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Caruana Galizia public inquiry: Former FIAU boss testifies

Former FIAU boss Manfred Galdes testifies about reports concerning persons of interest in Daphne Caruana Galizia's murder and on whom police had failed to take action

matthew_agius
20 January 2020, 2:37pm
by Matthew Agius
2 min read
Former FIAU boss Manfred Galdes is testifying in the Daphne Caruana Galizia public inquiry
Former FIAU boss Manfred Galdes is testifying in the Daphne Caruana Galizia public inquiry
17:54 This live blog ends here. Thank you for following. Kurt Sansone
16:55 The press has now been told to leave the courtroom again. It is understood that today’s session will end behind closed doors Massimo Costa
16:55 Farrugia is asked to specify whether any of the reports involved PEPs. He appears somewhat hesitant to answer Massimo Costa
16:54 Farrugia is asked how many reports linked to the Panama Papers were sent to the police. He replies that 15 such reports were sent to the police, but that these were related to Panama Papers, not necessarily involving PEPs Massimo Costa
16:52 Asked whether there was continuity from his predecessor, Farrugia replies that yes, all kept going. Questions about politically exposed persons (PEPs) mentioned in the Panama Papers, Farrugia says investigations continued and if there were suspicions of money-laundering, the FIAU would direct these to the police. In the absence of such suspicions, cases would be closed Massimo Costa
16:49 Farrugia says that at the start of his tenure, FIAU procedures stayed the same, except when it came to supervisory functions, where there were changes - some drastic - after the European Banking Authority issued its opinion about Pilatus Bank Massimo Costa
16:47 Farrugia tells the inquiry board that he was appointed as head on 13 February 2017 and remains in this role today. The board asks him is he was given a handover from his predecessor Manfred Galdes. Farrugia responds that the deputy head had first taken over from Galdes, and said deputy had in turn given him (Farrugia) a handover Massimo Costa
16:46 The court orders Kenneth Farrugia to testify. It further orders him to not incriminate himself because of non-disclosure issues, as it did to Manfred Galdes before him Massimo Costa
16:43 Caruana Galizia family lawyers Therese Comodini Cachia and Jason Azzopardi point out that there is no reason for Farrugia not to testify Massimo Costa
16:43 Current FIAU head Kenneth Farrugia has taken the witness stand. He is citing the law which prevents him from testifying, even in the case inquiries. Farrugia presents the inquiry board with a document showing the FIAU’s obligation under the law Massimo Costa
16:42 The press has been allowed to enter the courtroom again. Galdes is no longer on the witness stand - he finished giving testimony behind close doors on the incidents which left him feeling uncomfortable before he left the Unit Massimo Costa
16:04 Galdes tells the court that there were a couple of incidents before his departure which left him uncomfortable, but he would prefer to speak about them behind closed doors. At this point, the press is asked to leave the courtroom Massimo Costa
16:00 Galdes is speaking again about the lack of resources. He said he had found it “surprising” that his department was starved of funds “especially because of the timing, it was a suspicious affair” Massimo Costa
15:58 Former chief justice Joseph Said Pullicino asks Galdes if it is possible that his (Galdes’) successor encountered a different scenario when it came to how forthcoming Pilatus Bank was. Galdes says this was possible, and that missing documents from customers could have been obtained or found Massimo Costa
15:56 Shortly before his resignation, Galdes says he had a meeting with Sadr, where Sadr insisted that his employees had failed to give full information to the investigators and invited him back to check the bank again Massimo Costa
15:56 Before he left the FIAU, Galdes says he had met with former Pilatus Bank chairman Ali Sadr, who was contesting the conclusions reached by FIAU officers. The officers had gone on site over a period of several days and were requesting information on client due diligence, but were not receiving any. It appeared, Galdes says, that there were serious gaps at Pilatus Bank in this Massimo Costa
15:51 Galdes continues explaining that there are different levels of breaches, from the mundane to the very serious. The punishment will vary according to the shortcoming, he says Massimo Costa
15:50 Galdes responds that “in similar cases, there would be an on site examination... in the Pilatus Bank case, MFSA and FIAU would investigate as a joint team. Subsequently a compliance monitoring committee would receive those findings and determine whether there is a breach of the law" Massimo Costa
15:50 The subject turns back to Pilatus Bank. Lawyer Azzopardi points out that an investigation into the bank had found irregularities. He asked what happens in such cases Massimo Costa
15:43 Galdes explains that, in the case of an FIAU report, the only person who can issue an attachment or investigative order is the court on the advice of the Attorney General. “As far as I know the AG had not [issued such an order],” Galdes says Massimo Costa
15:41 Azzopardi asks whether the Daphne Caruana Galizia’s blog was used for open source data. It was, Galdes acknowledged, saying that “no information should ever be ignored" Massimo Costa
15:40 Galdes is asked what the FIAU had done when the Panama Papers scandal emerged worldwide. "The FIAU had already a lot of information at the time. It was confirming some of the information it already had and started to look at other avenues,” he answers Massimo Costa
15:40 Azzopardi asks Galdes whether the FIAU reports he worked on were written in order to be leaked. "Absolutely not," Galdes replies, adding however that he could not vouch this was also the case with his successors Massimo Costa
15:39 Galdes says he was finding understanding from Finance Minister Edward Scicluna, but when he had made a follow up on the issue he was informed by a person from a ministry department, the MPO, that there was no backing for increases resources. The MPO falls under the OPM, lawyer Azzopardi remarks Massimo Costa
15:37 "The resources I was given over the years increased... many people came from the private sector,” Galdes elaborates. There was however a problem with staff retention, he said. He had ended up doing hands-on work, as he was understaffed. The permanent secretary had held discussions with the FIAU on increasing remuneration for its staff almost in line with MFSA levels Massimo Costa
15:37 Caruana Galizia family lawyer Jason Azzopardi asks Galdes whether, in the light of his experience, he had found the backing which he had required from the Minister of Finance, to which Galdes answers “yes” Massimo Costa
15:35 Galdes says that he had expected that the minute he had handed certain reports to the police, this would have resulted in attachment and freezing orders. Two years later, however, nothing had been done. Galdes reiterated that he would be more comfortable testifying about this matter behind closed doors Massimo Costa
15:32 Galdes says that Moneyval reports clearly showed that systems of seizing assets of criminal enterprise to fight money laundering were ineffective. In this regard, he tells the court that he had resigned because he was working in a body which was ineffective in practice. Whether this flaw in the FIAU was by design or not, he couldn’t say, Galdes highlights Massimo Costa
15:31 He continues to speak about a lack of resources in the FIAU during his time there. In his day, the FIAU’s budget was of less than €1 million, Galdes says. This was increased to €10 million after he left Massimo Costa
15:30 Galdes continues giving testimony with the press present. He says he felt that a country could have the best FIAU in the world, but if it only had three inspectors focusing on money laundering cases and spending most of their time in court, or in The Hague, Strasbourg or Brussels, arguing about policy and involving extremely complicated cases which require expertise, then the system “was not going to work” Massimo Costa
15:25 The inquiry board asks Galdes why he resigned from head of the FIAU. At this point, Galdes answers that he would be more comfortable testifying on this behind closed doors Massimo Costa
15:24 Galdes hands the inquiry board a copy of his FIAU resignation letter Massimo Costa
15:23 "It is a good practise to have different entities cooperating and sharing information,” Glades says in connection with the joint operation he just mentioned Massimo Costa
15:23 Inquiry board member Judge Abigail Lofaro now asks Galdes whether police and FIAU investigations could be held concurrently. "With good coordination, I would think we would have helped each other,” Galdes replies, as he recalls a joint operation between the Malta Security Service, the FIAU and the police Massimo Costa
15:21 "When I went to Commissioner Michael Cassar, there was information which ended up in more than one report,” Galdes says, once again talking about the instance when he had given a “collection of information” to Cassar. One report was about bank statements of Willerby Trade and the other contained printouts leaked in the Panama Papers. This included cocumentation which showed the beneficial owners of certain companies, he says Massimo Costa
15:19 Another report he is shown appears to be from an on-site visit to Pilatus Bank, he says Massimo Costa
15:18 Shown another article with a leaked report about Adrian Hillman, Galdes said this had come after he had resigned Massimo Costa
15:18 Galdes says the wording of the leaked reports is familiar and is very similar to a report that was passed on to the police a few days before his resignation, he says. The media article is about Willerby Trade - a company in the British Virgin Islands - and Keith Schembri's alleged kickbacks from passport sales Massimo Costa
15:16 Caruana Galizia family lawyer Therese Comodini Cachia now shows the witness a number of articles from the media containing excerpts from leaked FIAU reports. The witness is looking at them, in an effort to determine whether they were genuine or not Massimo Costa
15:10 Galdes says he had chosen this course of action after considering past feedback the FIAU board had given him. He felt an inconclusive report would still have sufficient importance and would lead to a police investigation. "I felt there was sufficient information for the police to open a file and look at the issue,” he says of the instance in question Massimo Costa
15:08 Galdes replies that he did not recall whether in the incident in question, the letter he had sent specified whether the FIAU had a suspicion of wrongdoing or not. “We hadn't followed normal procedure because of the nature of the case and the people involved and also because myself and the deputy director felt that it would be opportune for the police to know about the information immediately because we anticipated that the collection of all the information for a full report would take time,” Galdes explains Massimo Costa
15:06 Comodini Cachia asks a pointed question as to whether this meant that the information was not given with recommendations as to the action to be taken Massimo Costa
15:05 Galdes says that Assistant Police Commissioner Ian Abdilla would act as a liaising officer, apart from in one instance when Galdes gave a "collection of information" - not a report - to Police Commissioner Michael Cassar in 2016 Massimo Costa
15:04 Galdes tells the court that in cases where investigations were taking place, the FIAU Board would not be informed unless circumstances required it, such as when there was media coverage of the matter. "In that case, I would have to explain to the board [what was taking place]” Massimo Costa
15:03 With regards to Pilatus Bank, the FIAU’s role was merely supervisory, Galdes says. "When the FIAU detected a breach of the law, the Unit’s Board would be informed. I don't think they would be given the report per se, but would be given the findings of the on site visit so they would know, when the FIAU reached a decision to fine an entity,” he says Massimo Costa
15:02 Galdes explains further the FIAU’s job. He says the Unit has two roles: an administrative one and a quasi-investigative one Massimo Costa
15:01 Galdes tells the inquiry board that during instances when PEPs were being investigated by the FIAU, he felt it was his duty to inform the Unit’s board about what was being investigating but not on the contents of the investigation. This was done on a "need to know" basis, he specifies Massimo Costa
14:59 Lawyer Comodini Cachia asks Galdes who was on the FIAU board at the time, to which he replies that Assistant Police Commissioner Pierre Calleja had been replaced by Assistant Police Commissioner Silvio Valletta Massimo Costa
14:58 All the FIAU can say is that it has reasonable suspicion, Galdes elaborates. Answering a question from the board, Galdes says that the FIAU must pass on the report to the police liaison officer. "At the time I left it was inspector Ian Abdilla who was acting liaison officer" Massimo Costa
14:57 If there is a reasonable suspicion of money laundering, the law at the time he was FIAU head stated that the file on the matter was to be passed on to the police and the police alone, Galdes says Massimo Costa
14:56 Galdes continues explaining the FIAU’s role, saying that it also gathers information from other similar units across the world - over a hundred globally Massimo Costa
14:55 “I felt with a great responsibility that I could no longer continue in my role if i wasn't going to be effective in it,” Galdes tells the court. He explains that the anti-money laundering legal framework stipulates that financial practitioners are to inform the FIAU when they have a suspicion of wrongdoing. The FIAU must then gather more information on that report which is up to that point based on a suspicion, he says Massimo Costa
14:54 In the FIAU, Galdes says, two of the highest positions were vacant because people had left for jobs in industry and they could not continue with their overview of financial services and gaming. The head of department for investigations was also vacant and the FIAU could not find a suitable candidate, mostly because they didn't have the funds to give a salary commensurate to the role Massimo Costa
14:53 “It was a long time coming,” Galdes says of his resignation. He says the FIAU was underfunded and needed more resources. Through periodic Moneyval assessments, it was getting harder to reach the international standards, he says. "I kept on drawing the attention of the authorities, the MFSA, CBM, ministers and saying that Malta had to make certain changes" Massimo Costa
14:52 Galdes tells the court that, in July 2016, when he had started to feel the time was right to resign, he had spoken to the Chairman of the FIAU, Peter Grech. They had spoken to the permanent secretary and informed him of Galdes’ decision. There were many attempts by the permanent secretary and the chairman of the MFSA to get him to stay, but he had stuck to his intention, Galdes says Massimo Costa
14:49 The board orders the witness to testify about facts which he is aware of during his tenure as director of the FIAU with regards to the subject and merits of this inquiry. Galdes asks to be allowed to testify behind close doors. Former chief justice Joseph Said Pullicino says it will be decided by the board as the proceedings go along whether some of Galdes’ testimony will be given behind closed doors Massimo Costa
14:47 Caruana Galizia family lawyer Therese Comodini Cachia says that the Public Inquiries Act gives the board the power to override the law Massimo Costa
14:46 Retired Judge Michael Mallia asks him about his time as FIAU chairman, and what led to his resignation. Galdes says that the law prohibits him from disclosing certain things. "I have no objection - to the contrary I want to testify - but I don't want to become the subject of criminal proceedings for breaking the law by revealing them" Massimo Costa
14:46 Galdes has been summoned to the stand. He takes the oath and questioning begins Massimo Costa
14:44 Good afternoon. We are in court for the continuation of the public inquiry into Daphne Caruana Galizia's murder. Former FIAU chief Manfred Galdes is testifying today Massimo Costa

Former FIAU boss Manfred Galdes testified before the public inquiry into the murder of Daphne Caruana Galizia today, although most of the important information was delivered behind closed doors.

Galdes, who spent eight years as head of the Financial Intelligence and Analysis Unit (FIAU), testified about a number of reports on persons of interest in the murder, which had not translated into police action..

In those parts during which he testified in open session, Galdes said that he expected the police to act and issue freezing orders on reports the FIAU would have passed on. However, he said no such action was ever taken.

He spoke about the lack of resources the organisation had during his time.

Kenneth Farrugia, FIAU head, took the witness stand after Galdes but his testimony was heard behind closed doors.

In last week’s sitting, Malta Developers Association President Sandro Chetcuti was grilled at length on alleged meetings with Yorgen Fenech, which he denied, together with another allegation that he had an office at the Labour Party Headquarters.

The public inquiry will have to determine whether any wrongful action or omission by or within any State entity could have facilitated the assassination of Caruana Galizia or failed to prevent it, particularly whether the State knew or should have known of risks to the journalist’s life “at the time” of her murder.

It must also consider whether the State not only knew of, but “caused” risks to Caruana Galizia’s life.

Although its terms of reference allow for restrictions on the publication of the inquiry's report, it specifies that the board must provide the family with the opportunity to read the full report, including the redacted parts, without being granted copies of the text underlying any redactions. The family are also prohibited from divulging the redacted content.

The inquiry board is bound to presenting the inquiry report, once it is completed, to the Prime Minister and Attorney General, to notify the public that the inquiry has been concluded and presented to the Prime Minister, and, most notably, to publish the report within eight working days from when it is delivered to the Prime Minister.

The Prime Minister has to table the report in Parliament within five days of receiving it.

The inquiry, which started in December, must be completed within nine months.

Matthew Agius was Senior Reporter on Law and Court Affairs at MaltaToday from 2014 to 2024...
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