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6 maltatoday | WEDNESDAY • 13 JULY 2022 NEWS NEWS MATTHEW AGIUS A witness giving evidence in money laundering proceedings against former More Supermar- kets director Ryan Schembri accused businessman Darren Casha of taking over he compa- ny and cleaning out its assets, directing them into his own pocket. Investor Edmond Mugliette from Hamrun, who is listed as the sole shareholder of We Me- dia, is involved in litigation with Casha over an alleged €2 million credit extended to the super- market when it was still under control of Ryan Schembri. Magistrate Donatella Frendo Dimech continued to hear ev- idence against Schembri, who was brought to Malta in April on the strength of a European Arrest Warrant, having fled the island 8 years ago, leaving be- hind a trail of creditors of the reported €40 million in debts from his collapsed supermarket business. Mugliette was introduced to Schembri by Darren Casha in 2012 as a business associate at his Hamrun office, for a short loan on stock which had already been sold and which would be repaid once the stock was deliv- ered. Schembri at the time was planning an international ex- pansion of his supermarket. Mugliette had inspected the More Supermarkets Hamrun outlet's financial records and observed that it was a solid, profitable business. "When I disbursed the money, I made sure that assets were pur- chased," said the witness. "At first the results I saw were encouraging. But when I start- ed looking into the operation and conducting due diligence, I started finding that the ac- counting books weren't as they should be… I found that there were things which weren't true. For example there were sales of ship chandling services using invoice factoring which never existed." Mugliette said he discovered that the supermarkets "were in a loss situation". The supermarket attempted to bring in a large Spanish brand at large orders of stock to drive prices down. "The problem was the overheads and rents were much higher than turnover. There was no profit so it made no sense to offer a prospectus to potential investors." Mugliette told the court that he had invested €2 million in Schembri's supermarket opera- tion. He insisted that he would pass on the money and the stock would be bought and that he had seen the stock items. After Schemrbi left the island over multi-million debts accu- mulating, Mugliette wanted to draw up a constitution of debt, but realised that Darren Casha had instructed the accountants to sell the holding company, Cassar & Schembri's fixed as- sets to More Supermarkets Mo- sta, Fgura and Paceville – the individual supermarket subsid- iaries. He also accused Casha of carrying out the transaction to claim the VAT on capital investments. This credit, some €300,000 in VAT, Casha placed into More, which was unable to pay salaries at the time. "I immediately realised what was happening," Mugliette told the court. "They pulled the rug from under my feet. I said this was not acceptable and we made the constitution of debt. I gar- nisheed the fixed assets… then Darren Casha filed a case alleg- ing fraud. We are still awaiting the outcome of that case." Mugliette accused Casha of withdrawing the money from the bank that had been ear- marked for salaries, specifically €80,000 in cheques to his own company Copacabana Ltd. "He pocketed them, basically," in- terjected Ryan Schembri's law- yer, Roberto Montalto. Mugliette said Schembri transferred his shares to Casha to prevent his personal prob- lems from having an impact on the supermarket. "I told him that this could not be done." The witness recounted being told by shareholder Etienne Cassar of an incident where, as he was sitting in his car, Dar- ren Casha approached him and spread a number of papers on the bonnet, telling him to sign them – which he did. "Casha told me that he had paid all the supermarket's creditors… but the list of creditors I submitted with the constitution of debt didn't mention Copacabana, it didn't exist. Casha wrote the cheques behind our backs." Mugliette said Casha's own origin into the business had not been explained. "One fine day I found him there... He told me 'I will speak to the workers, be- cause this is mine.' I got very an- gry and went to speak to Schem- bri at Handaq... But it emerged that Schembri had transferred all of his shareholding to Casha, who then made himself director in all the companies." Casha's actions were the "fatal blow", as it led to the closure of the Hamrun outlet, Mugliette said. Montalto asked whether the witness knew that the share- holder agreement had been signed when Schembri was in hospital. "I found this out later, when I went to visit him in hos- pital." Schembri's business still had substantial value at that point, the lawyer suggested. The wit- ness agreed, adding that the fixed assets were worth over €5 million and the stock €1.8 mil- lion. "Then Darren Casha came along and brought them down to zero," observed Montalto. Mugliette accused Casha of misappropriating around €100,000 in cash which had been earmarked for salaries, as well as VAT, the €5 million in fixed assets and the €1.8 million worth of stock. He also accused Casha had made a fictitious VAT claim taking €3 million, explained the witness. Mugliette said he had resisted Casha's attempt to do this and a constitution of debt was en- tered into. "If I sell €100 from Cassar and Schembri to More, no profit is made. But they sold stock, charged VAT but didn't pay it." Montalto suggested to the witness that Casha was being helped by someone on the in- side. "He had to," replied Mugli- ette. The magistrate asked whether Schembri had done anything af- ter finding out about the VAT carousel. Montalto said Schem- bri had not been a shareholder at the time. The witness said he did not know whether this was the case. Under cross-examination by lawyer Roberto Montalto, Mugliette said his involvement was limited to loaning money to Cassar and Schembri, and not investment. "I wouldn't involve myself in the deals and so on, but he would approach me with cashflow problems and I would help solve them." The witness became a consult- ant to Cassar and Schembri. "I was against expansion in Libya, but it didn't mean he couldn't do it," said the witness, adding that no stocks in the Libya arm of the business were sold during his time. "It could have been that the expansion happened too fast," he said, referring to the supermarket business in Malta. Too many outlets were opening, too quickly, he ex- plained, listing a number of out- lets, and planned outlets. Bail requested After all of today's witnesses testified, Montalto requested bail for Schembri. He summoned Schembri's More Supermarkets: defence turns guns on Medasia restaurateur over VAT carousel fraud Ryan Schembri defence counsel accuses More Supermarket owner Darren Casha of fraudulent bankruptcy Ryan Schembri being escorted to Court after having been extradited from the UK