Malta in the web of Mitsui

The newly established company BWSC Malta Ltd has been hailed in Tokyo as one of Mitsui Engineering & Shipbuilding Co Ltd’s (MES) success stories during the past financial year, when the company held its 107th Ordinary General Meeting of Shareholders on Friday, June 25, 2010 at 10.00am.

The meeting was held at Nihonbashi Kokaido 4th Floor, Nihonbashi Citizens Centre 31-1, Kakigaracho l-chome, Nihonbashi, Chuo-Ku in Tokyo.

The shareholders heard that although many countries are passing through a recession and business was down, Burmeisters & Wain Scandinavian Contractor (BWSC) that is owned by MESCO and extends engineering service for diesel engines worldwide, achieved their planned figures during last year. Even the company’s principal licensing partner to build diesel engines for power stations – MAN Diesel & Turbo SE did well.

So did the company’s major lender – Sumimoto Mitsui Banking Corporation (SMBC). Apart from being a major lender for MES, SMBC is also a principal lender for Enemalta.

On June 30, 2005, when BWSC’s interest for the Delimara contract had already been aroused, Enemalta signed a €210 million 10-year loan facility with SMBC, Banco Efisa and DEPFA Bank. Both SMBC and BWSC are owned by MES. Both SMBC and BWSC have KPMG as auditors.

KPMG are very well connected to the PN government and are among the consultants appointed by Minister Austin Gatt and Minister Tonio Fenech, whose ministerial responsibilities have included or still include Enemalta Corporation and the Department of Contracts. When Minister Gatt was responsible for Enemalta he commissioned KPMG to prepare a report to raise water and electricity tariffs for which KPMG was paid €123,450. KPMG states in its reports that “the proposed tariffs should enable Enemalta to reverse its historical loss making and achieve an acceptable rate of return on both its current and future capital employed, which would enable it to service its existing debt obligations and sustain an acceptable fixed asset replacement and upgrade policy.”

So the new tariffs proposed by KPMG, while putting a painful burden on Maltese families and businesses, help Enemalta pay off its loan to SMBC and finance BWSC’s new plant.

At the end of February 2008 BWSC sent its proposal to Enemalta on how its new plant at Delimara would be financed: 50% of the contract value by the Nordic Investment Bank and another 50% by the European Investment Bank. Six months before the General Contracts Committee endorsed Enemalta’s evaluation board decision to award the tender to BWSC, Enemalta and government signed a €150 million loan from the European Investment Bank (EIB) which had already been negotiated by BWSC before February 2008.

MES, the owner of both BWSC and SMBC is also “the senior licensee of MAN B&W Diesel A/S and a principal producer of MAN B&W diesel engines.” On 21 April 2008 MAN announced that “The Electricity Authority of Cyprus (EAC) has placed an order for a 50.4-MW low-speed, diesel plant with BWSC, the Danish contracting arm of MAN Diesel’s Japanese licensee, Mitsui Engineering and Shipbuilding Co. Ltd (MES).” Since 1990 BWSC has built 79 power plants worldwide, 53 of these plants are powered by MAN engines licensed by MES.

MAN together with BWSC submitted a bid for the Delimara Power Station extension. Both proposed a diesel engine combined cycle plant working on heavy fuel oil. Both benefitted from government’s decision to change local environmental laws, to abandon the necessary investment for the provision of gas supply by 2012 for the new plant and both were given the go ahead by Lahmeyer International appointed by Enemalta as an “independent” consultant when it had built three power stations with BWSC and who used to be represented in Malta by Joseph Mizzi who still represents BWSC.

When the bidding process started both BWSC and MAN did not qualify to supply the new plant as existing environmental laws and government’s policy excluded them but the tendering document was written in such a way to let them bid as steps were being taken to change to their advantage environmental regulations and policies that had excluded plants powered by heavy fuel oil. In fact by the end of the procurement process all the necessary changes were implemented to enable them to qualify and to be placed first and second to be awarded the contract with MES the ultimate beneficiary. The threads are different, but are all coming out of the giant spider weaving the web: Mitsui Engineering and Shipbuilding Co. Ltd.

At first it seemed as if the prime mover to secure the contract of the extension of the Delimara Power Station for BWSC was their local agent Joseph Mizzi who boasted to BWSC of having access to top political players and high officials at Enemalta. He was there at the very beginning and set the ball rolling, but then major new players took over to make sure that everything was to be done to award the contract to BWSC: changing environmental laws, dumping government’s commitment to install gas-fired power plants, modifying the tender specifications, choosing a business partner of BWSC as an “independent” international consultant to approve BWSC’s prototype emission abatement equipment and rushing to sign the agreement with BWSC on the same day that the National Auditor started investigating the award of the contract and having the same legal office GVTH providing legal services to Joseph Mizzi, Enemalta, BWSC, the PN and the Ministry responsible for Enemalta.

How much of the money spent on this contract is going to find itself directly or indirectly into the PN’s coffers, as over the years the party has perfected a financing system based on contributions coming from contractors on the ‘JS’ list and one of its main financial backers – Zaren Vassallo – has been awarded the construction work for the Delimara extension?

The major players based in Tokyo, Copenhagen and Malta worked hand in hand to leave no stone unturned to enable BWSC to get the contract.