The director of the Malta Freeport’s investment in Brindisi Terminal was asked for a €2.6 million bribe for the concession to operate the terminal, a Brindisi court was told this week.
The investigation has now raised questions about the debatable decision by the Maltese government to pump more money into a bankrupt sea terminal.
Dubbed the “Brindisi bribesville” (Tangentopoli Brindisina), Italian magistrates in the Apulia town have revealed how the director of the Brindisi Terminal Italia (BTI) – partly owned by the Malta Freeport when it was still a government company – was asked for 5,000 million Italian lire (€2.6 million) in bribes for the concession to operate the terminal, some time before 2004.
The investigation has revealed how former Brindisi mayor, Giovanni Antonino, who pleaded guilty to charges of fraud, extortion and corruption, had demanded a bribe from BTI director Mario Salucci.
Earlier this week, local businessman Luca Scagliarini – accused of being the financial mind behind Antonino’s illicit activities – revealed how Antonino financed politicians’ campaigns from both the left and right of the spectrum.
“Antonino had a lot of power. Between us, we had a rapport of friendship most certainly. But initially I was surprised about this situation,” Scagliarini said of the bribes. “Then I understood it was normal that things were like that.”
In his court testimony, Antonino claimed that Brindisi’s centre-right administration had set up a proper ‘business committee’ to manage the money coming from bribes.
It was here that Antonino claimed the committee had demanded the Lit 5,000m bribe from Salucci to set up the container terminal to be run by Malta Freeport in Brindisi.
Antonino said it was Marco Pezzuto - at the time Forza Italia president of the local council - who demanded this sum, allegedly in a meeting they held with Salucci in a hotel room in Malta.
It was agreed that Lit. 1,000 million would go to him, another 1,000m to the former president of the province Nicola Frugis, and the other 3,000m to the three parties in the local administration: Alleanza Nazionale, Forza Italia and UDC (Christian-Democrat Union), whose representatives were Marcello Rollo, Marco Pezzuto and Nicola Di Donna respectively.
Pressed by the court, Antonino admitted this was a real and proper bribe, adding that when Pezzuto made that request, both Di Donna and Rollo were present.
The Brindisi misadventure
Brindisi Terminal Italia was a joint operation between the Malta Freeport, the Brindisi local council and Italian investment firm Papalini. The deal first came about in 1998 under a Labour government, then materialising in 2000 under a Nationalist administration, for the Freeport to buy out its foreign competition.
In 2004, Labour leader Alfred Sant questioned why, after BTI had incurred €15.6 million in operational losses, the Maltese government was investing yet another €10 million (Lm4.23m) in the terminal.
While Sant accused government of spreading misinformation, Investments Minister Austin Gatt said the €10m was a loan facility from Bank of Valletta, terming it “refinancing”, so that BTI could finance other Italian loans.
BTI’s losses came at the hands of Mario Salucci, a Papalini representative, who was entrusted with setting up the terminal. Instead, Salucci and Brindisi mayor Giovanni Antonini were funelling off funds and delaying infrastructural work. Salucci is suspected of redirecting €6 million to fund Papalini and the Brindisi football club, of which he was president.
Antonini and others from the local council were arrested on charges of corruption, fraud and extortion, after threatening Salucci with withholding the concession for BTI to operate the terminal unless he was given a satisfactory payment – read bribe.
When Papalini was declared bankrupt in June 2003, Malta Freeport was faced with the whole repayment of €15 millions in loans from two Italian banks, despite being until then a minority shareholder in BTI with 40% of the shares.
The Malta Freeport had two options. It could have declared bankruptcy for BTI and face a €26.7 million bill, namely: paying back the Monte dei Paschi di Siena and Meliorbanca loans (over €16 million with interest), taxes and bank exposure (€3.2 million), termination benefits for employees (€1.3 million), and creditors (€6 million).
Instead, it chose to keep the operation going to “handle the exposures at a more manageable rate.”
So in February 2004, Malta Freeport bought Papalini’s shares for a tenth of their value – €350,000 instead of €3.6 million – becoming the owner of just over 99% of BTI.
Sant’s hunch was that the government bought 99% of BTI’s shares instead of declaring it bankrupt at a “delicate time” when it was conducting negotiations to privatise the Malta Freeport, when the unexpected blunder cropped up.
Malta Freeport also made redundant a large number of workers at BTI: Salucci had employed 98 workers without the consent of the board of directors, most of the recruitment done on the eve of the mayoral elections in Brindisi according to the Investments Ministry, despite the lack of work at the terminal. The original business plan provided for 40 workers. In April 2004, Malta Freeport reduced the number to 17.
Finally, the government’s investment arm Mimcol stepped in, getting Bank of Valletta to issue a €10m loan to minimise the damage from bank loans, unpaid taxes, creditors and termination benefits, instead of paying €26.7 million at one go. That was the government’s story – Alfred Sant claimed Brindisi was so bankrupt “that no bank would oblige” and instead the government threw good money after bad.