Rita Schembri requests IAID scrutiny, but ethics breach investigation remains hazy

A request to the Auditor General to carry out a scrutiny of the operations of the International Audit and Investigations Department, on the strength of reports by MaltaToday on a breach of ethics by the IAID director Rita Schembri, has been formally made by Schembri herself.

But there is no specific request to have an investigation into whether her involvement in a financial bid to purchase a 60% stake in the Casinò di Venezia by Far East Entertainment plc, was a breach of the public service management code's code of ethics.

There is no indication that the request for the Auditor General's inquiry was made by Godwin Grima, the principal permanent secretary who also heads the IAID's supervisory board (IAIB).

The IAIB in fact told Prime Minister Lawrence Gonzi on 22 November that it had no right to call in witnesses or demand information from third parties, and that it was "severely limited" in conducting a thorough investigation:

1.     Instead the IAIB proposed that the Auditor General investigate the allegations and assess whether Schembri "acted appropriately taking into account the position she occupies, both as director general responsible for the IAID as well as her recent role of developing even further a governance structure for the public administration."

2.     However on 23 November, it was Rita Schembri - the person under scrutiny - to ask the Auditor General to carry out a scrutiny of IAID audits, "namely that all audits and investigations have been professional conducted in full independence, transparency and without any direct or indirect influence", as well as:

• Allegations by former EU commissioner John Dalli of her personal participation in the OLAF investigation concerning a bribery allegation (Schembri heads the OLAF liaising unit, Afcos, which is part of the IAID);
• Allegations made by whistleblower Philip Rizzo, who was part of the casino bid and met Schembri in her Valletta office;
• Whether there is any conflict of interest in her work by being a non-executive director of South African private investment firm Brait, and for having held the chairmanship of the Farmers' Wine Cooperative for the past 16 years;
• If any of her court litigation in personal civil cases impinged on her work at the IAID.

3.     On his part, on 26 November, Auditor General Anthony C. Mifsud told Schembri his office only received instructions from the finance minister of the public accounts committee.

4.     To which the Finance Minister issued his own instruction on 27 November, to confirm the request by Schembri for the Auditor General to conduct the inquiry.

Godwin Grima told the Prime Minster that the IAIB first met on Friday 16 November, and then again on 21 November to review details from Grima's meeting with Schembri, as well as a report she drew up, and a log of the emails which were mentioned by MaltaToday as showing her involvement in the casino bid.

Grima also said he had suspended approval that he gave back in April 2012, for Schembri to occupy a non-executive directorship in Brait, although it is understood that FEE plc's bid for the casino is unconnected to her Brait directorship.

Grima also said that Schembri, who has denied any wrongdoing, called in the Malta IT Agency to her office after she alleged a possible hacking and illegal hoarding of information at the IAID. Grima said MITA had been requested to keep a copy of the email back-up tapes as from January 2012.

Schembri was also asked to give her reactions to revelations by whistleblower Philip Rizzo of having discussed the casino bid with her, in her meeting with the IAIB on 19 November.

While the IAIB said that any inquiry undertaken by the Auditor General should not take more than three weeks, Schembri - who is now out on long leave - said she should take vacation leave while the Auditor General undertakes the scrutiny.

DOCUMENTS [Read the letters exchanged between the IAIB and the Auditor General]

The story

The detailed trail of correspondence handed to this newspaper by Rizzo has confirmed that Schembri used her government office at Valletta Buildings, in South Street in Valletta, to discuss the investment proposal by Far East Entertainment Group plc to acquire a 60% stake in the Casinò di Venezia, of Birgu.

Apart from using the IAID offices for a private business affair, Schembri's relations with the FEE Group and their interest in the Birgu casino did not have the official approval of principal permanent secretary Godwin Grima.

Both instances could suggest a serious breach of the estacode's code of ethics: using official IAID facilities for private purposes; and failing to declare a possible financial or other interest in FEE's casino bid.

Key players

Rita Schembri is permanent secretary and director-general of the IAID, which is an office inside the Office of the Prime Minister. She also aheads the anti-fraud coordinating unit Afcos, which liases with the EU's anti-fraud office OLAF. She also sits on the OLAF supervisory committee.

Godwin Grima is the principal permanent secretary, heading the civil service and serves as Cabinet secretary. He is also the chairman of the Internal Audit and Investigations Board, the board that has oversight of the IAID. Schembri is also a member of this same board.

Philip Rizzo was appointed by FEE chairman Colin Perkins to carry out a financial review of the 60% stake from Casinò di Venezia and met Schembri inside her IAID office. He claims he has done his civic duty to by reporting the breach of ethics.