Caruana Galizia inquiry: ‘Look me in the eye, say I’m not involved,’ Konrad Mizzi told finance ministry official

The public inquiry into the murder of journalist Daphne Caruana Galizia continues with the testimony of Alfred Camilleri, the permanent secretary in the finance ministry

4 September 2020, 9:44am
by Matthew Agius

2 min read

The exchange between Konrad Mizzi and Alfred Camilleri took place in parliament last December as thousands protested in the streets of Valletta

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As government faced massive protests last December, Konrad Mizzi had asked the finance ministry’s permanent secretary to say that he was “not involved”, the Caruana Galizia inquiry heard.

Alfred Camilleri, the veteran permanent secretary in the finance ministry, recounted the incident this morning when he testified in the public inquiry.

“Someone had told me ‘look me in the eye, say I’m not involved’,” Camilleri cryptically told the inquiry board about an incident that happened inside Parliament while people protested outside.

Pressed to clarify his statement by Caruana Galizia lawyer Jason Azzopardi, Camilleri said it was Konrad Mizzi who spoke those words.

“I had replied to him, I don’t look anybody in the eyes,” Camilleri told the inquiry.

Mizzi had resigned from Cabinet after businessman Yorgen Fenech was arrested in connection with the Caruana Galizia murder investigation.

Pressure was mounting on then prime minister Joseph Muscat to step down as subsequent court testimony pointed towards a possible involvement of his chief of staff Keith Schembri in the assassination.

Schembri resigned shortly afterwards and Muscat formally stepped down in January 2020 after a kick-starting a leadership race within the Labour Party.

Mizzi and Schembri had listed Fenech’s Dubai company 17 Black as a target client in documentation for their Panama companies.

The period was characterised by large, noisy protests outside parliament and in the streets of Valletta as shocking details emerged in court.
This was the second time that Camilleri took the witness stand in the inquiry.

At the start of the inquiry, the Caruana Galizia family, through its lawyers, objected to a one-time extension to the inquiry board’s term granted by Prime Minister Robert Abela.

The family has argued that the board should not be bound by a set time limit.

In the previous sitting, Energy Minister Michael Farrugia testified that former Prime Minister Joseph Muscat had asked MPs for their feedback on what to do with Konrad Mizzi, who had been outed, along with Keith Schembri, as having a Panama company in 2016.

The public inquiry into the murder of journalist Daphne Caruana Galizia is tasked with, amongst other things, determining whether the State did all it could to prevent the murder from happening.

Caruana Galizia was murdered in a car bomb just outside her Bidnija home on 16 October 2017. Three men, George Degiorgio, Alfred Degiorgio and Vince Muscat, have been charged with carrying out the assassination, while Yorgen Fenech is charged with masterminding the murder.

Melvin Theuma, who acted as a middleman between Fenech and the three killers, was granted a presidential pardon last year to tell all.

The inquiry is led by retired judge Michael Mallia, and includes former chief justice Joseph Said Pullicino and Judge Abigail Lofaro.

12:34 The sitting is over. That’s it for today, thank you for following. Kurt Sansone

12:34 On Wednesday Lawrence Cutajar will continue his testimony and on Friday Louis Grech will take the stand. After that Owen Bonnici, Chris Fearne and Jose Herrera will be summoned in later sittings during the week of 14 September. Kurt Sansone

12:33 Camilleri has concluded his testimony. Kurt Sansone

12:33 Camilleri replies that he is not the representative from the Finance Ministry present at the meetings, saying that he only heard about this through the press. Kurt Sansone

12:32 Azzopardi asks the witness whether he is aware that Malta is in the process of signing the Status of Forces Agreement (SOFA) with the US. Kurt Sansone

12:32 Camilleri says that the responsible person should be summoned to reply if there is a specific question on this topic. Kurt Sansone

12:31 Camilleri: “The AB is autonomous and independent. It was established in 1979 and has the same status as the MFSA. I am only aware of the administration of the accountancy board. I never attended their meetings. They have no obligation to inform me about their discussions. I know what you are referring to. I'm not stupid. Certain things were public. But I have no right to ask what action was taken. The reply would be 'stay out of it', the moment I do it I would be breaching the law.” Kurt Sansone

12:21 Azzopardi: “Are you aware as to why the accountancy board had not revoked the licence of operators who because of their abuse had given a bad reputation to Malta?” Kurt Sansone

12:15 “The regulator,” replies Camilleri. Kurt Sansone

12:15 Azzopardi asks how the system failed after an STR was not filed by Pilatus Bank. “Who has the duty to act if this was not done?” Kurt Sansone

12:13 Camilleri is now preaching to the panel. Said Pullicino asks him if he had delivered this lecture to Cabinet. “I did,” he replies. Kurt Sansone

12:12 Camilleri: “I always say that we need conviction and belief in our project. We cannot let problems be pushed away onto other institutions. Secondly, it is for our collective benefit. Thirdly, we must be resolved to do the right thing. If there are STRs (suspicious transaction reports) to be filed they must be filed. There are sectors where this is still lacking. This is a collective problem. if you aren't prepared to do your work hand in hand with the authorities, the chain is broken. Will we make it? No pious quotes, platitudes will save us. We have to work and do our jobs to achieve our goals.” Kurt Sansone

12:08 Camilleri says the risk of the country ending up in this circumstance is factored in and it could be that if it materialises there will be no large difference in the day to day functioning. “It will impact investment upon which we greatly depend because we will become less attractive. Our success is built on trust and correspondent banking. Banks aren’t charities... there is so much emphasis on AML/FT that if a correspondent bank sees this risk and fears being fined by its regulator it also faces reputational risks. The reputational risk cannot be quantified,” he says. Kurt Sansone

12:06 Camilleri says that if grey-listing happens it would mean that Malta would have a programme of action to be implemented with handholding from FATF. The consequences are not that predictable, he says. “It could be that it is not correct to expect the collapse of the country,” he adds. Kurt Sansone

12:03 Camilleri says it is not easy to explain in a few words. “Grey-listing means that a detailed programme of reforms would have to be drawn up and that the country would be closely monitored by the FATF. FATF was setup by the G20. Moneyval falls under the Council of Europe, it is not the European Union. In the Moneyval report you have the whole framework. Due to the result, we obtained... you have the whole framework which looks like a chain, holding up a picture of an interlinked chain. We failed in nine out of eleven,” he explains. Kurt Sansone

12:01 Azzopardi asks the witness to explain the effects of grey-listing by Moneyval. Kurt Sansone

12:00 “Konrad Mizzi,” the witness says almost inaudibly. Kurt Sansone

12:00 Azzopardi tells the witness that he does not know what he is on about. Camilleri repeats, adding, “I had replied to him, I don't look anybody in the eyes.” Azzopardi insists: “Who are you talking about? Can you tell us?” Kurt Sansone

11:59 Camilleri continues: “Someone had told me ‘look me in the eyes’ and say I am not involved in anything.” He is referring to an incident at Parliament in December 2019 during the protests. Kurt Sansone

11:58 Camilleri: “I wrote to Willian Wait.” Kurt Sansone

11:58 Jason Azzopardi asks about his last point on direct orders. “When you found out that the chairman had gone behind your back did you ask about it?” Kurt Sansone

11:57 Camilleri: “She was a PRO and was appointed directly by Konrad Mizzi.” Kurt Sansone

11:56 Comodini Cachia asks what Julia Farrugia Portelli’s role was in Projects Malta. Kurt Sansone

11:56 Camilleri says he had objected to the direct orders in writing, but in general, when it comes to direct orders of professionals there is an element of trust. “Legal advice almost doesn't fall under the procurement regulations,” he says. Kurt Sansone

11:55 Camilleri: “When once Projects Malta asked to move to Schedule 3 of the contracts regulations, we didn't let them. Schedule 3 is perceived as being a carte blanche to do what you like.” Kurt Sansone

11:48 There is the law and there is policy direction which explains direct orders. Direct orders went to the director of contracts. It must first be approved by the ministry concerned. They must conduct the research and contract and take responsibility. It comes to the finance ministry for financial clearance, explains Camilleri. Kurt Sansone

11:47 Camilleri says that many think that direct orders are issued by the finance ministry. “It is not true. They are issued by the ministry concerned. I had told the CEO about the direct orders, recommending that an effort be made to open up the procurement system to more competition,” he says, reading from an email. Kurt Sansone

11:46 Camilleri: “Afterwards.” Kurt Sansone

11:45 Comodini Cachia: “The direct orders to Nexia BT, Bonnici Advocates, William Wait, €700,000 to perit Maniera, when would you find out about them?” Kurt Sansone

11:44 Camilleri: “I'm not sure. You'd need to ask the accountant.” Kurt Sansone

11:44 Comodini Cachia asks where their salaries would come from. “Was it from Projects Malta or Konrad Mizzi’s ministry?” Kurt Sansone

11:41 Camilleri says that Konrad Mizzi had done a presentation on the VGH concession deal to Finance Minister Edward Scicluna and himself. “These were normally done at the finance ministry. People on the evaluation committee were chosen by Konrad Mizzi’s ministry,” he says. Kurt Sansone

11:37 Camilleri: “Nothing. And I asked about this... on 4 June 2015, I asked what the function of the board was in the concession for the hospitals. I was given this answer: ‘This project is not a Projects Malta project but of the government, Projects Malta is administering the project for the government. The contracting authority is the ministry of energy and health.’” Kurt Sansone

11:35 Comodini Cachia: “What were Projects Malta asked to do over the Vitals deal?” Kurt Sansone

11:34 Camilleri: “I wouldn't answer to anyone. We were a service provider, like Mimcol and others.” Kurt Sansone

11:33 Comodini Cachia asks about Projects Malta. “In your appointment as a director of Projects Malta you would answer to Konrad Mizzi not Edward Scicluna?” Kurt Sansone

11:32 Camilleri: “No, I can’t.” Kurt Sansone

11:32 Lawyer Jason Azzopardi: “Can you explain, why, despite your suggestion, no minutes were kept?” Kurt Sansone

11:31 He is asked about the Café Premier bailout by government. “What I told them about Café Premier was to make sure that they document everything because this will fall in the purview of the auditor. And that is what happened… My communication was not with josephmuscat.com [the email domain used by the prime minister] but with the principal permanent secretary.” Kurt Sansone

11:25 He says that with the Moneyval report, pressure increased but his approach towards the institutions never changed. “I simply told them to go and do their work.” Kurt Sansone

11:24 Camilleri insists he never withheld money for any investigation. Kurt Sansone

11:15 Camilleri: “I was always against tax amnesties... with a tax amnesty there will be a declaration of assets and the tax which should have been paid. But with an amnesty, if I have evaded tax you are blessing my actions.” Kurt Sansone

11:13 Said Pullicino asks about amnesties. Kurt Sansone

11:12 Camilleri: “The spotlight on tax evasion has been ongoing. We have been in the spotlight because of our tax imputation system. This system had been approved in the negotiations for entry to the EU but some are still critical of it.” Kurt Sansone

11:11 Judge Mallia: “Malta has been an EU member since 2004 and yet it is now that we have this spotlight on us. What did we do wrong?” Kurt Sansone

11:10 Camilleri: “Various issues. You can split it up into various headings and strategies. There are large constraints on the sharing of information, but we have made strides, there are many MOUs for intelligence sharing between agencies. Also, capacity building. Human resources and know-how and systems. There is always something to be done... but we did a lot of work and invested. We also worked on the legislative and regulatory framework. There were 41 pieces of legislation, 43 MOUs, software, training and so on. On prosecutions and convictions, whenever the investigative authorities asked for help and resources we always gave it to them.” Kurt Sansone

11:07 Comodini Cachia: “So, can the permsec of the ministry of finance do nothing unless someone is convicted Kurt Sansone

11:06 Camilleri: “I know I was more careful. We double checked everything. But to date is anyone convicted of this?” Kurt Sansone

11:06 Comodini Cachia asks if the witness had tightened his due diligence on Konrad Mizzi after the allegations emerged. Kurt Sansone

11:05 Camilleri: “We couldn't investigate it ourselves. We had no powers, the investigating powers are autonomous... ask the politicians. I am an administrative person.” Kurt Sansone

11:04 Judge Mallia interjects: “We know that at least a whole year passed from the breaking of the news and the taking of action, if any was taken. Don't you think this is prejudicial to the country?” Kurt Sansone

11:03 Said Pullicino points out that it appears that nothing had happened in Malta after the Panama Papers was uncovered in 2016. Kurt Sansone

11:03 Policy setting comes from the law and the law is not up to us to set, the witness replies. Kurt Sansone

11:02 Comodini Cachia: “For every leak - Swiss Leaks, Panama Papers and others – didn’t the finance ministry set out a policy for the investigation of money laundering and collection of dues?” Kurt Sansone

11:00 Witness says he doesn't know what happens in Cabinet. Kurt Sansone

11:00 Said Pullicino asks about tax evasion. “We have a minister [Konrad Mizzi], chief of staff [Keith Schembri]... if you have two options you decide on the case at hand. Had the minister brought this before Cabinet?” Kurt Sansone

10:58 Camilleri: “This was a tax issue and we don't involve ourselves in these issues. The law gives the tax authorities two avenues – an administrative route or a criminal one.” Kurt Sansone

10:57 She repeats the question. Kurt Sansone

10:57 Camilleri: “Everyone knows what their work is and that they should fulfil their duties.” Kurt Sansone

10:56 Comodini Cachia asks about the Panama Papers and what action was taken. Kurt Sansone

10:56 Camilleri says that investigations are ongoing. “This is a very difficult question for me to answer.” Kurt Sansone

10:55 Said Pullicino asks where Malta had gone wrong. “Why is a shadow cast on each project?” Kurt Sansone

10:55 Camilleri says that he would not know. He adds that in Malta there has not been a single project that was not controversial. “They have all been referred to the National Audit Office,” he says. Kurt Sansone

10:54 Chief justice emeritus Joseph Said Pullicino asks whether the allegations about kickbacks were around the same time. Kurt Sansone

10:54 He replies that he hadn't. Kurt Sansone

10:54 Comodini Cachia reads out another email in which Electrogas and Mizzi's ministry were informed about a PR from Socar to be sent out. She reads a reply by Ronald Mizzi – the permanent secretary in the energy ministry under Konrad Mizzi – and asks the witness whether he had been asked to see PRs sent out by SOCAR and Electrogas. Kurt Sansone

10:50 QUICK REMINDER: The emails being read out come from a massive leak received by Daphne Caruana Galizia from the Electrogas servers a few months before she was murdered. At the time of the murder she had been working on the leak but had not yet published anything from it. Kurt Sansone

10:48 Comodini Cachia says that on 4 September, the witness received an email from BOV informing him that there was a default on the bridge loan. She points out that in his reply, Camilleri copied Ron Mizzi, Konrad Mizzi, Ron Galea Cavalazzi amongst others, saying it was very serious, but had not copied the finance minister. “The minister was informed,” Camilleri says. Kurt Sansone

10:46 Camilleri replies that the finance minister only got to know in January 2018. “Negotiations were conducted by Konrad Mizzi and we were informed about it in 2018 where it was said that Enemalta would absorb the excise tax. This tax amounted to around €5million,” he replies. Kurt Sansone

10:45 Comodini Cachia asks: “Which minister? Which excise tax issue? [The email dates to September 2017.” Kurt Sansone

10:44 Another email from Turab Musayev (of Socar) is read out: "Dear all, Yorgen and I spoke to Konrad Mizzi and David... We clearly emphasized that current deadline is not attainable. They agreed. An extension of the bridge loan is not on the table. Minister is working on solving on excise tax issue." Kurt Sansone

10:44 Another email exchange on 1 September at 10:30am from Socar Trading is read out. Fahmi proposed a timeline of a signing by end of September and a closing by November. He noted that the bridge lenders were extremely nervous. “The company never informed me about this,” Camilleri says. Kurt Sansone

10:42 “The company never informed me about this,” Camilleri says. Kurt Sansone

10:42 Comodini Cachia reads an email between Catherine Halpin (the CEO at Electrogas) and Yorgen Fenech. Halpin: “I will let him know that his company is in the media... It's all just pre-election talk.” Fenech: “Welcome, to Maltese elections :)” Halpin: “Peter (from Electrogas) very worried that the banks are getting nervous. Lots of questions by the new potential ones.” Fenech: “He's right, and today Simon Busuttil said that he would remove the tanker from Delimara and buy from the interconnector. Hogwash I say. We have to hold on tight for a week.” Comodini Cachia reads from another email exchange on 1 September with Socar Trading: “Proposed timeline suggests an end of September… It must be noted that the bridge lenders are extremely nervous and are requesting an extension of the guarantee.” The lawyer says this exchange happened three days before Camilleri was made aware of the situation. Kurt Sansone

10:30 Camilleri: “No.” Kurt Sansone

10:30 Therese Comodini Cachia asks about the second guarantee of €450 million which expired in May 2017. “Were the banks nervous about this loan?” Kurt Sansone

10:29 Camilleri: “Then you have the security of supply agreement. Doesn't this still expose the government? No, because of the Enemalta restructuring.” Kurt Sansone

10:22 Camilleri explains that in December 2012, parliament through a bipartisan agreement carried out debt restructuring at Enemalta. “The Enemalta guarantee was discarded on our insistence - we were talking about something that the company couldn't withstand.” Kurt Sansone

10:21 Camilleri: “We would ask many questions, especially about the business model. Some people would not like this.” Kurt Sansone

10:20 Camilleri says that on 4 November, the four banks increased to 8+1 and the bridge loan was paid off and a new loan was agreed but the ministry of finance was completely out of the equation. “I don't know how much the loan was for, in fact,” he says. Kurt Sansone

10:18 Camilleri says that if things had gone wrong and the guarantee was touched, it wouldn't have been good for the country. “Yes, I was overcautious but this was in the national interest. There would have been €72 million in breakage fees and we could have ended up paying €522 million. We greatly reduced the risks. This is the context.” Kurt Sansone

10:14 Camilleri says the government managed its exposure under the guarantee, even though it was not easy. “Every bank had its lawyers and consultants. Camilleri Preziosi were assisting the government. We wanted to reduce the risk to government. I wanted to have a safety net,” he says. Kurt Sansone

10:12 Camilleri says the loan was for €450 million. The government was guaranteeing €360 million at that stage. Then the remaining €90 million were covered by company shareholders providing letters of credit. Kurt Sansone

10:11 On 30 November 2017, the banks reached financial close with the company, Camilleri explains. “On that day, from four institutions, they increased to eight banks and financial institutions. It has nothing to do with government as it is a commercial contract between the lenders and borrowers but I am informed that these were BOV, KFW, HSBC London, Societe General, BNV Targa DZ bank, Credit Industrie et Commercial and Rivage, which is a finance company.” Kurt Sansone

10:08 Camilleri says Bank of Valletta was security trustee, there was HSBC London, Societe General and KFW. Kurt Sansone

10:07 Comodini Cachia asks when the Electrogas guarantee was given, how many banks were involved and who were they. Kurt Sansone

10:07 Camilleri gives the board his copy for them to check and confirm its completeness. Kurt Sansone

10:02 Mallia shows the witness the document the board had received (the guarantee) and asks him to confirm whether it is the original. He confirms it is. Kurt Sansone

10:01 A moment of levity after Mallia's phone rings. “Tinkwetax hawn min idoqqlu meta jkun mitfi (don’t worry, there are some whose phone rings when it is off),” quips Comodini Cachia. Kurt Sansone

09:59 Alfred Camilleri, permanent secretary at the finance ministry takes the witness stand. Kurt Sansone

09:58 Referring to the request of the board for the exhibition in a confidential manner of the contract of guarantee given by the government to Electrogas, the board says it has received the original document. Kurt Sansone

09:57 Mallia: “Following the letter of the Prime Minister, in which he extended the term of the inquiry till 15 December, the board orders that a copy of this note [filed by the Caruana Galizia lawyers] and a copy of the verbal arguments made by Therese Comodini Cachia be communicated to the PM, so that if he feels the need, he can make the appropriate submissions.” Kurt Sansone

09:56 Inquiry board member Judge Abigail Lofaro: “Don't forget COVID, we are behind by three months because of it.” Kurt Sansone

09:56 Mallia: “I am going to order a formal notification to the Prime Minister of Therese Comodini Cachia's arguments… Under EU law you must conclude once you have heard what is needed.” Kurt Sansone

09:54 Comodini Cachia: “But when you see the reticence of the witnesses and the wasting of time by witnesses, we don't have the opportunity to say these are the witnesses and conclude the list, because they are creating new avenues of inquiry.” Kurt Sansone

09:53 Inquiry board chair, former judge Michael Mallia: “My only worry is that when we drafted the extension we asked for an extension to the end of the year.” Kurt Sansone

09:52 Comodini Cachia says that when one sees the terms of reference of the board and the Inquiries Act, it is the terms of reference that bind the board of inquiry. “These terms of reference were agreed upon after many struggles and arguments with government… The terms of reference say it should work with the aim of concluding the inquiry within nine months, but doesn't bind it not to extend if more time is needed,” she argues. Kurt Sansone

09:51 Caruana Galizia family lawyer Therese Comodini Cachia says that after seeing the Prime Minister's letter in the last sitting, they felt the need to file a note of submissions. The issue concerns a one-time extension to 15 December 2020, given to the board by Prime Minister Robert Abela. The board was appointed in November last year after lengthy negotiations between the Caruana Galizia family and the government, following international pressure to have an independent inquiry into the murder. Kurt Sansone

09:48 The judges on the inquiry board have just emerged now. Kurt Sansone

09:46 Good morning. Kurt Sansone

Matthew Agius is Senior Reporter on Law and Court Affairs at MaltaToday. He is also a Leg...