The director of a financial services company attempted to cover-up a loss of €224,250 in an unauthorised investment by engaging in other illegal actions which led to some €6 million in clients' funds being lost, a police inspector told a court today.

Inspector Ian Abdilla was testifying in the compilation of evidence against Jean Claude Bugeja, managing director of Maltese Cross Financial Services, who is pleading not guilty to money laundering and misappropriating over €4 million.

The inspector said matters took a turn for the worst in March 2008 when Mr Bugeja invested in a BNP Paribas fund that needed a minimum investment of €1 million.  Since Maltese Cross could only raise €700,000 from clients, Mr Bugeja used €300,000 from clients' assets without telling anyone and without authorisation. The fund did well and a profit of €8,30 was made.

But Mr Bugeka then decided to invest in another BNP fund. Clients put up €300,000 and he decided to make unauthorised transactions to cover the remaining €700,000. This time, a loss of €224,250 was made.

In order to recoup the money Mr Bugeja made further unauthorised investments but this was the time of the global financial crisis and he had lost €1 million by the end of 2008.

Unauthorised losses continued to grow over the years. Last August Mr Bugeja revealed to the company's other directors that while the company was meant to have €6.7 million in clients' funds, there as actually a shortfall of €6.2 million.

The other two directors then alerted the Malta Financial Services Authority (MFSA)

The inspector said Mr Bugeja had been able to hide his transactions because the company's computer system was tailored to his requirements. Mr Bugeja himself had told the police that the other directors were not involved.

He also insisted that the transactions he had made were not for personal gain but for the company. When matters turned bad he had said he also used his own funds as well as funds belonging to his wife and his parents, who had also invested in the company.

Mr Bugeja had fully cooperated with the police. He had also told the police that the past few years had been 'like a prison' for him and he was unable to sleep or enjoy his family.

He said no MFSA inspections of the company had been made since 2008.