Former Nexia BT partners Brian Tonna, Karl Cini, Manuel Castagna and their financial controller Katrin Bondin Carter were in court yesterday on charges of money laundering.
The hearing saw over 50 documents worth of evidence exhibited to the court, relating to alleged passport kickbacks, offshore company structures, suspicious loans, and the Hillman-Schembri inquiry.
During the proceedings, Inspector Anne Marie Xuereb told the court about Willerby – the BVI company set up by Brian Tonna. For the purchases of Maltese passports by three Russian nationals, invoices were sent out both from the side of Willerby and from BT International, with a court expert warning that double invoicing occurred for the same payment – one from Willerby, and one from BT International. In the Willerby account, the amount received was written down as sales revenue, while in BT International’s books it was registered as income. The inspector points out that Willerby was never registered to sell Maltese passports under the Individual Investor Programme (IIP).
Only BT International had been approved to operate as an agent for Malta’s golden passports scheme.
The inspector further pointed out that there had been a referral agreement between the two companies, whereby Willerby would receive commissions from BT International for every IIP client introduced to BT International.
On a separate note, Keith Schembri had loaned Brian Tonna €100,000, which they said was due to financial concerns resulting from Tonna’s separation. However, the inspector pointed out that Tonna had a lot of cash in hand and at the bank, meaning that there should have been no real financial concerns from his side.
She further added that, in a separate inquiry, Schembri and Tonna testified that they didn’t remember how and when the money was passed. The inspector passed on to the court three documents detailing the loan agreement and assignment.
The inspector pointed out that Brian Tonna used to keep account of everything down to the last cent, but with this loan there was hardly any indication that the transaction ever happened.
Regarding the Hillman-Schembri printing press deal, the inspector noted irregularities with the invoicing. Schembri had told police that him and Nexia BT agreed to purchase the printing equipment from the United States. The payments went through several companies in different locations so that the company could pay a lower tax.
The four accused, who all pleaded not guilty, were charged on Saturday along with 11 others facing corruption, fraud and money laundering charges.
All those from the financial services firm Nexia BT were denied bail.
In September 2020, Tonna and Cini lost their warrants to practice as accountants after the regulatory authority initiated disciplinary proceedings against them.
The board also suspended the registration of Nexia BT, BTI Management Limited and Nexia BT Advisory Services Limited.
The court had already imposed a wide-ranging freezing order on Tonna and Cini, their companies and linked business associates.
12:11 That’s it for today. The next hearing will take place next Tuesday at 10:30am. A short summary will follow soon.
12:09 The Attorney General’s office has been submitted a copy of the magisterial inquiry led by Magistrate Natasha Galea Sciberras. A digital copy of the inquiry will be distributed to all parties.
11:59 Next Tuesday, submissions for the request for a Constitutional referral will be heard between 10:30am and 10:45am. Bail requests will remain pending for the time being.
11:59 The exhibition of evidence has finally come to a close. The magistrate is suggesting that the cross-examination of evidence is postponed to a later hearing – there seems to be a consensus.
11:46 We arrive at 20 March 2021 – the day of the arraignments. Karl Cini and Brian Tonna were among the several individuals called to the Financial Crimes unit to deliver a police statement, but they said they required more time.
11:44 Among the documents is an email between Robert Zammit, Kasco’s financial controller, and Brian Tonna, discussing payments to Keith Schembri’s father. Schembri said that these were donations.
11:35 We arrive to March 18 2021 – Brian Tonna and Karl Cini were both provided disclosure documents, and said that they needed more time to look at the information gathered and subsequently deliver a police statement. Tonna said that he was shocked to be implicated in this inquiry.
11:25 The inspector moves on to the Hillman-Schembri scandal. She explains that there were irregularities with the invoicing of the purchase. Schembri had told police that he spoke with his auditors, at the time Nexia BT, and they agreed that the printing equipment would be purchased from the United States. In turn, the payments went through several companies before arriving in offshore bank account. Schembri said this was done so as to pay the lowest possible tax rate.
11:18 The inspector has presented several envelopes worth of documents relating to the inquiry conclusions against Karl Cini, Manuel Castagna and Keith Schembri. They were presented earlier this month, together the respective arrest warrants.
11:11 She is currently referring to a statement by Keith Schembri. When questioned over the €100,000 loan agreement, Schembri said that he couldn’t remember whether he was present for its signing. Police had asked him why he chose to have the money directed to his account with Pilatus Bank, but he told them to refer to his testimony during the magisterial inquiry.
11:06 And we’re back. Inspector Anne Marie Xuereb continues presenting the documents to the court.
10:59 All four of the accused were interrogated several times over the past months. Initially, they refused to reply to any questions, but earlier this month Cini confirmed that he created a number of invoices, and that he had asked Pilatus bank for a €200,000 loan for a property purchase. He admitted that some documents confirming transactions were backdated because they had been requested by Pilatus.
10:57 Regarding Willerby Trading, one of Tonna’s offshore companies, the Inspector testified that invoices for the sale of Maltese passports to three Russian nationals were sent out both from Willerby and from BT International, raising double invoicing concerns. Only BT International was an approved agent for the IIP.
10:55 A quick wrap-up of what we’ve heard so far: Keith Schembri had received two payments from Russian nationals in his Pilatus bank account, amounting to €50,000 and €100,000. Keith Schembri had loaned €100,000 to Brian Tonna, which they said was given because Tonna was concerned with garnishee orders or other financial difficulties he might encounter throughout his separation. The prosecution don’t quite believe this, arguing that Tonna had €624,000 in hand.
10:45 The court has temporarily suspended the hearing – the proceedings will continue at 11am.
10:32 There are several documents yet to be presented. Inspector Anne Marie Xuereb came prepared with a sizeable cardboard box filled with emails, police statements, and other documents relevant to the case.
10:24 With regards to Katrin Bondin Carter, she confirmed that the company Willerby had in fact belonged to Brian Tonna, while the account was managed by Karl Cini. Cash top-ups among workers were delivered in lieu of unutilised leave, Bondin Carter told police. This was all revealed during a police interrogation on February 26, 2021.
10:16 The inspector is still presenting the statements – Brian Tonna had been first to be interrogated, but refused to reply to any questions. Castagna and Cini also failed to respond to any questions during their interrogations. Keith Schembri and Brian Tonna were again called in for questioning on December 20, with Tonna and Cini questioned over cash payments made to Nexia BT workers.
09:58 The inspector is now presenting police statements and other documents gathered during the arrests of Schembri, Tonna, Cini and Castagna.
09:55 Moving on, the Inspector details the arrest of Keith Schembri. The ex-chief of staff was arrested in his residence at the Santa Maria Estate, where he was presented with an arrest mandate and attachment order. A search was carried out in his house, with several items seized, including two iPhones and an iPad. Searches continued in the offices of his Kasco company, where a laptop and computer tower were seized.
09:52 She explained that the ultimate beneficial owner of the Willerby company was Brian Tonna. The company was registered in the British Virgin Islands on 19 March 2013, with the company holding a bank account with Pilatus bank.
09:44 Referring back to the Tonna-Schembri loan, she says that their version of events – that the loan was secured because Tonna was worried about finances – was hard to believe. She said that Tonna had deposits, cheques, and cash running into the thousands, creating no cause for concern from their side.
09:39 Journalists have just been ordered not to publish any details regarding personal declarations involving the children of the accused.
09:39 The inspector further pointed out that there had been a referral agreement between the two companies, whereby Willerby would receive commissions from BT International for every IIP client introduced to BT International.
09:37 She begins to explain Willerby – the BVI company set up by Brian Tonna. For the purchases of Maltese passports by the three Russian nationals, invoices were sent out both from the side of Willerby and from BT International, with a court expert warning that Nexia BT had double invoicing in their accounting books for the same payment – one from Willerby, and one from BT International. In the Willerby account, the amount received was written down as sales revenue, while in BT International’s books it was registered as income. The inspector points out that Willerby was never registered to sell Maltese passports under the Individual Investor Programme (IIP).
09:24 She noted that Bondin Carter and Karl Cini drew up several documents after the Panama Papers leak, largely to satisfy due diligence procedures by the bank. “Many of these documents were requested by Pilatus after a compliance visit by the FIAU.”
09:18 She gives background on a separation deed, whereby Keith Schembri loaned €100,000 to Brian Tonna to help him through separation proceedings. During their testimony in a separate inquiry, they said that they didn’t remember how and when the money was passed, but they passed on three documents detailing the loan agreement and assignment. The inspector pointed out that Brian Tonna used to keep account of everything, to the last cent, but with this loan there was hardly any indication. The inquiry had discovered an email, with subject head “as discussed”, and with the loan documents attached.
09:06 Inspector Anne Marie Xuereb from the Economic Crimes Unit takes to the witness stand. She’s giving a brief informer on the passports inquiry, where Keith Schembri was accused of receiving kickbacks from the sale of passports by Brian Tonna. She explains that Keith Schembri had a bank account with the infamous Pilatus Bank, and had received two payments from Russian nationals, amounting to €50,000 and €100,000.
09:01 The prosecution is requesting that the MFSA be notified of the asset freeze order issued on 20 March 2021 against the companies mentioned in the indictments. The defense did not object.
08:59 For a quick refresher: Lawyer Tonna Lowell is representing Brian Tonna, Karl Cini, and all commercial entities bar KBT Holding Ltd, which is being represented by Gianella De Marco. Lawyers Amadeus Cachia and Franco Debono are representing Katrin Bondin Carter, while Michael Sciriha is defence counsel for Manuel Castagna.
08:55 Magistrate Donatella Frendo Dimech has just emerged from the chamber, marking the start of the hearing. She asks for a roll-call as to who’s representing who.
08:46 For Covid-19 reasons, the hearing has just been moved to the larger Hall 22, delaying proceedings by 15 minutes.
08:38 A quick reminder: Nexia BT partners Brian Tonna, Karl Cini, Manuel Castagna and their financial controller Katrin Bondin Carter were charged with money laundering in a milestone arraignment last Saturday, which also saw ex-OPM chief of staff Keith Schembri and his Kasco companies arraigned on similar charges.
08:33 Good morning. We are in Hall 9 today to cover the court hearing against Nexia BT.