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Matthew Vella
The European Commission is to investigate whether a contract award for the provision of interception equipment to the Maltese Security Service (MSS) infringed European procurement rules.
In reply to a question by MEP Joseph Muscat, who followed up MaltaToday revelations on the contract award to Israeli spy-tech firm Verint, Brussels said it would investigate the procurement procedure further, to establish whether “there is an infringement of Community Law that warrants the opening of an infringement procedure against Malta.”
Italian firm RCS, which claims it presented the cheapest offer, has sued the Malta Communications Authority for refusing it an appeal on its decision to award Verint Systems the contract back in December 2005.
The MCA, which led the tender procedures, has claimed the contract does not fall under normal procurement rules because it concerns equipment for the Security Service, which enjoys a special dispensation.
MSS is the Malta Police Force’s special intelligence agency, previously run by the Commissioner but now in the hands of former superintendent Godfrey Scicluna. Its responsibilities include surveillance for criminal investigation and anti-terrorism purposes, among others.
But RCS claims that bidders were never informed of a “dispensation” exempting the contract from procurement laws. They were informed by the MCA that its offer had been rejected, and Verint awarded the contract, on 29 December 2005.
In a meeting days later on 3 January 2006, MCA representatives told RCS that its offer had been the cheapest and was also compliant and sound, but that Verint’s offer was “holistically superior”.
But two days later, the MCA signed a memorandum of understanding with the Security Services, passing on “responsibility” for the contract to the MSS.
MEP Joseph Muscat told the Commission the contract award breached EU procurement rules for lack of transparency and failure to treat economic operators equally, as well as failure to provide justification for the refusal, and to provide an appeal.
Muscat said the breaches were compounded by the MCA’s justification that the procurement had been made in the interest of public security, and had a secret procedure to which the general EC procurement rules did not apply.
“This declaration compounded the breach in that it was made after meetings with bidders which were held in order to find a solution to the above shortcomings... after putting forward this justification, the contracting authority refused to provide bidders with any form of remedy and has continued implementing the procurement award with third parties.”
Charlie McCreevy, commissioner for the internal market, said the Commission understands the contract was awarded following a secret procedure by way of exception to the EU procurement rules, which allow a derogation on public contracts declared to be secret.
“The Commission notes that the information provided does not enable it to verify whether the conditions necessary for the application of the above derogation are met in the case at hand. The Commission will investigate the matter further, in order to establish whether, in this particular case, there is an infringement of Community Law that warrants the opening of an infringement procedure against Malta.”
The secret contract
The main point of divergence on the procurement of the Security Service’s eavesdropping technology is whether the contract had a special dispensation from normal procurement rules.
The MCA claims that, although it had been leading the tender process on the MSS’s behalf, the contract still fell under the auspices of the Security Service.
But RCS claim that Verint was the preferred bidder because both the Security Service and Go Mobile already operated Verint’s legal interception system, while Go Mobile had also been recently sold an upgrade from Verint.
RCS sales director Crovato stated in a court affidavit that since the legal interception system will be funded by network operators such as Go Mobile and other telephony and internet providers, “therefore what would have happened had the tender been awarded to RCS rather than Verint? Go Mobile would have acquired a solution that was not compatible and would have caused a problem in creating the fund necessary to pay the tender issued by MCA.”
Crovato argued that since the new interception system would be a single, unified system covering all operators, “I do not believe that the ‘upgrade’ sold to Go Mobile was to be simply dismissed once the tender was awarded, but was to be ‘reused by Verint’… By reusing an upgrade, Verint was able to, de facto, change the scope of the supply for the tender.”
Among the list of witnesses that RCS’s lawyers have asked to testify over MCA’s tender process are the authority’s lawyer David Gonzi, Joe Demajo from the Demajo Group, who are Verint’s agents, and Melanie Gonzi Miceli Demajo, wife to David Gonzi, to testify if she had ever offered consultancy services to Verint, or whether she represented Verint in discussions with MCA.
Dr Gonzi is Prime Minister Lawrence Gonzi’s son, while Mrs Gonzi Miceli Demajo is the daughter of Norbert Demajo, one of the directors of Verint’s local agents, M Demajo Group of Companies.
mvella@mediatoday.com.mt |
