PAC live blog | Saviour Balzan testifies: George Farrugia should have been charged in court

20:28 PAC has been suspended. Matthew Vella

20:22 Going back to 2013 and the €5 million out-of-court settlement with Shell now... Matthew Vella

20:19 Balzan: “The person who had a say on the stocks of fuels, was Frank Sammut. MaltaToday simply framed the story around Sammut when it broke the story, but it was already known before in certain circles that Frank Sammut could not be trusted.” Matthew Vella

20:17 Balzan now says that Frank Sammut, prior to 2003 (as director of MOBC) was in fact in charge of fuel stocks. Matthew Vella

20:17 Bonnici says that since Enemalta stocked aviation fuel at subsidiary MOBC, Shell felt that they faced unfair competition on the supply of aviation fuel. Matthew Vella

20:16 Balzan says that he met members of the Shell group in Malta, who had complained at the state of affairs on fuel procurement. He now confirms statements by justice minister Owen Bonnici over the 2004 claim Shell made over aviation fuel. Matthew Vella

20:12 Balzan says that the police showed great zeal in interviewing certain people. “Someone like police inspector Angelo Gafà broke people like Ray Ferris, who went through martyrdom because a liar like George Farrugia fabricated lies about him. And today George Farrugia is still trading as if nothing has happened, travelling as he sees fit while so many other people accused by Farrugia have their assets frozen. And all this because one person, Lawrence Gonzi, saw fit to believe only George Farrugia. And to add insult to injury, the people who are whistleblowers, the Farrugia brothers, were charged.” Matthew Vella

20:08 Balzan now recounts that a Transport Malta officer, later CFO, Ray Stafrace, was responsible for setting up George Farrugia’s private company Aikon Ltd, through which Farrugia siphoned off profits from family business Powerplan. He says that Stafrace even registered Aikon at his home address, and that he assisted in setting up a company for Trafigura’s Naeem Ahmed, a contact of George Farrugia throughout his oil deals. Matthew Vella

20:04 Balzan tells Jason Azzopardi in reply to his question that former minister Austin Gatt was aware of all decisions taken at Enemalta; “I did not say he was aware of the corruption… but I know that he was on ball and that it was in his character not to let anything pass him by.” Matthew Vella

19:54 BFA goes on to say that the €5m settlement had nothing to do with the George Farrugia affair. Matthew Vella

19:53 Fenech Adami says Shell was demanding €30 million in a litigation brought to the European Court of Justice. Matthew Vella

19:51 Nationalist MP Beppe Fenech Adami points out that the compensation was not over fuel procurement to Enemalta, but over the supply of aviation fuel. Matthew Vella

19:51 “The timing was diabolical,” Balzan says. “I was depicted as some demon for breaking the story, while the Cabinet was deliberating on an out-of-court settlement with Shell.” Matthew Vella

19:49 Home Affairs minister Carmelo Abela says that at the time Busuttil was PN deputy leader, positing that this settlement was made between the Nationalist cabinet and a deputy leader of its own party. Matthew Vella

19:48 Balzan says that in January 2013, the Nationalist Cabinet of ministers at the time was contemplating a tax-free €5 million settlement to the Shell group in Malta after the Malta Resources Authority concluded that there had been an imbalance in the way Shell had not won any fuel contract in Malta. “If at that point in time, the administration knew that something was remiss in fuel procurement, why are we amazed that we are in this situation. At that time, the firm in question was being legally represented by Simon Busuttil. So what I’m saying is that the Cabinet accepted the MRA’s reasoning that Shell did not have a fair deal… and they decided that a €5 million compensation was forthcoming. I think that certainly enough there was a feeling in the government that something was wrong. And this out-of-court-settlement was made so as not to go to court – and at the time had Simon Busuttil as legal consultant.” Matthew Vella

19:44 Balzan says that George Farrugia was siphoning profits from the business made through Powerplan, the family business, and into his own personal company Aikon Limited, which cash ended up in George Farrugia’s private Swiss bank account. Matthew Vella

19:39 Balzan contends that Austin Gatt’s precision in his work, diarizing every single meeting, should leave no doubt as to which meetings were held with the minister. “Claudio Grech was the aide who would meet the corporations’ chairpersons. He was often described as being arrogant with them, because he was the one who controlled this aspect of the ministry.” Matthew Vella

19:36 Balzan says that he is aware of documentation, that could be accessible in the future, that Austin Gatt and his ministry – between 2003 and 2005 – were aware of every single decision at Enemalta; even the choice of senior personnel. That’s why I’m not surprised that there were meetings, informal or formal, between these politicians and people like Farrugia. Matthew Vella

19:33 Balzan: “I have my doubts over Farrugia’s credibility. What we wrote about were facts, not commentary. There was enough time between the first story we reported and the rest, for the people involved with George Farrugia to have a chat about what was happening.” Matthew Vella

19:32 Balzan: “If I had to base myself on what Farrugia said, then it would be a matter of whether I believe George Farrugia or not. But what I know so far is that there is no proof that money was indeed paid to certain people.” Matthew Vella

19:30 Bonnici asks Balzan over claims by George Farrugia that he would bribe Tancred Tabone for nothing, because he later found out that he was winning the contacts irrespectively of the bribes. Matthew Vella

19:29 Balzan says he is unsure of Tabone’s familial relation to Austin Gatt. “He is a successful businessman who was close to the Nationalist government.” Matthew Vella

19:24 “George Farrugia did not tell his brothers of his contacts with TOTSA or Trafigura, he would not tell them of the business that Powerplan was winning, of the scale of money he made.” Matthew Vella

19:20 “When Manuel Mallia was representing the Farrugia brothers at the time of their legal claim, he was still a Nationalist,” Balzan points out at being told that they were represented by a Labour candidate. Matthew Vella

19:18 Saviour Balzan is asked by Nationalist MP Beppe Fenech Adami over allegations that the Farrugia brothers wanted their cut from illegal earnings that George Farrugia in the oil business. Matthew Vella

19:12 Justice minister Owen Bonnici asks Saviour Balzan over reports in MaltaToday pertaining to meetings between former aide to Austin Gatt, Claudio Grech, and George Farrugia. Matthew Vella

19:09 “The person who was the real mastermind behind this whole affair, who has still retained his oil trading business, is still out there with his presidential pardon” – Balzan said, referring to George Farrugia. Matthew Vella

19:09 Balzan also adds that ECU police inspector Angelo Gafà spoke to the Farrugia brothers from the John’s Group to supply the police with information on George Farrugia; but yet, after Farrugia was given a presidential pardon, the police instead charged the Farrugia brothers. The charge sheet was prepped on 9 March 2013 by former police chief John Rizzo, and then only issued on the eve of the resignation of former acting police chief Ray Zammit. Matthew Vella

19:06 Balzan says that former Enemalta chairman Tancred Tabone had become a scapegoat in the entire affair, saying that there was so far no physical evidence that kickbacks had been paid – he says that from letters rogatory between the Maltese and Swiss police there has been no evidence of money being moved to the accounts of the people accused; “in my opinion it had to be George Farrugia who should be tried in court.” Matthew Vella

19:04 Balzan also says that he had doubts over why Farrugia was given a presidential pardon, and said that it was clear that there was a certain familiarity between the Gonzi family and the Farrugia family. Cathy Farrugia was in fact a secretary of Lawrence Gonzi’s when he was a Mizzi Group chairman. Matthew Vella

19:02 Balzan says that Farrugia, who has a presidential pardon on condition of saying the truth, retains that pardon despite one of the people he accused – Ray Ferris – had been acquitted. “Ferris was destroyed, emotionally and physically, by Farrugia’s allegations.” Matthew Vella

19:00 Balzan says that the George Farrugia offered the John’s Group property Valentine’s Hall for the elections, as well as BMWs, or garaging their personal cars. Matthew Vella

18:58 Balzan says that Farrugia also devised a regular stream of extravagant gifts to Enemalta officials during the time in which TOTSA and Trafigura took most of their contracts from Enemalta, mainly under the chairmanship of Alex Tranter; and that Farrugia spoke in his emails of having had regular meetings or conversations with ministry officials from Austin Gatt’s ministry. Matthew Vella

18:53 “George Farrugia was intrinsically dishonest. Trafigura did not know he was representing TOTSA, and TOTSA did not know he represented Trafigura. It was like representing Pepsi and Coca-Cola at the same time.” Matthew Vella

18:47 “The irony was that these people – who were fervent Nationalists – when we broke the story on 20 January, at the time the story was based on Frank Sammut [former MOBC director who took Trafigura kickback through George Farrugia]. The invoice was specifically describing the sale of fuel to Enemalta, and explaining why the ‘commission’ was being paid.” Matthew Vella

18:45 “I’m informed that Pace showed the documents to then minister Austin Gatt. What happened next was what I only could describe the malaise of the Gonzi years… the whistleblower became the hunted. Instead of even pursuing money laundering charges against George Farrugia, they ran a tax compliance investigation against the Farrguia brothers.” Matthew Vella

18:43 Balzan says that in a bid to avoid court action, the Farrugia brothers tried to put pressure on George Farrugia. One of the brothers went to Lawrence Gonzi’s security detail with the information; Gonzi was told that the Farrugia brothers wanted to pass on the information to him but the prime minister told the security detail to pass the information to his superior – head of the Security Service Godwin Scicluna – who passed on the files and documents [later published by the newspapers] to Bernard Pace of the Investments Ministry. Matthew Vella

18:41 “The brothers decided to act against George Farrugia, accusing him of operating a fiduciary company used to steal commissions from Powerplan, and transferring money to a Swiss bank. A week after this letter was sent to George Farrugia, in a meeting held between all the brothers, George Farrugia claimed that ‘if the letter is publicized, the government will fall’.” Matthew Vella

18:40 “George Farrugia’s wife Cathy had mislaid a letter which was found out by the other brothers, and they found out in the other emails that oil profits were being siphoned off to Aikon.” Matthew Vella

18:38 Balzan said that the Farrugia brothers of the John’s Group – whose subsidiary Powerplan was run by George Farrugia to act as a broker for oil companies – had filed a court case in 2010 against George Farrugia, having found out that he was operating under another company, namely Aikon Limited. Matthew Vella

18:35 Balzan says George Farrugia has been economical with the truth in his PAC hearing, having said nothing of the role of the Malta Resources Authority and the official Godwin Sant who would provide him with confidential information; for example on particular tenders related to Transport Malta. “It’s no coincidence that at TM, there was the same chief financial authority who acted as accountant for Farrugia’s personal company Aikon, which he used to hide away oil profits from family company Powerplan.” Matthew Vella

18:33 “I am sure there was the involvement of other technical people at Enemalta, considering the way the Excel sheets were being passed on to Farrugia detailed the stocks of fuel on the island.” Matthew Vella

18:32 “The person that was passing this information on to George Farrugia was a person who would receive minor gifts from Farrugia, freebies. The person, Emanuel Mizzi, is being investigated by police. What I know is that in his PAC testimony, Farrugia mentioned none of this information he would receive secretly from Mizzi.” Matthew Vella

18:30 “In the context of the way fuel procurement was being carried out… George Farrugia was being told of the levels of stocks of fuel of other competitors. These stocks were either outside the port, or stored in the Enemalta tanks. These gave tenderers their advantage.” Matthew Vella

18:29 Balzan says that of the three criteria – specs, price and stocks – it was in stocks of fuel oil that one could find a way of spiking the process’s fairness. MaltaToday had published an email in which George Farrugia was being informed by Enemalta middle-management on the stocks of oil. Matthew Vella

18:28 “The importance of understanding fuel procurement, which is difficult to write about in the media, was to understand where throughout the process of procurement, was there a loophole to favour any potential bidder. How could a company be favoured over others with this water-tight process?” Matthew Vella

18:27 Saviour Balzan says that all the results of the FPC decisions would be communicated to the investments ministry. Matthew Vella

18:25 “At this point, Pippo Pandolfino as CFO would read out the offers and work out the maths for the offers. They would rank the two most favourable offers, and in a telephone call before all FPC members, the chairman would ask the tenderer whether this was their best offer – they would concede a 20 minute chance to get a better price, and the FPC would chose the best tenderer thereafter. All members would then sign the paper where the CFO’s calculations had been jotted down.” Matthew Vella

18:23 “The FPC would meet at a precise hour, and the tender would be issued and publicized; tenderers had to be provide oil specifications, price of oil and how much stock of oil they could provide. They could only provide these specs at a specific time during which the FPC meet, between 12pm and 2pm. The board secretary and another secretary, receiving the offers, would come in to the FPC boardroom as the offers come in.” Matthew Vella

18:22 A fuel procurement committee was appointed for a short period in 2008, Balzan says. The committee included the Enemalta chairman – Tancred Tabone – as well as Pippo Pandolfino (CFO), Ray Attard, Bobby Staines, and others… Matthew Vella

18:19 Balzan is asked to recount his knowledge of fuel procurement. Between 1984-2013, the Maltese government was dependent on Libyan oil; faxes would be sent from the CFO. He says that at times, the Central Bank would pay Maltese companies like the Corinthia Group instead for monies they were owed by the Libyan government, in lieu of the oil payment. Matthew Vella

18:15 Balzan says he was not conversant with the fuel procurement economy at the time he started reporting on the Enemalta oil scandal. Over the past three years, he has learnt more of the procedure related to the procurement of fuel oil. Matthew Vella

18:13 Balzan says he personally curated the first reports related to the Enemalta oil scandal, before other journalists started reporting on the case. Matthew Vella

18:11 Saviour Balzan is in the parliamentary committee now testifying on the 2013 reports published by MaltaToday. Matthew Vella

MaltaToday managing editor Saviour Balzan will appear in the Public Accounts Committee today Thursday evening, to testify in the hearings on the NAO's inquiry into Enemalta's fuel procurement policy, at 6pm.

The NAO audit was launched in the wake of MaltaToday's revelations in February 2013 when the newspaper broke the story of kickbacks paid by oil giant Trafigura to a former Enemalta official, Frank Sammut.

The story broke wide open the system of kickbacks devised by oil lubricants importer George Farrugia, formerly of the John's Group, who was granted a Presidential pardon by the Gonzi administration. Eight Enemalta officials were charged in court with bribery.

Saviour Balzan has in the past stated that an incriminating cache of emails was passed on to Lawrence Gonzi by his Security Service detail in 2011, who insisted that the MSS investigate the allegations. But instead of investigating the allegations of fuel profits being siphoned from the John's Group subsidiary Powerplan to Farrugia's secret trading company Aikon, the emails were passed on to the tax compliance unit.