State witness blames ambassador for his demise

Oil trader George Farrugia acted as an agent for multinationals Total and Trafigura at a time when the two rival companies tendered against each other to supply oil to Enemalta and MOBC, but the companies were not aware of his conflict of interest, the defence in the oil procurement corruption case told a court today.

Lawyer Gianella de Marco told the court today in the compilation of evidence against former Enemalta chairman Tancred Tabone, accused of bribery and money laundering, that Farrugia was an unreliable witness who paid his brothers and former business partners €1 million in a out-of-court settlement over accusations that he had defrauded family business Powerplan.

Tabone is being charged of having taken commissions on the supply of oil by companies represented in Malta by Farrugia. His former consultant and MOBC chairman Frank Sammut faces the same charges, on crimes which took place between 2000 and 2005.

De Marco attacked the state witness for failing to remember when asked, that he took cuts from invoices to MOBC chairman Frank Sammut, issued to Trafigura for the first tender they had won; or the extent to which he had defrauded his family's business.

Warned by the magistrate that he was under oath and that his replies were not sounding credible, George Farrugia replied that he could not remember some of the events that took place 10 years ago.

"My brothers were fully aware of the commissions I paid to Tabone and Sammut," Farrugia said.

But De Marco reiterated that while his brothers were equally involved in the scandal - by his own allegations - no charges had been leveled at them, neither had they requested a state pardon.

"You had a conflict of interest and did not inform the rival companies you represented. You defrauded your own brothers for 10 years... you had a choice to admit to misappropriation and fraud, but instead say you paid them commissions from the money you were siphoning off. You portray yourself as a novice in the oil trade but you an old hand, having had dealings dating way back from before the time of Tabone's chairmanship. You're simply an unreliable witness," De Marco said.

Accuses Tony Debono

In his testimony, Farrugia also accused Tony Debono, currently an ambassador to Jordan, of having "sworn to destroy me and my business".

Farrugia was at first reticent at naming the "high government official", but on insistence of his own lawyer Sigfried Borg Cole and the court, the witness named Debono, who was then a consultant for family business John's Group.

"He demanded a commission on every deal I concluded but I never gave him anything. I'm scared of him as he belongs to a 'gathering' I will not name," Farrugia told the court.

Farrugia accused Debono of having destroyed his name and image, run his business to the ground, and even broke up his relations with his brothers. "I managed to save my family only because my wife did not take heed of those people whom Debono had told to call her and feed her lies about me."

During his two-hour testimony, Farrugia said the Enemalta oil scandal had been brought to light because Debono and his brothers hacked his office computer while he was abroad.

The information they found led to accusations that he had been siphoning off monies from Powerplan, and into his personal firm Aikon Ltd. Farrugia said he was using the money to pay commissions on oil tenders, but his brothers claimed he had siphoned over €45 million in company funds.

Farrugia said that he paid €500,000 to clear his name from guarantees Powerplan held with Volksbank, and another €500,000 to pay outstanding employee contributions and settle bills with car dealers for the John's Group.

Dealings with Sammut and Tabone

Mirroring his statement to the police, Farrugia recounted his meeting with Trafigura representative Tim Water and Frank Sammut. He said Trafigura had refused Sammut's request for commissions on MOBC tenders, but that he had still invoiced the commodities giant anyway. Although Trafigura refused to pay any more commissions other than one time, Farrugia agreed to start paying Sammut a bribe of $0.50 per ton of fuel purchased, from his own pocket. The same agreement was reached over purchases from TOTSA, a Total subsidiary.

Sammut instructed Farrugia to forward a cash payment to then Enemalta chairman Tancred Tabone, in a meeting they had held in a Geneva hotel room. When Sammut's directorship at MOBC was discontinued, it was Tabone - then Enemalta chairman - who phone Farrugia demanding that the commissions paid to Sammut be transferred to him,

"When I told Tabone I could not pay commissions, he said he could stop Total's contract and have AOT step in. I approached AOT myself offering them my services but during our meeting that they already have a representative in Malta," Farrugia said. "Tabone insisted he still controlled Enemallta's purchases but in hindsight, I cannot understand how he could ever influence a decision as it was the fuel procurement board that awarded the tender. I was being used and my funds drained for nothing," Farrugia said.

Farrugia said he paid Sammut and Tabone a total of €100,000 on MOBC tenders and €300,000 for Enemalta purchases. He also said he had passed cash to Tabone at his Forestals store, but that between 2003 and 2005 Trafigura and Total only won six of 16 tenders issued by Enemalta.

Bribes pre-date Tabone's term

Cross-examined by the defence, Farrugia was said to have reached similar deals with Alfred Mallia and Tarcisio Mifsud, two former Enemalta officials also charged with bribery. Farrugia also paid commissions to Mallia when Total requested the allocation of storage facilities at MOBC.

Farrugia then said he had rarely seen Tabone at MOBC. "My job was to introduce companies to MOBC, then they would deal and tender themselves. At the time MOBC did not issue tenders but Sammut did the dealings himself. I offered logistical services for which the companies paid me. At the same time I was paid directly from MOBC for consultancy services I provided for them," Farrugia said.

It was only after Tabone became chairman of Enemalta, that the company started using a tendering process to purchase oil and fuel.

Investigations into the 'commissions-for-oil' case started after MaltaToday revealed  invoices of a US$4.3 million consignment on which Sammut was paid a commission into a Swiss bank account for the company Energy & Environment Consultants. The company, belonging to Sammut and set up in 2003, was struck off the business register in 2004.

Inspector Jonathan Ferris is leading the prosecution while defence lawyer Gianella De Marco and Gianluca Caruana Curran are appearing on behalf of Tancred Tabone.

Magistrate Claire Stafrace Zammit presided.

The case was put off for 16 January at 11am.

Separate procedures against Frank Sammut were put off for 16 January as the accused is unwell.