Caruana Galizia public inquiry: Auditor General Charles Deguara reiterates Vitals deal should have been scrapped

The public inquiry into the murder of journalist Daphne Caruana Galizia hears Auditor General Charles Deguara testify on the work done by the National Audit Office

11 December 2020, 9:33am
by Matthew Agius

2 min read

Auditor General Charles Deguara (right) is testifying in the public inquiry

The Vitals hospitals concession tender should have been disqualified Auditor General Charles Deguara has reiterated while testifying in the Caruana Galizia public inquiry.

Deguara was simply re-stating the findings of an extensive audit investigation into the Vitals deal that was released in July this year.

The Vitals NAO audit found there was collusion between the government and the private investors that eventually were awarded the concession to run three public hospitals.

The Auditor General was also asked about the 2018 NAO investigation into the Electrogas power station contract, which this week started being debated in parliament’s Public Accounts Committee.

Deguara told the public inquiry that the NAO found cooperation from permanent secretaries when compiling the necessary documentation and in those cases were this was missing, the office adopted the policy of “name and shame”.

He said a constant problem that undermined good governance was the lack of proper minutes to record meetings.

“I've been in this job for 12 years and I've been saying it since the beginning. I'm like a voice crying in the desert. It is a sine qua non for governance, but in many cases insufficient minutes are kept of meetings… If I was an auditee and was mentioned in an auditor’s report as not having given a document, I wouldn't sleep. It is a serious thing,” Deguara told the inquiry board.

Previous sitting

In the previous sitting, former PBS editor Reno Bugeja testified. Bugeja said that it was unfair to describe PBS as a “glorified noticeboard,” pinning a lack of investigations on a lack of resources.

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.

10:45 Thank you for following. Kurt Sansone

10:45 His questioning is finished. Deguara leaves the stand. The inquiry will continue on Monday at 9:30am with the testimony of former OPM chief of staff Keith Schembri. Kurt Sansone

10:43 Deguara addresses journalists and says they are the ones who present the NAO’s findings to the public. He emphasises that in the vast majority of cases the information requested is given and appreciates the cooperation afforded by permanent secretaries. Kurt Sansone

10:41 Deguara: “If I was an auditee and was mentioned in an auditor’s report as not having given a document, I wouldn't sleep. It is a serious thing.” Kurt Sansone

10:40 Said Pullicino remarks that Deguara’s work was similar to that of the Ombudsman. Said Pullicino had occupied the role of Ombudsman. Kurt Sansone

10:37 Deguara: “I've been in this job for 12 years and I've been saying it since the beginning. I'm like a voice crying in the desert. It is a sine qua non for governance, but in many cases insufficient minutes are kept of meetings.” Kurt Sansone

10:36 Comodini Cachia asks about record keeping. How much had the NAO found a lack of paper trails? Kurt Sansone

10:34 Deguara says the Vitals case was the only one where the NAO had found something of the sort. Kurt Sansone

10:33 Comodini Cachia asks him about systematic failures in the method of administration such as the signing of an MOU before the RFP is issued. Kurt Sansone

10:26 Deguara says that there have been instances when a tender says something and the final agreement is completely different. Kurt Sansone

10:24 He gives a theoretical basis on tender processes: “Once a need is identified, a clear tender is issued and anyone can apply for it. The more bidders there are, the better for competition. Once bids are made, a fair and transparent adjudication process should take place and the winner is selected. Sometimes government is on a weaker footing in negotiations with business. Sometimes the government is weak with the contractors in big projects.” Kurt Sansone

10:22 Asked about Vitals deal, Deguara replies: “We had said that if there is a secret agreement or MOU, if the RFP is nearly identical, then that tender should have been disqualified.” Kurt Sansone

10:21 Deguara: “There is a code of ethics. Everyone must keep their place. It depends on the individual conscience as to how the code of ethics is adhered to. You can have the best laws, but if they are ignored… There are codes of ethics for chairmen of boards too. We have found that by and large our frameworks aren't bad. But it doesn't matter how good the framework is, it depends on the person.” Kurt Sansone

10:16 Said Pullicino says the government had been business friendly, which was a good thing. “How distinct should the two be?” Kurt Sansone

10:16 Deguara: “You can't say there is a clear border. The two must respect each other, I always say. There were cases where the distinction was not quite so clear.” Kurt Sansone

10:13 Lawyer Therese Comodini Cachia begins her questioning. “There are reports like the Vitals one, where you noted you had called for the Chief of Staff and he hadn't answered. Were there instances where the political and executive roles were overlapping in the same people?” Kurt Sansone

10:12 Mallia asks if there was an investigation into the ties between private business and government. There hadn't, says the witness, as the focus of investigations was more into individual deals. Kurt Sansone

10:12 He says the NAO was never asked to audit the Montenegro deal involving Enemalta. Kurt Sansone

10:10 Deguara says the great majority of ministries cooperate with us. “On the rare occasions that they don't, they can't find the documents or are hiding it. If there aren't good filing practises... some departments don't have good filing practises... audits become very difficult,” he says. Kurt Sansone

10:08 Deguara says the NAO communicates on the executive level with permanent secretaries not chiefs of staff. “For me a chief of staff represents the political side… they report directly to their political leaders,” he says. Kurt Sansone

10:01 Asked if he has enough staff, Deguara says he has a “very good, and extraordinary” team that are highly qualified, some with PhDs. “We have to practise what we preach. If we don't need two people for a one-person job, we won't employ two people,” he says. Kurt Sansone

10:00 Said Pullicino points out that the board is also bound by its terms of reference. “This doesn't mean that if you discover something amiss that is not within your terms of reference, you let it pass,” Deguara adds. Kurt Sansone

09:59 He chuckles and goes on to explain: “It is a very valid question. Some things will improve such as evaluation processes. For example, in the Vitals contract some things had improved but others no, such as the MOU. Essentially there are two types of audits. One type is when we choose the sector ourselves and the other is mandated by the Public Accounts Committee. In the latter cases we take the terms of reference that are given and follow them. This is important because at the beginning of the reports we explain our methodology and the terms of reference. Our work is always guided by the terms of reference.” Kurt Sansone

09:57 Judge Abigail Lofaro: “Do they learn the lessons though?” Kurt Sansone

09:56 Deguara: “We do follow up reports where we revisit our advice years afterwards... over 80% of our recommendations in finance and compliance are adopted.” Kurt Sansone

09:55 He is asked whether government pays attention to the NAO’s advice. Kurt Sansone

09:54 Chief justice emeritus Joseph Said Pullicino asks about connections between the projects. “Every case is separate. We don't see who the person involved is. There must be evidence. Where there is good governance we indicate it and where there is bad we do the same. Our job is like a doctor's. He focuses on your problem and prescribes medicine. The patient chooses whether to take it or not. We are fair, objective and evidence-based,” Deguara replies. Kurt Sansone

09:49 Deguara: “In the Electrogas case, we reviewed around 50 separate agreements. We drew up a 600-page report. If gaps remain after reviewing the documentation, we send for people to clarify things. Often the idea is good but there is insufficient planning. This lack of planning is a source of much trouble in large capital projects.” Kurt Sansone

09:47 Asked if the NAO could act against any breaches, Deguara says the office has no executive powers. “All we can do is name and shame,” he says. Kurt Sansone

09:46 QUICK REMINDER: The MOU had been signed between Malta Enterprise and several investors, who later formed part of the Vitals Global Healthcare company that was awarded the concession to run three public hospitals. The MOU had been signed before the government issued its request for proposals, which was very similar to what the investors had originally proposed. Kurt Sansone

09:44 Deguara says that in the Vitals investigation, the NAO wanted the Memorandum of Understanding that had been signed and but the office was told it wasn't found. “A week after publication of our report it was found and we were given a copy,” he adds. Kurt Sansone

09:43 Deguara: “[In those cases where documents aren’t received] You can't go and grab them by the scruff of the neck, but we name and shame them in the report. When they don't give us documents or are evasive in their answers, we indicate it in the report.” Kurt Sansone

09:42 Deguara says the point of his office is to strengthen good governance in public affairs. “Our yardstick is that we are objective, fair and evidence-based. By and large we find cooperation. Some people provide documents within the hour, others need several reminders and occasionally we don't receive the documents. If we don't receive them we will note it in our reports,” he says. Kurt Sansone

09:41 Judge emeritus Michael Mallia: “As an office, does the government cooperate with your requests for documentation and information?” Kurt Sansone

09:40 Auditor General Charles Deguara takes the witness stand. The board says it will ask questions about the National Audit Office reports on the Vitals hospitals concession and Electrogas power station tender. Kurt Sansone

09:39 The board has received a copy of the request Yorgen Fenech filed to the Council of Europe and the inquiry board and has inserted it in the acts of the inquiry. They comment that his lawyer could always follow proceedings and had been in the court on occasion. Fenech has asked for the inquiry to be suspended and for his rights to be safeguarded. Kurt Sansone

09:36 Good morning. Kurt Sansone

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