Updated | PBS audit on John Bundy handed to Contracts director for further investigation

An audit report that has found a “clear breach of procurement rules” at the Public Broadcasting Services by its CEO John Bundy, has been forwarded to the director of contracts for further investigation.

The audit found a breach of both internal rules as well as the rules laid down in the Public Procurement Regulations.

Bundy was sacked by the PBS board of directors earlier this week, after the board had already passed a vote of no confidence in the CEO, who was appointed back in August 2016.

At the heart of the audit was an unprecedented €500,000 car leasing deal from Burmarrad Commercials that Bundy was said to have carried out without seeking the green light from the PBS board.

The director of contracts is now tasked to consider the 70-page audit’s findings, and see whether they should be forwarded to the National Audit Office or to the police.

Specifically, the audit report shows that only two weeks after he started in his role as CEO, Bundy, on 16 August, “intimated” with staff members about the procurement of a new car fleet for the television station.

Later, instead of buying the cars, he negotiated the lease agreement, and an original nine-car fleet was replaced by 14 cars. One of them was his own car, a Peugeot 508.

And while all cars had a Datatrak device to keep track of the vehicles, his car was the only one without the tracking device.

Bundy was asked by RSM to give his version of events, to which the CEO said that the PBS procurement manager had not informed him of the procurement rules by which he was bound.

A ministry official, Charmaine Portelli, denied suggestions that she had been consulted on any decision taken by Bundy. Bundy later amended his explanation, saying that PBS management had been informed of his decision.

Central to the audit was the revelation that Bundy had unilaterally secured a massive €500,000 leasing contract for motor vehicles carried out in breach of procurement rules.

Soft endorsement: with Joseph Muscat in the 2013 elections, where he compered a Q&A session

In minutes from a directors’ meeting seen by MaltaToday, the politically-appointed CEO was said to have ignored contract rules when PBS signed 14 different contracts for a total of €500,131 to lease cars for the unprecedented duration of eight years.

Bundy, a veteran television presenter hand-picked by the Labour administration without a public call, was said to have only once alerted the board of directors about the possibility of car leasing. But the contract itself was never green-lit by the board.

The only time the issue had, in fact, been raised at board level was back on 18 January, 2017, when Bundy referred to the PBS car fleet. “[He] noted that the cars were now old. He had sought advice on whether to buy new cars or go for leasing, and found that it was cheaper to go for leasing.”

Bundy was said to have used a basic procedure only employed for minor purchases, by obtaining three quotations from leasing suppliers. The person actually responsible for procurement, corporate services manager Edmund Tabone, was completely sidelined and left in the dark about the deal. In total, 14 different contracts were signed for a total value of €4,415 monthly, plus VAT: for the contract duration of eight years, the amount totals €500,131. The directors said that the leasing of cars for a period of eight years was “not considered as the norm”. But government procurement regulations for such an amount obliged PBS to issue a public tender.

Additionally, VAT can only be recovered on just that part of the fleet which comprises commercial vehicles. Indeed the amounts for each car – all Peugeots supplied by Burmarrad Commercials – vary from the cheapest being €230 (plus VAT), to the highest being €600 (plus VAT), which is the CEO’s car itself.

According to the minutes seen by MaltaToday, one of the cars was for the exclusive use of Natalino Fenech, the former PBS head of news, who in 2013 stepped down from his position after Labour’s election. Fenech is now a University of Malta lecturer, but still on PBS’s payroll with all perks and allowances.

The PBS board of directors said they were faced with legal threats from companies when they attempted to reverse Bundy’s “arbitrary decisions”.

“These decisions were presented to the board as a fait accompli, and the directors were faced with threats of legal action against them personally and the company,” they said in a letter to chairman Tonio Portughese, before the RSM audit had been carried out.

PBS’s board of directors later voted on a motion of no confidence against Bundy, delivering a unanimous verdict. In their letter to Portughese, the directors said Bundy “had, on several occasions, ignored the board of directors and taken decisions which required the approval of the board”.

They said Bundy’s attitude towards them showed a lack of respect. “Worse than that, it shows a lack of awareness of what the relationship should be between the CEO and the board of directors, that in terms of the law have enormous personal responsibility for everything that happens in the company.”

Two weeks into his new role as CEO, on 16 August, John Bundy “intimated” with staff members about the procurement of a new car fleet for the television station

The directors said they could no longer tolerate the situation and declared they had no faith in Bundy.

Last week just before his sacking, Bundy hit out at Portughese and the PBS board over the inquiry in a Facebook post where he dubbed the RSM inquiry as “vile”.

“An independent inquiry about which I get to know about in the newspapers, of which everybody but me knows about,” he said, although news of the inquiry had already been published three weeks earlier.

“Tonio Portughese and your clique, shame, shame, shame. You’ve been wanting to get rid of me… vile. The so-called PBS board met up in secret, carried out the role of judge, jury and prosecutor, and condemned me without calling in the accused, and then carried out an independent inquiry to see if I am guilty.”