Magħtab incinerator tender winner has ties with oil scandal bribe master

The Maltese partner in the consortium awarded the multi-million euro Magħtab incinerator tender has ties with 2013 oil scandal kingpin George Farrugia, MaltaToday can reveal. 

Bonnici Brothers Ltd, a Maltese construction firm, is the sole shareholder in an energy company run by Farrugia. 

The energy company called ENV Energy Solutions was set up in June 2018 and counts as its only shareholder, Bonnici Brothers. According to the description on its website, ENV is engaged in petroleum infrastructure construction, maintenance and services, product distribution and new energy. Farrugia is the company’s CEO. 

The connection between Bonnici Brothers and Farrugia has raised eyebrows in industry circles given the latter’s past involvement as an oil broker who bribed Enemalta officials to secure fuel oil contracts. Farrugia had been given a presidential pardon to tell all. 

Bonnici Brothers and French recycling firm Paprec were selected as the preferred bidder on 13 October for Wasteserv’s incinerator project in Magħtab. The project is one of the largest ever public infrastructure contracts to be awarded and the winning consortium was selected after submitting the lowest bid at €600 million. 

It is unclear what role Farrugia may have played in the winning consortium’s bid for the Magħtab incinerator tender. 

Bonnici Brothers denies Farrugia involved in incinerator project 

However, in comments to MaltaToday, Bonnici Brothers CEO Gilbert Bonnici denied Farrugia was involved in any way in the project. 

“Neither Mr George Farrugia nor ENV Solutions Ltd (ENV) are, or were, in any manner involved in the [incinerator] tender in question. Indeed, ENV operates within a sector which has absolutely nothing to do with this project and hence could have never been involved in the same,” Bonnici said. 

He said the information received by MaltaToday was incorrect and implied it was “presumably intended to unduly influence a competitive process which is still ongoing”. 

Bonnici insisted Farrugia will also play no future role in the incinerator project. “Not only did Mr Farrugia play no role in the Magħtab incinerator bid, but will also not be involved in the project should the tender be definitely awarded as recommended.” 

No reply on due diligence 

However, Bonnici did not reply when asked whether his company carried out due diligence on Farrugia before engaging his services or entering into a commercial relationship with him. He also skirted around another question whether Bonnici Brothers was ill-advised to engage Farrugia on energy projects given his dubious past in the same sector. 

Bonnici also skirted around a question as to whether Farrugia is on ENV’s payroll or whether he invoices ENV for his services as CEO. 

The incinerator bidding process was mired in controversy when the Contracts Department in June ‘mistakenly’ published the initial offering price of the five competitors who showed interest until then. 

This allowed the bidders to adjust their final offer a month later. Two of the lowest-priced bids dropped out of the running and the Paprec-BBL consortium reduced its initial price by around €17 million to put in a final offer for €599.7 million. 

The other two consortia – FCC Medioambiente Internacional and Hitachi Zosen Inova-Terna – submitted final bid prices of €616 million and €781.5 million respectively. 

Former MP Jason Azzopardi, claimed at the time, the June blunder was a “planned mistake aimed to give an advantage to a particular company close to the Prime Minister”. The reference was to Bonnici Brothers given that back in 2016 Robert Abela had been in a joint business venture with Gilbert Bonnici in a project to demolish a terraced house in Iklin and build an apartment block instead. 

The Magħtab incinerator 

The Magħtab incinerator is expected to process 192,000 tonnes of non-recyclable waste annually and is a crucial cog in Malta’s waste management plan. 

The incineration of waste will help reduce the dependence on landfills to dispose of non-recyclable waste. 

An artist’s impression of how the Magħtab incinerator will look

The tender issued by Wasteserv, the government waste management agency, is for the construction and operation of a plant that is also expected to generate 5% of the country’s energy needs. The selected company will be granted a 20-year concession to run the facility. 

Wasteserv had previously set a target investment of just over €400 million for the construction and operation of the facility, which will form part of its Eco-hive complex at Magħtab. The price tag has now risen by a further €200 million. 

Plans for an incinerator at Magħtab were first announced by the government in 2018 for a plant that would handle less waste and projected to cost around €150 million. It was said at the time the facility would be completed by 2023. 

However, the process hit several snags and the incinerator plans were finally given the Planning Authority’s green light in January 2022. 

Who is George Farrugia? 

George Farrugia: The man at the centre of the oil scandal in 2013 is involved in an energy company owned by Bonnici Brothers Ltd. Farrugia is CEO of ENV which was set up in 2018.

In 2013, trader George Farrugia shot to national notoriety after MaltaToday broke news of the payment of commissions on oil trades for Enemalta, on behalf of oil giants like Trafigura or Total – clients of Farrugia. 

Farrugia’s role in enabling these generous commissions led to the arrest of former Enemalta chairman Tancred Tabone, and other business partners – Frank Sammut, Francis Portelli and Anthony Cassar. Ten years later, all are still facing charges of trading in influence or bribery and money laundering – yet Farrugia was granted a presidential pardon to cooperate in the investigation. 

Farrugia was one of several brothers in the John’s Group business. He ran a lubcricants subsidiary called Powerplan, which had exclusivity agreements with Total and Trafigura, which legitimately entitled the company to a commission of $1 per metric tonne of oil sold to Enemalta. 

In 2010, the Farrugia brothers discovered that their own brother was siphoning off business from Powerplan. 

They commissioned audit firm FST Consulting to examine the company’s computers. E-mails found on the personal computers of George Farrugia and his wife had been addressed to officials from Totsa, Total’s Geneva-based subsidiary, and Trafigura B.V. with attachments of invoices on the letterheads of a secret company, Aikon, and Powerplan.  

The invoices added up to some $1.56 million for the period 2004 and 2008, and the investigation revealed that Farrugia had siphoned off some $8.6 million (€6.4 million) worth of commissions from Powerplan to his secret company, which naturally had its own secret Swiss account. 

Nonetheless, the company declared sales of some €55,000, €49,000 and €24,000 respectively for 2006, 2007 and 2008.  

The oil trader set up his company Aikon’s bank account at the Edmond de Rothschild bank in Geneva some time in 2004; but his brothers sued him in 2010 for having funnelled cash from Powerplan into his Swiss bank account, at their detriment.  

After MaltaToday broke news of the Enemalta scandal and illegal commissions in January 2013, former Enemalta chairman Tancred Tabone and business partner Frank Sammut, businessmen Francis Portelli and Anthony Cassar, were charged in court. The case is still ongoing.  

But in 2014, police also filed charges against Farrugia’s five brothers, all principals of the Johns Group, accused of knowing of their brother’s kickbacks system. Farrugia claims his brothers were aware that Aikon was being used as a slush fund for officials such as then Enemalta chairman Tancred Tabone. “They knew of the payments and of arrangements, which I had told them about.” 

He said he would split procurement quotations between Powerplan and Aikon, and that his brothers were unaware of how he organised this system. “Aikon was needed for local payments and for foreign traders... the payments were for contracts that were coming to Power Plan... the reason for the company was to have cash to spread around.” 

Frank Sammut, who sat on the Enemalta fuel procurement committee, was allegedly paid bogus consultancy fees which he deposited in an HSBC account in Lugano, Switzerland. 

Despite the charges against them, many of the protagonists in the Enemalta oil scandal are still actively trading. Tabone, Portelli and Cassar were partners in a bunkering operation that was later renamed Valletta Bunkers and is now run by their relatives instead, and through Valletta Petroleum Holdings, whose shares are held by Tabone’s Alta Investments, Portelli’s Virtu Holdings, and Cassar’s Cassar Marine Services.