A businessman has been charged with the murder of Malta’s best known investigative journalist, Daphne Caruana Galizia.

Local tycoon Yorgen Fenech, the 38-year-old head of a gambling and property empire, was arraigned on Saturday evening, and charged with participating in a criminal organisation, complicity in causing an explosion, and complicity in the murder of Caruana Galizia.

He has pleaded not guilty. Fenech has been held in custody and his assets have been frozen on request by the police. His lawyers did not request bail.

The journalist, who had exposed corruption at the highest levels within the Maltese government, died when an explosive device planted under the driver’s seat of her rental car was detonated on 16 October 2017.

The assassination and subsequent accusations of a cover-up have provoked international condemnation, and pitched Malta into its biggest political and constitutional crisis since the former British colony became an independent country in 1964.

Fenech was apprehended at 6.20am on 20 November last week by armed forces while sailing away from Malta aboard his luxury yacht.

Before his arraignment, Fenech had attempted to implicate the Maltese prime minister’s closest political ally, Keith Schembri, as a co-conspirator. Schembri resigned Monday as chief of staff to the prime minister, Joseph Muscat, and was held in police custody for questioning before being released Thursday. He denies all allegations against him.

Daphne Caruana Galizia was killed in a car bomb explosion in 2017. Photograph: AFP via Getty Images

The journalist’s three sons, her sisters, and her husband Peter Caruana Galizia, were present when Fenech was brought to the court house in Valletta, the capital of Malta, at 8pm on Saturday evening.

Three men are already awaiting trial for planting the explosive device, but the family have been waiting for two years for those who ordered the killing to be identified and charged.

The penalty for complicity to murder in Malta is a life sentence.

The indictment states Fenech “promoted, constituted, organised or financed a group with the intention of committing a crime”, and that he “actively participated in the criminal actions of this group, including but not limited to giving information or material means or recruiting new members when he knew that the purpose and general activity of the group had already been established”.

He is also charged with having “rendered himself complicit with third parties with an explosive substance which created an explosion which caused the death” of Caruana Galizia.

Following the arraignment, the journalist’s family called on Muscat to stand down: “We now expect the prime minister to leave office, and parliament, with immediate effect to allow a free and full investigation into his and Keith Schembri’s role in Daphne’s assassination.”

Muscat announced this week he intended to resign, but only once the investigation into the killing was “complete”. He pre-recorded a televised address setting out details of his departure, according to local media, which was expected to be broadcast shortly after the court hearing.