Minister’s right-hand man ‘bullied’ audit firm over Wasteserv shortcomings

Labour MP Leo Brincat has published a letter from the former auditors of the national waste agency Wasteserv, complaining to finance minister Tonio Fenech of having been berated by his former head of secretariat Alan Caruana over their audit reports.

The audit firm, BDO, specifically made reference to numerous shortcomings in their audit of the Wasteserv accounts, especially over an inadequate asset inventory that failed to reconcile a book value of €66 million with the original cost of €86 million.

This allegedly prevented BDO from issuing an audit opinion on the existence and valuation of the six assets in question.

According to the letter, which BDO partners copied to the Malta Government Investments and Malta Investment Management companies, Fenech's former head of secretariat Alan Caruana had requested a meeting to discuss the 2010 accounts audit.

In the letter, the audit firm says that during the course of the meeting "Caruana opted to focus mainly on putting in doubt and questioning the integrity of the experts' opinion of BDO Malta as auditors."

"Coming from a top executive of the major shareholder of the company, to whom our auditors' report is addressed, we must express out total disagreement to this highly unethical approach to the issue at hand, and to which we have constantly referred to in out three years we have held office, both in our management letters as well as our auditors' report," the letter reads.

"We consider this behaviour a threat to our independence as auditors by irresponsibly pressuring our firm to change our opinion. By putting in question our professional advice in the implementation of the reclassification carried out and threatening legal advice on the issue, the representative of the majority shareholder is trying to influence our position with respect to the qualified basis of opinion."

In a comment, Brincat said it was "shameful" that a person of trust had shown this kind of attitude to the audit opinion. "It is shameful that Caruana bombarded them with some political bullying of the worst kind," the MP said.

Alan Caruana has been appointed as a consultant to the finance minister on a salary package amounting to €67,473. Caruana reportedly resigned from the roles of head of secretariat just a few days before Tonio Fenech appointed him as his consultant, on 13 June, 2012.