Enemalta oil scandal: Brothers of pardoned oil trader insist they are victims not accomplices

Oil trader George Farrugia, who was at the heart of the bribery scandal involving Enemalta officials, acted behind his brothers’ backs and used a nominee company and secret bank account in Switzerland to hide his illicit actions. Nonetheless, George Farrugia was granted a presidential pardon to tell all while his brothers, who were the first to institute legal proceedings against him after they discovered the fraud, were charged with complicity

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The brothers of the man at the heart of the Enemalta oil scandal are insisting they are victims of their sibling’s corrupt behaviour and not accomplices.

In final court submissions this month, Antonio Farrugia, Gaetano Farrugia, Emanuel Farrugia and Saviour Farrugia denied any knowledge of their brother George Farrugia’s illicit actions.

The brothers were charged in 2014 and accused of being accomplices to George Farrugia, who was given a presidential pardon in February 2013 to tell all.

It was MaltaToday that broke the scandal in January 2013, showing how kickbacks were being paid on oil and fuel purchases by Enemalta, a state-owned company.

The Enemalta oil scandal, as it became known, rocked the island right at the start of the 2013 election campaign. A police investigation was launched that led to seven persons being arraigned. However, George Farrugia—the go-between who facilitated the bribes disguised as commissions—was immediately granted a presidential pardon to turn State’s evidence.

Farrugia is one sibling from the John’s Group family, who was being sued by his brothers over fraudulent practices. The information that led to the scandal came from the cache of documents that had been languishing in court as part of the civil case Farrugia’s brothers had instituted against him.

George Farrugia would later declare, the illegal commissions he started paying in 1999 set in motion a chain of kickbacks he would continue paying up until at least 2006. Farrugia said he had paid these bribes to various Enemalta officials.

Although prosecutions against minor players at Enemalta have not been successful, the main accusations, against former Enemalta chairman Tancred Tabone, his consultant Frank Sammut, and oil bunkering partners Francis Portelli and Anthony Cassar, remain pending 12 years on.

Francis Portelli (centre) with Anthony Cassar (right) emerging from court during one of the sittings in the compilation of evidence. The case against them is still ongoing

All accused deny the charges and insist they are innocent.

Going rogue behind his brothers’ backs

Similarly, the case against George Farrugia’s brothers is only now reaching its final stages with the brothers filing their concluding submissions through their lawyer David Farrugia Sacco earlier this month.

The brothers have denied the accusations against them, insisting their brother went rogue behind their backs by setting up a nominee company, Aikon Ltd, of which he was ultimate beneficial owner. The company had a Swiss bank account at the Edmond de Rothschild Bank in Geneva, to further hide Farrugia’s illicit actions. The bank account was used as a slush fund to pay bribes to Enemalta officials.

In his testimony before the court, George Farrugia admitted that his brothers did not know about Aikon Ltd and its Swiss account but insisted they were aware of his actions. The brothers outright denied any knowledge of George Farrugia’s actions, insisting they had sued him long before the oil scandal became public, when they realised, he was siphoning off funds due to the family firm Power Plan Ltd to his own company Aikon.

Invoices submitted as evidence show that George Farrugia and his wife Catherine Farrugia issued multiple invoices on the letterhead of Power Plan but with banking details of the Swiss account held by Aikon.

According to court testimony given by Christopher Farrugia, the son of one of the accused, his uncle George would, for every 10 invoices issued, make out two for Power Plan and eight for Aikon.

“This is fraud as clear as crystal being perpetrated behind his brothers’ backs,” the defence lawyer argued in his submissions.

A brochure instead of bank statements

But the defence also questioned whether George Farrugia was in breach of the presidential pardon’s condition to tell all the truth when he failed to provide banking statements for Aikon’s Swiss account. Instead, in court, George Farrugia presented a brochure of Bank Privee Edmond de Rothschild SA Geneve.

The brothers argued that banking statements would have uncovered who received payments from this secretive account.

“It is clear that George Farrugia is in breach of the presidential pardon when he does not provide the banking documents of the account held in Switzerland by Aikon Ltd and instead, to spite everyone else, presents a brochure of the bank… which is frankly a shameful way of laughing in everyone’s face,” the brothers argued.

Former Enemalta chair Tancred Tabone (left) during a hearing of parliament’s Public Accounts Committee that dealt with the oil procurement scandal at the state-owned entity

They also noted George Farrugia’s inability under cross-examination to remember the Swiss bank’s name. “Eh, eh, Edward, Richmond, something like that… something Rothschild, Rothschild,” Farrugia had testified when questioned by the court in one of the sittings.

Farrugia had also admitted in court that he was not transparent enough with his brothers about Aikon Ltd. He also confirmed on oath that his brothers never received any payment from the secretive company. George Farrugia claimed that on one occasion, he travelled to Switzerland to withdraw $20,000 to pass on to Tancred Tabone, who wanted to get paid in cash.

The brothers are insisting they are innocent and should be acquitted of all charges. The case is being heard by Magistrate Yana Micallef Stafrace.

How George’s devious plan unravelled

Christopher Farrugia started suspecting something was wrong with his uncle George Farrugia when he started noticing the latter’s lavish lifestyle—it jarred with how his brothers lived.

Testifying in court, Christopher Farrugia recounted how on one occasion his uncle had bought an €83,000 watch in front of him. On another occasion, George Farrugia had showed his nephew photos of a collector’s car, only to buy two of them valued at €130,000, the following weekend. Christopher Farrugia told the court that a week later, his uncle bought a garage to house the vehicles.

George Farrugia also owned a field for recreation and a large plot of land in Għargħur.

All this jarred with the simpler lifestyle of his siblings and when Chris confronted George about his lavish spending, the latter said he was being helped by his father-in-law. This was a lie, Christopher testified.

But it was George’s oversight when going abroad that led Christopher to discover his uncle’s fraudulent behaviour. George had left his iPad on his desk and when Christopher touched the screen—it had no password—an invoice identical to those issued by Power Plan appeared but with banking details of Aikon instead. The invoice was for the sale of fuel.

Christopher testified that he tried to verify who Aikon belonged to with the business registry at the Malta Financial Services Authority but discovered it was owned by fiduciary company. Aikon was set up in October 2002, years after Power Plan was set up but being a nominee company, its ultimate beneficial owner was hidden.

Christopher then searched on the company server for the name Aikon and came across KYC (know your client) forms that showed it belonged to George Farrugia. He also discovered the company held accounts at APS, BOV and in Switzerland.

With this information, Christopher informed his other uncles and they commissioned an investigative audit. The results showed that for every 10 invoices issued by George Farrugia and his wife Catherine Farrugia, two would be correctly attested to Power Plan and eight to Aikon.

Power Plan had agreements with Totsa and Trafigura, international oil suppliers, but George entered into parallel agreements with them for Aikon.

After confronting George with their findings, the brothers sued him over what they claimed was theft of business that was due to the family firm.

Christopher told the court that it was his uncle’s wife, Catherine, who was the true accomplice in the crime. She was on all correspondence that had to do with invoicing and billing for Aikon and Power Plan. On one occasion, Catherine also gave written instructions asking for payments to be made in Switzerland.

Eventually, it transpired that George Farrugia would use the Swiss account to pay off Enemalta officials as payback for oil tenders he managed to secure for his suppliers.

Kurt Sansone is Executive Editor of MaltaToday. He was formerly deputy editor of MaltaTod...