BWSC hearings | Joe Mizzi chose Zaren Vassallo’s company off the ‘Yellow Pages’

Miriam Dalli contributed to this report from Parliament.

Appearing before the Public Accounts Committee Tuesday evening, BWSC agent Joe Mizzi told MPs that he had picked Vassallo Builders Ltd - the contractor for Danish firm BWSC that won the controversial €200 million contract for the Delimara power extension -  “off the Yellow Pages”.

He added that he had done the same with three other companies

Asked by Labour MP Evarist Bartolo to present all correspondence between himself and the BWSC between 2006 and 2009, Mizzi said he didn’t have any copies because his computer “had jammed”.

Questioned over the legal notice which government raised the minimum emission threshold to a level which enabled BWSC’s bid to be legally considered, Mizzi said he never discussed it with BWSC.

“I had heard something about it but I never delved in to it and BWSC never asked me anything about it. It was not an issue which concerned me,” he said.

Mizzi, who is also Lahmeyer International’s exclusive agent in Malta, also denied knowing that Lahmeyer – appointed by Enemalta to evaluate the plants proposed by the bidders - had been blacklisted by the World Bank.

Quizzed by Bartolo how come he had never researched the company before becoming their agent, Mizzi simply replied that he only knew that Lahmeyer was an international company that employed thousands of people with offices worldwide. 

Former Enemalta chairman denies conflict of interest

The former Enemalta chairman Alex Tranter has denied having had a conflict of interest during the evaluation of the tender for the Delimara power station extension, because a bidder was also his employer.

Answering to questions from the Public Accounts Committee on the award of the €200 million contract to Danish firm BWSC, Tranter said he had declared his conflict of interest in 2008 when it resulted that the bidder’s sub-contractor was Vassallo Builders Group Ltd.

In his private capacity Tranter was a director for VBGL subsidiary, Caremalta, but claimed this was not a conflict of interest because his involvement was not in the construction activity of magnate Nazzareno Vassallo’s group of companies.

MaltaToday first revealed his conflict of interest in June 2009, but the infrastructure ministry defended his continued appointment at Enemalta's helm when the BWSC award became a national controversy.

Tranter was the director of several companies owned by Vassalo, among them Caremalta Finance, Caremalta Group, Caremalta Ltd, Caremalta Mellieha, and Vassallo Joiners.

He is also a shareholder with Vassallo in software company Makeezi.

Answering to questions by Labour MP Evarist Bartolo, Tranter did admit to a shareholding relationship with Vassallo.

“The ministry had told me I had no conflict of interest. I observed the Code of Ethics… I was absolutely noit the person responsible for the tender. I never discussed, directly or indirectly, with Zaren Vassallo on this matter,” Tranter told the PAC.

The 26 expressions for interest for the Delimara extension were presented in June 2006, and invitations to tender were then published in August 2007.

Tranter told the PAC this evening he did not see the list of sub-contractors, and that it was the investments ministry that communicated to him the names on the list.

“I told them I had no involvement in construction,” Tranter, who was chief executive of the VGBL elderly homes, told the PAC.

“To avoid any potential conflict of interest I immediately abstained [from the evaluation process] and left everything in the hands of the deputy chairman.”

Tranter also told the PAC he did not know who Joe Mizzi, a former Enemalta employee who was the BWSC middleman with alleged access to sensitive information on the Delimara tender, was.

“I have never spoken to him,” Tranter said.

Bartolo asked the former chairman what sort of internal investigation he had carried out when he declared having found no evidence of a leak of confidential information to potential bidders before the tender was issued, three days after the allegations were made on 5 October 2009 in the media.

“I am not sure who carried it out. Enemalta did not have an internal audit investigation back then. It could be that the CEO made his own investigations. I don’t know what shape they had taken then, I assume he investigated the persons involved. I can’t remember in detail or how the investigation was carried,” Tranter replied.

Tranter said he was not aware whether any documentation existed on this investigation, except that he had signed the letter of investigation as chairman.

At this point of the hearings, Bartolo made a formal request for the log book of all the people who entered the Enemalta buildling during the tendering process that started on 18 November 2006 and closed on 26 July 2009.

In a question by Austin Gatt, who is also on the PAC, Tranter said he was never approached or offered any incentives to be influences on any decision he took on a tender.

According to the MITC’s code of ethics, in tendering and procurement procedures directors must ensure “the highest possible level of accountability and transparency” at every stage of procurement.

Moreover directors must avoid “any actual, perceived or potential conflict of interest at all costs.”

But the code also says conflict of interest should not be “a deterrent for competent persons to take up public office.”

The former chief executive of Enemalta, David Spiteri Gingell, also told the PAC that the corporation’s electricity generation plan in 2008 was to move towards the use of a gas-fired power station. The BWSC plant is fuelled by diesel.

“When I became CEO in 2007 Enemalta had already issued the request for proposals [for the plant’s extension]. We always wanted to move towards gas. The tender was made with the intention that Enemalta moves to a gas plant but we couldn’t do this unless there was a structure for a gas powered plant. Nobody had provided a solution for a gas pipeline.”

Spiteri Gingell said a legal notice that was later amended in 2005 to allow for the use of diesel, over that of gas, had been made without any contestations being made on the amendment.

“I don’t know anything about BWSC wanting to change the legal notice… What I can say is that I did not have any political interference. My bosses were the chairman and the minister. I went to Enemalta because of my respect for the minister. I had no political pressure.

“It happened once and I resigned. I tried taking the best decisions. I admitted my mistakes. But I never doubted the people I worked with… a definite mistake was to choose Lahmeyer,” he said of the blacklisted firm that carried out an evaluation of the BWSC offer – Lahmeyer had previously worked on a BWSC contract in another part of the world.

“I didn’t know they were also BWSC agents or that they had built power stations together. The Malta Resources Authority recommended Lahmeyer because they knew Maltese law. I knew that Joe Mizzi was the BWSC agent but I didn’t know he was also a Lahmeyer agent.”

Spiteri Gingell also denied having been approached or offered any incentives from BWSC or Lahmeyer to influence his decisions during the tendering process or to convince MEPA to amend the legal notice on carbon emissions.

BWSC hearings: background

The tender awarded to Danish company BWSC is controversial because of the choice of a fuel oil turbine, over a cheaper and more environmentally friendly gas turbine proposed by the Israeli firm Ido Hutney Projekt/Bateman.

BWSC’s offer costs €165 million, €27 million to convert to gas, and €18 million in maintenance costs over five years. Bateman’s gas turbine costs €148 million and €35 million in maintenance costs over five years.

Labour MP Evarist Bartolo said Maltese intermediary Joe Mizzi arranged meetings between BWSC with top Enemalta officials back in 2005, months before the formal tendering process started.

Enemalta have refuted the claims, saying it regularly receives presentations from suppliers to keep up to date with the industrial developments, and that it had been evaluating the possible use of a 35MW extension in 2005.

But Bartolo says that BWSC was provided with “inside information” via a Maltese intermediary who – as early as 11 May 2005 – informed BWSC’s business development manager Angers Langhorn, that the firm had to “tap another source higher up in the political hierarchy.”

In a subsequent investigation by the National Audit Office, Auditor General Anthony Mifsud said he found no hard evidence of corruption “many coincidences which made one wonder… there was smoke, but no fire.”

Mifsud said there had been a lack of cooperation mostly from BWSC agent Joseph Mizzi, who refused to answer questions.

The transcript of Joseph Mizzi’s questioning could not be published as requested by the MPs, because NAO proceedings were protected by the Professional Secrecy Act.