Bending the rules so that RCC stays on in PN executive

Richard Cachia Caruana, erstwhile ambassador of Malta to the European Union, has always denied being the power behind the Nationalist throne.

But such was the unbridled power he commanded that Prime Ministers accorded him the widest of berths: not just by being paid the civil service’s highest-ever salary at €148,000, but by being granted tax-free status and exemption from public service restrictions on his political role in the Nationalist Party.

Correspondence obtained by MaltaToday and being published in this issue now shows how, in 2005, Cachia Caruana was allowed to stay on as an executive committee member of the Nationalist Party, even though public service rules for ambassadors restricted him from political activity.

Richard Cachia informs Godwin Grima how he had answered to MaltaToday, then requests that he is exempted from the PSMC ban on public officials retaining political roles

Godwin Grima informs the Prime Minister of RCC's wishes

The correspondence, instigated by questions posed by MaltaToday, after this newspaper flagged a breach of public service rules, shows how Lawrence Gonzi signed an exemption so that Cachia Caruana could go on working in the PN’s strategy group.

The letters show specifically that Cachia Caruana first replied to MaltaToday saying he was “not a member of the public service”; then sought to have his contract exempted from the public service restrictions; and finally obtained the exemption in November 2005, together with a tax-free status on his benefits.

In February 2005, MaltaToday put it to Cachia Caruana – then permanent representative to the EU after having served for some 20 years at Eddie Fenech Adami’s side – that as ambassador receiving a Scale 1 salary, he was debarred by Public Service rules from “holding office in party political organisations” and was “required to maintain a reserve in political matters and abstain from any public manifestation of their views”.

The Prime Minister approves of tax-exempt status on RCC's salary as permanent representative

He replied on the very same day, 13 February, declaring that he was “not, nor have I ever been, a member of the Public Service…  I serve for only as long as the government of the day wishes to retain my services.”

The next day, Cachia Caruana wrote to principal permanent secretary Godwin Grima, head of the civil service. In the letter Cachia Caruana explains how, as personal assistant to the prime minister, he had enjoyed Fenech Adami’s confidence to stand as a member of the executive committee of the Nationalist Party since 1999: as head of the PM’s secretariat, he was, after all, a politically appointed member of staff, not employed as a civil servant.

But upon becoming an ambassador in 2005 – the Prime Minister now was Lawrence Gonzi – his new appointment meant being subject to Public Service rules.

“It was certainly not envisaged that this appointment would preclude me from continuing to form part of this (PN executive) committee,” Cachia Caruana argued in his letter to Grima.

He also argues that the same public management code allows public officers to “ensure (that) their participation in political activities does not bring them into conflict with their primary duty to serve the government.”

“It is clear that this concern does not apply to the undersigned” – he continues – “since I am not, and have never been, a member of the Public Service and only serve for as long as the government of the day wishes to retain my services.

“In the light of the above I would appreciate your written confirmation that, in continuance from my previous contract as Head of the Prime Minister’s Secretariat in terms of which my participation in the Nationalist Party’s Executive Committee was approved at all times by the Prime Minister, my contract as Permanent Representative of Malta to the EU similarly provides for such participation.”

In September 2005, Godwin Grima obliged with a letter to Prime Minister Lawrence Gonzi, repeating Cachia Caruana’s arguments.

“I have assessed this matter within the framework of the government’s policy on the participation of public officers in political activities and have concluded that there is no conflict of interest between Mr Cachia Caruana’s membership of the PN executive committee and his role as permanent representative,” Grima decided.

According to Grima, in his note to PM Gonzi, Cachia Caruana’s participation in the PN – which put him at the heart of the Nationalist Party’s core strategy group – did not conflict with his government service and it maintained “ministerial and public confidence in the impartiality of the advice given”.

Grima however concedes that the public service management code had not been updated to “clarify any provisions that may give rise to difficulties of interpretation” – a situation he was keen to overlook given Cachia Caruana’s urgent wishes.

“This is not to say that there is any doubt as to Mr Cachia Caruana’s case… I propose a side-letter be added to Mr Cachia Caruana’s contract as Permanent Representative confirming that the government’s restrictions on the participation of public officers in political activities do not apply to him.”

Top salary, tax free benefits

The correspondence with Godwin Grima also shows that the head of the civil service had obtained clarification from the Commissioner for Inland Revenue so that Richard Cachia Caruana’s benefits would be exempt from income tax, and that the ambassador be given “an additional side-letter to [his] agreement”.

Cachia Caruana earned an annual salary of some €148,000 that included emoluments to top up his Scale 1 civil service salary.

Despite bending backwards to free him from the public service rules that stood in the way of his political role in the PN, Cachia Caruana still got a civil service Scale 1 salary of over €42,000 a year, apart from an additional €100,883 in global emoluments that globally took his earnings close to €150,000 a year.

Cachia Caruana was additionally paid another €96,000 to rent his duplex apartment over the artificial lakes in the wealthy Ixelles district in Brussels, as well as another €75,000 for the payment of Cachia Caruana housekeeping, a personal driver, and a police escort.

Cachia Caruana was, undeniably, Malta’s most powerful ambassador, serving as the country’s voice inside the EU – his salary was not tagged to the customary Scale 3 ‘ambassador’s salary’ but to the top rung.

He was granted a 10% top-up on his civil service salary “as a recognition of him being one of the most experienced individuals in the service of government, having continuously served in the highest of roles even before 1996,” foreign minister Tonio Borg had said in 2012, when Cachia Caruana fell from grace after Gonzi lost a vote of confidence in his EU ambassador.

Cachia Caruana’s salary details only emerged after MPs forced his resignation in a motion of censure that was passed by the vote of government MP Jeffrey Pullicino Orlando.

Cachia Caruana had been previously grilled in the foreign affairs committee on his role in reactivating Malta’s participation in Nato’s Partnership for Peace. Wikileaks cables showed that Cachia Caruana was the prime mover in convincing Nato to reactivate Malta’s membership in the PfP so that the Nationalist government would not need to secure a vote in parliament, which would have surely been opposed by the Labour Party.

Two weights, two measures

It was a different matter in the case of a different person – in 2008, Alternattiva Demokratika’s secretary-general, Victor Galea, was told he could not continue exercising his teaching profession because teachers in public employment were precluded from any political post.

To justify Galea’s effective dismissal from the civil service, the OPM cited the Public Service Management Code, which bans anyone from scale 1 to scale 13 positions from any sort of political involvement. The rules were revised after the Galea case.

Galea claimed he had been “singled out for the implementation of these provisions of the Public Service Code”, insisting that “various other public officers have been permitted to hold office within the party structures of the Malta Labour Party and the Nationalist Party”.