Updated | Oil procurement scandal - Farrugia brothers to be indicted

Magistrate Miriam Hayman has ruled that there is no doubt that sufficient prima facie evidence exists against the Farrugia brothers for them to be placed under a bill of indictment, after pardoned oil trader George Farrugia confirmed in court that they were aware that he was offering kickbacks and bribes in return for being awarded oil contracts.

Antonio Farrugia, 68, Gaetano Farrugia, 65, Raymond Farrugia, 62, Emmanuel Farrugia, 59, and Salvatore Farrugia ,60, yesterday pleaded not guilty to charges relating to having had knowledge of bribery of state officials. It is alleged are that they had been aware that their brother George had been bribing state officials to secure oil contracts from Enemalta for Powerplan Ltd, the family business he once managed.

Aside from a possible prison sentence for the bribery charge, the brothers may be fined up to €500,000 for the breaching of financial regulations.

Today George Farrugia recounted how, when Malta had started the process of joining the EU, he started looking at options to expand his business after the fuel market was liberalised.After negotiations with Total on oil storage were held, Farrugia had approached Alfred Mallia, head of the Enemalta Petroleum Division. Mallia requested they split the profits on several occasions, said Farrugia.

Farrugia had discussed the matter with his brothers, who gave the green light for the profit sharing agreement to go ahead. "There was a board meeting and they were all informed about it. At the time it (the commission)was only 12c per ton per month on the storage. My duty was to find new clients to buy diesel from Total."

MOBC, a fuel bunkering company was one possible client. He approached Frank Sammut, the MOBC chairman, who at first refused to meet him. Farrugia persisted and eventually Sammut asked what was in it for him. Farrugia offered him half of the commission, equivalent to $0.50 per metric tonne and informed his brothers of the deal. Some contracts reached 5,000 tonnes of diesel per month.

Asked what form the payments would take, Farrugia said some of them were made in the form of a Korando car, which Sammut had wanted to buy for his son. 

At a later stage, he asked Sammut about storage of fuels for Trafigura but Sammut wanted to speak to the company representative directly.A meeting had been held in late 2003 with Tim Waters in Sammut's office. At one point Sammut asked Farrugia to leave the meeting “as he wanted to speak to Waters in private”.

Farrugia recalled that during the 1999 fuel strike during which Enemalta could not take delivery of fuel, Mallia had asked him whether Enemalta could purchase 20,000 tons of diesel held in the storage tanks at Has Saptan. In return for this Mallia had requested half the commission. Farrugia had informed some of his brothers, he said.

While Mallia was in hospital following a traffic accident in early 2000, he was visited by Farrugia, Mallia had instructed him to contact Tarcisio Mifsud, at the time head of finance at Enemalta. A meeting was arranged, during which Mifsud asked Farrugia to “hand him what he used to hand  Mallia”. After discussion with his brothers, it was agreed that Farrugia would keep 20 per cent of income related to oil trading. To do so, he had set up Aikon Limited and opened a bank account in Switzerland.

"I admit I was not transparent enough with my brothers but thanks to this arrangement my brothers were getting paid," he said.

“Tancred Tabone ended his Chairmanship in 2005 but claimed to still be in control and have influence, demanding fees up till 2006, but at one point I stopped giving him money.”

“Ray Ferris [Enemalta’s former Chief Projects Officer] had spoken to me, saying that he is on the Privatisation Board and could influence the decision and had requested three silver centerpieces. If we were to get the contract, he would want €40,000 in cash. I brought the silver items to his office and handed them over. They were worth, I think €4,600 .

Asked if there were cheques which he hadn’t personally signed he said yes. He would occasionally be abroad and on his return would find the account “cleaned out”. “Any two directors could sign, ” he explained. There was a time when Tony Debono was hired as a consultant for the restructuring of our companies.

“Ronnie Agius had told me that Tony Debono had sworn that he wanted to destroy me because I had not given him a sum of money.” Tony had threatened Siegfired Borg Cole, one of Farrugia’s lawyers, over the phone. “I heard this first hand as the phone was on speaker,” he said.

While he was abroad for the 2010 World Cup, Tony Debono and Twanny Farrugia’s son Chris had accessed his hard drive and leaked the contents to the media, he said. Magistrate Hayman asked him not to assume anything. “The court wants facts. How did you reach this conclusion?” He answered that when he returned they were the two people who spoke to him about it.

Magistrate Hayman asked him if he had any other kickbacks. “On the work I used to do for Enemalta, there was no more.” She requested a general figure of the amounts on kickbacks. “From Ikon, there were $500,000 to Tancred Tabone and Frank Sammut, Lm40,000 to Alfred Mallia and Tarcisio Mifsud – these came from PowerPlan before I started Aikon. Then there were the amounts that were received by MOBC and reissued, but I don’t remember the exact figures. 

Asked if his brothers had any involvement in Aikon, he said no. “I was supposed to keep 20% of the income from the company. If you see the amounts received from Aikon and payments in commissions and costs of finding new business, from that amount not even 5% was left, aside from my wages.”