Shaken, but still standing | Tonio Fenech

Tonio Fenech does not look extraordinarily jovial.

The Finance Minister’s 2011 budget speech was underscored by continual references to the recession and tempest that has hit the economies of the world. I ask him if the past changes in the utility electricity and water tariffs could be the reason for the local recession he was referring to in his budget speech.

“I disagree. Primarily we were hit because international demand dropped, and so our exports fell and tourism numbers dropped.  I can mention several factories that were hit by all this: Trelleborg, Methode, ST and others.”

I interrupt: but will he not agree that the utility tariffs increase was ill-timed?

“We had no room for manoeuvre; we cannot but face the reality of high oil prices, the economy had to adjust to this but at the same time we had to ensure that we provide the right incentives for businesses. We could have chosen to subsidise energy, have no money to counter the crisis and lose jobs. Rather, we redirected funds to the things that count: such as attracting tourism to the island, supporting factories in difficulties giving us the growth and jobs today.”

I refer to the buzzword – Xoghol – in the budget and ask him to concretely refer to incentives that will create work.

“The most effective tool to create jobs is economic and financial stability. Only that secures investment and creates jobs.  We also added further incentives to directly incentivise exports in particular, such as the ‘Gateway to Export’ scheme. Export is a key driver to creating jobs. We also have programmes that encourage franchising.”

Tonio Fenech was looking more comfortable as he explained that the level of unemployment in Malta was low, and that whereas the previous budget was addressed to reducing unemployment with incentives such as microinvest – which he reminded was still available for all business that employ less than 10 people, this budget was directed at creating work.

There are those who may argue that this more part-time jobs are being created. But Fenech stresses that part-time work is important for the economy, not least for woman who try to balance family life with work.

I remind him of his recent controversial comments on working women, which drew sharp criticism from women’s organisations.

“They were taken out of context. I did not say that women should not work or seek work, but I simply emphasised that it is ultimately a matter of choice, and that Government’s role was not to dictate but to create the right environment for women who want to work while supporting the family unit.”

I turn to Enemalta and other government-funded agencies and companies, and tell him that many of the problems at these companies stems from government inaction and more so from the decision to hold onto high staff complement.

He disagrees with my diagnosis. “Enemalta does not have high staffing; rather we have shortages particularly in the districts that support the network. What exists in Enemalta are inefficiencies in having an old power station that needs to be changed and losses in the network which are being tackled.”

But on a number of fronts government seems to be acting only now. Was it reluctant to take the bull by the horns before?

“Reluctance is not the word, when one talks about the timing of reforms one cannot take these completely out of the political climate.  Imagine if, 10 years ago, someone suggested the shipyards privatisation.  I am sure many would have agreed, but I am equally sure we would have seen a lot of industrial strife and trucks on the road.  There is a timing issue in everything, and a limit as to how many reforms can be done at one go. You cannot take the whole reform programme and detach from the political realities of this country.”

What is the true story of Alex Tranter?

“Tranter had an opportunity with a foreign company, Italian to be precise, and - being in the energy sector - he recognised that this may raise conflicts of interest. So he decided to leave.  I agreed that had he stayed on, he would have had a conflict of interest.”

So you did not fire him?

“No. I had no reason to, but for all that has been said about his links with Zaren Vassallo, Tranter is no longer working with him.”

I tell him that I know of people who talked to individuals in his Ministry about the pressure Alex Tranter exerted during the adjudicating procedures in the extension of the power station.

“I have no knowledge of this at all.”

Fenech adds that many people come forward to make allegations, but more often than not they are unwilling to substantiate their allegations to the police.

“I must point out how difficult it is to find a chairman to run Enemalta. I have offered the job to three people and they have all declined, as the present climate of personally targeting individuals makes serious people think twice how much they really want to give there contribution.”

He takes the opportunity to thank Edmund Gatt Baldacchino for his decision to serve as chairman of Enemalta until a suitable replacement was found. “Would YOU like to be chairman, Salv?” he suddenly asks.

What about Delimara? Was he convinced that everything was above board and was he comfortable with the auditor’s report?

“I believe the auditor was spot on, what he talked about was not corruption but ‘administrative shortcomings’. One should appreciate we had just introduced the new public procurement regulations that introduced the concept of the negotiated procedure. This was in fact the first tender in which this process was adopted. The process was indeed complex and I can understand the doubts that it intrinsically raises. But there is no substance to the allegations that were made.”

I ask him directly if the changes to the emission levels by George Pullicino’s ministry, and the damning letter by Michel Barnier, worried him?

“It would have been better if the changes that had to be made to align our legislation with that of the EU had been cleared before the process. However, bidders were notified in the tender document of the process that had been initiated to change these levels. And that is what George Pullicino did.  

“Nobody really looked into the fact that the Israeli company Bateman’s bid had a serious shortcoming, in that whilst it offered a gas solution, it had to propose a transitional solution until such time the country had the infrastructure to operate a gas power station, something it failed to do.  I would have expected the other bidder Mann to have felt aggrieved, rather than Bateman.”

What is his definition of corruption?

“When somebody in his public capacity takes money in return for doing something.”

I turn to former Enemalta CEO David Spiteri Gingell, and compare him to Serracino Inglott of the 1980s, being present everywhere in everything. Did Fenech agree that he should have joined one of Zaren Vassallo’s companies so soon after his position at EneMalta as CEO (among others)?

“I do not like it, but unlike other countries, we do not have the culture of contractual safeguards that preclude top management from joining up with competing companies or subcontractors.  But there is nothing illegal in what he did.”

I put it to him that Smart Meters were not discussed at Cabinet level.

“Smart meters were discussed, but what was not discussed was Arms Ltd, which in effect did not need to be discussed as this was an operational issue between Enemalta and WSC.”

Why was no one accountable for the mess at Arms?

“People should be accountable, but in this case I do not think that I should look for a scapegoat. I take responsibility for the fact that it took too long to appoint a CEO to oversee four managers.  Without a CEO, we may have been doing technically everything correctly but nobody was really looking at the customer interface, which was seriously neglected. Also, as I explained in Parliament, certain decisions taken, including the decision to issue an energy allowance through Arms, compounded the problems.”

I refer him to the incident when a power cut left Malta without electricity throughout Good Friday this year.  Yet no one was held responsible for that incident.

“It is not the fault of one person,” he calmly replied.

I put it to him that he leaves most of the decision to the civil service and does not involve himself in day-to-day decisions.

“There is no way you can micromanage this ministry. You have to build the right structures and ways of supervising.  And it is all about appointing the right people.

“But when I needed to micromanage I did, as was the case in the privatisation of the shipyards; when we needed to sit down with factories in difficulties such as ST and others; and now, Air Malta and Arms, of course.”

Speaking of Air Malta: I question whether procrastination on reforms and bad decisions under this government had led to the present state of affairs.

“Air Malta was not ignored, but overtaken by market realities.  There is no carrier in the EU that is not experiencing difficulties other than low cost carriers. Many would blame low cost carriers for where Air Malta is today, but this is a reality and at the same time we could not renege on our national airline.  How to find the right balance is the question.”

He adds that in 2004, there was a restructuring process which included a three-year wage restraint policy. 

“Since then we had the Sterling drop, the dramatic increase in price of oil and the intensification of the low cost phenomenon.” 

As for Air Malta: is there a chance of a complete buyout?

“No, it is not on the cards.  And yes, we should look at options in the future with partner airlines, but we must keep an interest in our national airline: if necessary, a majority stake. More importantly, we must keep the competitive edge. We have to find the right size for our airline and become cost efficient. The suggestion that there will be a 1,000 staff cut is exaggerated.”

I ask specifically if there are Maltese investors who have expressed an interest.

“All speculation! The government is not discussing with anyone at the moment. We are focusing on establishing a restructuring plan.”

On a different note, Fenech has had his fair share of controversy this year. I remind him of the news stories concerning his private flight to Barcelona, the works at his home by JPM company; the case of his former private secretary taking donations for his campaign. Did he never feel the need to tender his resignation?

“I would be lying if I did not say ‘yes’. I told the PM that I would be willing to resign.  I look at politics as a service, not a career.   

“When Eddie Fenech Adami had approached me to enter politics, I had refused because I always believed that ‘politics besmirches people’ (“li l-politika thammgek”).  He convinced me otherwise, in that one would be corrupt only if he allows himself to become corrupt.  I am not quite sure I share that viewpoint anymore, il-politika thammgek anke jekk ma tkunx korrott (“politics besmirches you even if you are not corrupt”)… at least in terms of perception. 

“On a personal level I feel a big sense of disillusionment with politics. My family life would be much better off without all this and I am sure that financially I would have been better off, too. So many times I question whether all this is worth it in the end. However as long as I have the trust of the Prime Minister I will continue to serve.  And more importantly if I still have the trust of people that I did nothing incorrect, I will continue.”

He pauses, and I cannot say that he does not look perturbed and worried.

“You know in Maltese we have this saying that it is very easy to pluck a chicken but next to impossible to put the feathers back onto the chicken.  I have the feeling that some people believe the insinuations in the media, irrespective of the truth.”

When I turn to the Montebello issue, he stand up walks to his desk and picks up a file.

In the file, he has organised papers associated with the works at his home: quotes for work from JPM Company Limited, and VAT receipts from the subcontractor who took over the works.

“I did nothing incorrect, I did not have the works in my house done in return for a favour, and when the Montebello brothers could not pay Charles Magro (who was their sub-contractor) I dealt directly with him and paid him myself.  Magro cannot say that he only knew the Montebello brothers. This has nothing to do with favours – it has to do with a contractor who was over-stating his claims, who was contested and who ultimately accepted the final settlement.” 

He denies that he ever took money from the Montebellos, but he admits that he never knew that it would come to this.

“They were my constituents, and like others we would meet in social gatherings. Perhaps I am naïve or better still have trusted too much.”

What about his former private secretary who admitted to taking money from the Montebello brothers?

“One must clarify that the former secretary admitted that these amounts did not go towards my electoral campaign, as originally claimed, but were taken personally.  I am indeed disappointed; we have a screening process before engaging officials with the secretariat. I always knew him as a person of integrity.”