Enemalta denies knowledge of 17 Black involvement in Montenegro wind farm, internal investigation underway

Enemalta has denied any knowledge of 17 Black’s involvement in the 2015 deal through which it bought the Mozura wind farm in Montenegro.

The company said due diligence of the project and its financial viability carried out by Shanghai Electric Power, the lead investor, and its international external legal and financial advisors did not flag 17 Black’s involvement.

“None of the individuals/company mentioned in your press reports featured in the said due diligence reports provided to Enemalta,” the company told MaltaToday in replies to questions sent to it on Tuesday.

Enemalta was asked about revelations last week that murder suspect Yorgen Fenech’s 17 Black company had profited from the deal.

“While Enemalta was completely unaware of the bank transfer transactions and possible criminal acts by third parties as referred to in your press reports, it has nonetheless commissioned an internal investigation and also asked the police to investigate the matter,” the company said, adding its director were committed to provide the fullest support possible to the investigative authorities.

A journalistic investigation has revealed how Cifidex, a company registered in the Seychelles, had bought all the shareholding in the wind farm project from Spanish firm Fersa Renovables. Cifidex paid €2.9 million for the shares and reportedly got the money through a business loan from 17 Black.

However, a few weeks later, Cifidex sold all its shareholding to Enemalta for €10.3 million, more than three times the price it had paid.

Cifidex eventually paid back the €3 million loan and an additional “profit share” of €4.6 million to 17 Black, according to multiple sources who spoke to Reuters and Times of Malta.

The revelations have cost former energy minister Konrad Mizzi a place in the Labour Party parliamentary group after he refused Prime Minister Robert Abela’s request to resign.

The PL executive on Tuesday evening voted to remove Mizzi from the parliamentary group.

No explanation for inflated price tag

Enemalta was unable to explain the inflated price tag at which it bought the Mozura shares from Cifidex.

However, the company insisted the price was agreed by all four members of the consortium and not Enemalta alone. The other investors were Shanghai Electric Power, Vestigo Capital Advisors, based in the UK, and Envision Energy.

“Enemalta made a separate objective analysis of the due diligence reports and recommendations provided to it by Shanghai Electric Power before it decided to be one of the investors in the project,” the company said.

It added that apart from the price, Enemalta also separately negotiated with the consortium members a guaranteed equity internal rate of return on this investment. This was eventually set at 9.4%. The guaranteed return was committed to by Shanghai Electric Power as the majority investor and Envision Energy.

Enemalta clarified that it had appeared on the deal with Cifidex because the arrangements to form the consortium had not been done yet, insisting that it only paid €3.5 million to secure the investment.

“Since the consortium’s financial structures had not yet been fully established by October 2015, Enemalta paid €3.5 million to secure the acquisition of the Mozura Wind Farm from Cifidex at a final price of €10.3 million. The €10.3 million was not to be paid by Enemalta but rather by the new consortium,” the company said.

Enemalta made profit from sale of its shares

Enemalta said that despite initial discussions required Enemalta to only hold an indirect investment in the project through its 30% shareholding in International Renewable Energy Development Limited (the other 70% are held by Shanghai Electric Power), in 2016 Enemalta agreed to retain a 10% direct shareholding in the project, after a request by the government of Montenegro.

“This was acceded to by Enemalta after it considered the potential rate of return of the project. This resulted in Enemalta having an effective shareholding (direct and indirect) in the Mozura project of 28.9%,” the company said in its reply.

It added that the portion payable by Enemalta amounted to €2.977 million.

“This is nowhere near the €10.3 million as quoted in the media, with the difference between the €3.5m actually paid and the €2.977 million which was payable, having been reimbursed to Enemalta by the other consortium members,” the company said.

The company referred to its annual accounts for 2015 in which the 100% share purchase in Mozura was listed as an “asset for sale” since the other consortium members would eventually acquire their respective shareholding.

The audited accounts for 2017 also show that when Enemalta sold 90% of its shareholding to the other consortium members it also made a profit of €811,000 on the sale.

“Enemalta’s directors analysed what was in the best interest of Enemalta and its shareholders and had concluded on the basis of all the documents provided to it that this investment was indeed in the best commercial interests of Enemalta and its shareholders,” the company said.

Joseph Muscat and several ministers attended the opening of the Mozura wind farm in Montenegro with part-investment from Enemalta

Direction to invest came from government

Asked who had given Enemalta direction to invest in the wind farm, the company said that it was informed by “the government of Malta” that in March 2014 the government and Shanghai Electric Power had agreed to collaborate in order to identify projects of renewable energy in the European region.

The Mozura Wind Farm project was one of the projects which was subsequently identified as having potential.

The company did not specify who gave it political direction but the energy minister at the time was Konrad Mizzi.

The accountants to Mizzi and Keith Schembri, chief of staff to prime minister Joseph Muscat, had listed 17 Black as a target client in bank account opening forms for the Panama companies the pair set up after the 2013 general election.

Schembri testified in court this week that it was his intention to do business with Yorgen Fenech after he exited politics, which is why 17 Black was listed as a target client.

What has Enemalta said?

• The wind farm investment was a joint venture between Enemalta and three other companies
• Enemalta appeared on the deal because the financial arrangements of the consortium had not been finalised
• Price tag for deal was agreed by all four partners at €10.3 million
• Enemalta paid €3.5 million to secure the deal on behalf of its partners
• Enemalta had a direct and indirect shareholding worth €2.977 million
• Enemalta was reimbursed by project partners the difference between what it paid and its shareholding value
• Due diligence never flagged 17 Black’s involvement