Key witness in oil scandal never interrogated by police

For eight years, Cathy Farrugia, the wife of former oil trader George Farrugia, was responsible for drawing up and issuing ‘illicit’ invoices for her husband’s secret company Aikon Ltd.

The company, managed by fiduciary firm Intershore, served as Farrugia’s vehicle to allegedly siphon off €6.8 million in illicit commissions on the sale of fuel oil to Enemalta, and then deposit the cash in separate local and foreign accounts.

While her husband today enjoys a presidential pardon issued just days after MaltaToday broke the story of his role in the Enemalta fuel bribery network back in January 2013, Cathy Farrugia has never been interrogated or questioned by Michael Cassar, then the chief investigating officer at the time, despite her pivotal role in Aikon Ltd.

Cathy Farrugia was then responsible for issuing bona fide invoices during this period for Power Plan Limited, the family firm owned by the John’s Group for the supply of fuel to the oil bunkering industry.

But she also played a role in issuing secret invoices for her husband’s other company, Aikon Ltd.

The bulk of the illicit commissions for the sale of fuel oil to Enemalta were made from 2005 until 2010, when Alex Tranter was responsible at the energy corporation as the politically appointed chairman of the energy corporation.

Behind the backs of his brothers in the John’s Group, George Farrugia – using his company Aikon – brokered deals for the supply of oil to Enemalta from oil giant Trafigura.

What was unknown to the press at the time that Lawrence Gonzi advised on the issuing of a presidential pardon to George Farrugia, was that Cathy Farrugia had been the prime minister’s secretary for 10 years when Gonzi was a legal advisor at the Mizzi organisation.

Cathy Farrugia’s secretive invoicing was discovered by her husband’s brothers – the rest of the John’s Group shareholders who later kicked out George Farrugia –  accidentally, because she had used the same computer and word processor from the company’s offices to issue Aikon’s invoicing.

She even negligently corresponded with oil companies Trafigura and Totsa and referred to the two batches of invoicing – one for Power Plan and the other for Aikon – in the same emails, and signed as Cathy Farrugia for Power Plan.

Aikon was set up in 2002 and operated until 2010 without the Farrugia brothers’ knowledge.

MaltaToday has documents in hand showing that Cathy Farrugia was responsible for invoices issued behind the back of George Farrugia’s brothers.

Michael Cassar, now appointed Commissioner of Police following the resignation of acting commissioner Ray Zammit, confirmed on Friday that George Farrugia’s brothers would be prosecuted on charges related to the oil scandal – allegedly for having known of the bribery network employed by George Farrugia.

However, it was a court action they brought against George Farrugia that produced a cache of incriminating emails and invoices that showed the extent of Farrugia’s operations in Aikon and his Trafigura dealings.

The Farrugia brothers were arrested in March 2013, shortly before the general election, but never arraigned. Well known for their Nationalist sympathies, the John’s Group firm had started legal proceedings against their brother George over suspicions that he had skimmed off over €6 million in profits for Power Plan, into his own personal company Aikon.

The charges were issued by Inspector Jonathan Ferris in 2013 at a time when the home affairs minister was Manuel Mallia; but they were ‘reopened’ in the last week while the police was under pressure over the Sheehan shooting inquiry.

Former police inspector Angelo Gafà also recently told parliament’s Public Accounts Committee that he had intended prosecuting the brothers before he was reassigned to the Security Service in June 2013.

He said he was waiting for some bank documents before pushing ahead but confirmed that the decision had been taken.

Opposition leader Simon Busuttil has stated in parliament that the police had not prosecuted the Farrugia brothers because Manuel Mallia had been the firm’s legal advisor.

But it was the Farrugia brothers who had in fact alerted Prime Minister Lawrence Gonzi to the case some time in 2011, by giving a cache of Aikon invoices to the prime minister’s Security Service detail.

Gonzi reportedly told the MSS officer to report the allegation to the Commissioner of Police, without taking any further ownership of the matter.

The security officer relayed the information to his superior, Malta Security Services head Godfrey Scicluna, who on his part communicated the matter to a high-level official in investments minister Austin Gatt’s secretariat.

An investigation into the irregularities was never held by the MSS or the Police: instead, the cache of papers was decimated – ostensibly shredded – and instead passed on to the finance ministry, which in turn passed on the matter to the Tax Compliance Unit to investigate.

This week in parliament, education minister Evarist Bartolo told the House that Gonzi’s bodyguard took the invoices and emails that Farrugia had sent to the MSS head in May 2011. He said: “This file contained a cache of documents sent to the TCU and a series of emails; contact was made with a minister’s official and the emails were shredded. This was how the Security Service was used to destroy information.

“The initials of the two persons involved in this matter are R.S. and B.P.,” Bartolo alleged.

The Finance Ministry launched an investigation in 2011 after receiving a tip-off that George Farrugia was committing serious tax fraud.

The file with documented evidence was passed on to the Finance Ministry indicating rampant tax fraud at Aikon. The file was forwarded for investigation to the Tax Compliance Unit on August 25, 2011.