the law firm had received funds from the government or whether they were just an instrument used to move money between the key players, Milenović replied: “In my report more the role of the helpers. I didn’t establish the links of the payments to DF Advocates… I didn’t mention any money flows to DF Advocates. It was involved in structuring.”

After the cross-examination ended and the video link to Milenović was disconnected, Debono complained that she had been evasive in her testimony. “She named Kevin Deguara as one of the key players and not one word on his involvement. This is unacceptable.”

Lawyer Stefano Filletti suggested that even if Milenović’s report was expunged from the proceedings challenging the freezing order, this would not affect the case deciding the defendants’ guilt or otherwise. “We have a person without a warrant, wIth a degree in geophysics and a certificate from somewhere in America, telling us about a professional issue. The FATF is relevant, but only to Malta as a State, which must then translate its directives into law,” submitted the lawyer.

The court repeated that issues of admissibility of evidence and the competence or otherwise of experts could not be raised at this stage of the proceedings. 

Judge Grima explained to the defence that if she decided to expunge the report because she wasn’t convinced of the expertise of the person who drew it up, the defence would “surely then raise the matter in the case [deciding guilt or innocence] and call it ‘a fact that had been declared by the court in other proceedings’”, said the judge. “When a court discards evidence it must give a reason for doing so.”

Expert witness unavailable

Earlier, at the start of the hearing, forensic accountant Jeremy Harbinson, expected to testify in the Vitals Global Healthcare fraud case, could not be reached when the court attempted to establish a video call in today’s sitting. It is understood that Harbinson had not replied to the court’s request to testify. 

Harbinson had previously sent a representative of his firm to testify in his stead, when he was called to testify in a related case that is challenging the €20 million freezing orders issued against the Pakistani businessman Shaukat Ali Chaudry and his wife Aasia Parveen Shaukat.

Instead, forensic accountant Miroslava Milenović, appointed to assist the inquiry, was cross-examined by defendant Deborah Chappell’s lawyer Joseph Mizzi about a €40 million freezing order against his client. 

The defendants in the VGH case are all challenging the scale of the freezing orders imposed against them, calling the court-appointed experts to testify as to how they quantified the alleged theft  in the VGH procurement.

Milenović is a forensic accountant certified by regulatory bodies in both the US and UK bodies for the past 20 years.

Replying to Mizzi as to how she had quantified the €5 million allegedly paid to defendant company Technoline as laundered monies, Milenović – testifying by video call – ran a search in her report for the words ‘5 million’, ‘Technoline’ and ‘Deborah Chappell’, yet yielded no results.

Madame Justice Edwina Grima, presiding over the proceedings, explained that this was one of the amounts specified in the inquiry as being linked to Chappell. “I think it was not one of the conclusions of my report,” replied the witness.

Milenović said her conclusion mentioned the key players in the VGH scheme, and that this scheme was not possible to be carried out without the help of others, “whom I mentioned.” Chappell’s name was one of them, Milenović said. “In this respect… I mentioned these people as professional helpers, corporate service providers, and in that respect I mentioned Deborah Chappell.”

When suggested that Chappell was actually VGH’s in-house counsel, and therefore falling outside the remit of the Prevention of Money Laundering Regulations, Milenović said she was a TCSP (Trust or Company Service Provider), as described by the FATF.

Mizzi pointed out the obligations of a TCSP were different to those of an in-house counsel.

The court was told Milenović’s report stated that money had flowed from Steward Healthcare LLC and later that it originated from the government of Malta. “The money transferred by Steward or Accutor came from only one source, and that was the government of Malta,” replied the witness.

Mizzi suggested that €2.5 million had originated from the US company, pointing to a letter in the inquiry which stated that Accutor AG had received €4 million from Steward between 2018 and 2019. “Could the money have not actually come from Malta but from the United States?” asked the lawyer.

“I don’t think so,” Milenović replied. “The money came from the government of Malta… maybe some other money came from Accutor. Looking at the money flows, I said that it was likely that Accutor had paid the money which it had received from the government to Deborah Chappell.” This emerged from bank records, she added.

She added that the government had paid VGH and then Steward, who paid Steward LLC’s parent company, who then sent the money to Accutor AG in Switzerland. “There were also transfers from Steward Malta to Steward LLC, as well as between Steward and the government.”

Milenović explained that these payments emerged from bank statements from Switzerland.

Who are the defendants and what are they accused of?

The former Minister for Health Chris Fearne and the former Minister for the Economy Edward Scicluna are charged alongside Ronald Mizzi, Alfred Camilleri, and Joseph Rapa, and lawyers Kenneth Degurara, Kevin Deguara, Jean Carl Farrugia, Deborah Anne Chappell, Bradley Gatt, Aron Mifsud Bonnici, James Camenzuli, Emmanuel Castagna and Robert Borg, as well as DF Advocates, accused of defrauding the Government of Malta. 

Fearne, Scicluna, Mizzi, Camilleri, Rapa and Chappell are additionally accused of misappropriation to the detriment of the Government of Malta. Mizzi, Camilleri and Rapa alone are accused of committing a crime which they had been duty bound to prevent.

Chappell is also being charged with money laundering, in her personal capacity, together with Kenneth Deguara personally and in his role as Chief Financial Officer of DF Advocates, Kevin Deguara and Jean Carl Farrugia in their personal capacities and as representatives of DF Advocates.

Mifsud Bonnici, Castagna, Chappell, Kevin Deguara and Farrugia are further accused of, in their personal capacity and as representatives of DF Advocates, having actively participated in a criminal organisation of over 10 people between 2013 and 2023.

More charges, relating to conspiracy to commit a crime punishable by imprisonment are being faced by Chappell, Mifsud Bonnici, Deguara, Farrugia and DF Advocates. Chappell and Deguara also being accused of falsifying financial documents to cover up for a crime, as well as falsifying VAT records.