[ANALYSIS] Time to close the door to businessmen in government?

The scandals of recent years and the clamour generated by MaltaToday's revelation that a former chief executive of Enemalta's bunkering arm MOBC, was paid commissions by Trafigura for the supply of oil to Enemalta, has shown that the so-called revolving door between the public and private sectors is now totally out of control in Malta.

It is no surprise that Malta slid four places into 43rd place on Transparency International World's Corruption Index List. The index is sobering. No region or country in the world is immune to the damages of corruption. But while the press in Malta has had a critical role of bringing the public's attention to the issue of corruption, the negative effect on public trust has been ignored by governments and MPs.

Plus ça change. In September 2011, 88% of 500 Maltese respondents to the EU's Eurobarometer continued to cement the strong perception that corruption is an endemic and unavoidable aspect of public life, but that the EU can help tackle this problem. And the majority, 50%, believe the reason for corruption in Malta were the close links between business and politics. 40% also said this was down to MPs' inaction, 21% blamed the lack of transparency on public spending, 24% said that there is too much light sentencing, 21% said that it was down to public appointments not based on merit, 22% said corruption was part of daily life.

So how to tackle the revolving doors of businessmen and government appointees in Malta?

It's an issue that has gained considerable traction inside the EU and the United States of America. Transparency watchdog Corporate European Observatory for example, hosts RevolvingDoorWatch, which exposes the way EU officials and politicians find themselves in lobbying and private sector jobs after years at the heart of the EU's sensitive internal operations.

According to COE, Brussels is home to one of the highest concentrations of political power in the world and the revolving door is one of the most important ways in which lobbyists can influence the political agenda in Brussels.

"When European decision-makers leave office and go straight into lobby jobs, or when lobbyists join the EU institutions, the risk of conflicts of interest can be great, undermining democratic, public-interest decision-making, and it is the responsibility of the EU institutions to ensure that this does not happen."

Examples include former Maltese commissioner Joe Borg, who left the fisheries commission in 2009 and was getting a 'double salary' as part of his transition into the job market from his former Brussels post. Borg was receiving both a salary from Fipra, a PR consultancy lobbying on maritime issues, and an €11,000 monthly allowance from the European Commission.

But closer to home, the reality of revolving doors and conflicts of interest has often been taken far less seriously by our legislators. On an island where mountains tend to be made out of molehills, the many conflicts of interest flagged by MaltaToday have often fell on deaf ears.

Conflicts, galore...

Most recently, the permanent secretary who heads the Internal Audit and Investigations Department inside the OPM, Rita Schembri was reported by whistleblower Philip Rizzo to have conducted private consultancy work during office hours and inside her IAID office, for a gaming company that was interested in purchasing a 40% stake in the Casinò di Venezia. It was one of the few cases where a clear breach of the public service's code of ethics was in clear view: but instead of having the case determined by the Public Service Commission, the head of the civil service wrangled the case into the hands of the Auditor General for an inquiry that will not issue sanctions, but recommendations.

At the heart of what is probably the most controversial decision taken by Enemalta, was Alex Tranter, revealed by this newspaper to have been in a flagrant conflict of interest when he occupied the post of Enemalta chairman at the same that the energy company was considering an offer by Danish firm BWSC for the Delimara power station's new turbines: it turned out that Tranter's business associate, PN donor and magnate Nazzareno Vassallo was BWSC's local partner for the €200 million contract.

Tranter claimed with MaltaToday that his conflict had been declared in 2008, and that he did not sit on the adjudication committee for the contract, with Investments Minister Austin Gatt's full knowledge. Tranter later claimed that the Auditor General's assertion that he should have resigned from chairman was "not only gratuitous but also explicitly contrary to the Enemalta Act as well as the Code of Ethics approved by Cabinet".

Instead, it was Enemalta chief executive David Spiteri Gingell who sat on the committee in Tranter's stead to approve the BWSC tender: leaving Enemalta in 2008, then carrying out a strategic review of Vassallo Builders Group in 2009, before being appointed a director of emCare360, a subsidiary of Caremalta Group, Vassallo's elderly-care provider, in 2011.

Additionally, his private firm David Spiteri Gingell Consulting was incorporated as DSG Consulting Ltd, with equal stakes held by the Vassallo Group and 6PM Holdings plc. The company has conducted costings of Malta's national environment policy, Malta Enterprise's Life Sciences Park, and corporate reviews of the Government Property Division and Mater Dei's patient information system.

A further illustration of the lack of a revolving doors policy in Malta comes from the fact that Tranter stepped down from Enemalta chairman in April 2010, to move into solar power giant SunPower. Only two months earlier, SunPower Corporation had acquired SunRay Malta Holdings, of which Tranter was a director. It was only weeks after SunPower had expressed interest in a public call for the installation of solar panels on government buildings... jointly with the Vassallo Builders Group.

"I was aware of SunPower's interest in responding to this expression of interest through my business connection with SunRay Renewable Energy. Nonetheless, I was not in any manner involved in the submission of the EOI by Vassallo Builders Group," he had told MaltaToday.

In 2010, MaltaToday revealed that the head of Transport Malta, Mark Portelli, had opened himself up to a possible conflict in his role as chairman, because he was also one of several shareholders with direct interests in the maritime industry he had to regulate - companies like Bezzina Ship Repair, Mizzi Holdings, Hili International, and Midi plc, the developers of Tigné Point and Manoel Island. Again, the suggestion of a conflict of interest was refused by the finance ministry.

In 2008, MaltaToday also called into question the dual role of Claudio Grech - former head of Austin Gatt's secretariat, negotiator for the Smart City internet village in Kalkara - as chairman of the government's sensitive IT agency MITA, and his role as CEO of Smart City Malta.

The OPM back then claimed that Grech's was a non-executive chairmanship at MITA, a sort of 'part-time' position.

But in a window into the rationale behind such business-to-state appointments, the OPM had said it was "normal and desirable for government to seek professional experts with relevant competencies to add value to these positions in the interest or the organisation they are asked to lead and in the national interest."

But it's this kind of relationship between the government executive and Malta's business class that keeps raising eyebrows about the way people like Frank Sammut, the former chief executive of MOBC - Enemalta's bunkering arm - could have been associated with companies vying for the MOBC's privatisation, even when these very allegations were communicated to Investments Minister Austin Gatt in parliament. The question arises: why do conflicts of interests tend to be treated so lightly in Malta?

Even the role of former Enemalta chairman Tancred Tabone is now in question. Tabone had made Sammut a consultant to MOBC after his role was terminated on the sale of MOBC to the government. In April 2004, roughly at the time of the alleged kickbacks-for-oil and the privatisation of MOBC, Sammut was rumoured to be readying himself for a position with Island Bunker Oils Ltd. Four years later, Tancred Tabone joined the company as a director-shareholder.

Can we stop the door?

But can a revolving door policy avert such flagrant instances of conflicts? Generally, a revolving door policy gives a "cooling off period" that prohibits former office-holders or such political appointees from lobbying the same government agency, or work on contracts that the government officer was personally and substantially involved in while in public service.

In the USA, 27 states have some form of revolving door policy that restricts lobbying activity for one year or less. Eight states impose a two-year ban on lobbying by some or all of its officials. A few states, such as California, New Mexico and Mississippi, impose a permanent ban for working on identical official actions or contracts that the government officer was personally and substantially involved in while in public service.

In the UK, senior civil servants and ministers are required to consult ACoBA, the advisory committee on business appointments before taking up a new business appointment. However, it's only an advisory body and there is nothing to stop individuals from ignoring its advice.

Transparency International advocates a statutory body that can regulate the post-public employment of former ministers and civil servants or other political appointees, with rulings that are mandatory and enforceable.

The reality is that in Malta, it's the businessmen and entrepreneurs who are being shuffled into government appointments by friendly ministers. And as non-executive chairmen, they retain their professional employment elsewhere while gaining an insight into the heart of government work, public tenders, and other political decisions. When it's time to go, they pass through the revolving door back from where they came from.

So the problem is not the people in the civil service who join the private sector. It's the ones from the world of business who are being let into the heart of government through a convenient, political window. And there's nobody who's going to look a gift horse in the mouth.