Prime Minister claims MOBC chief was kicked out over ‘conflict of interest’

The Prime Minister has claimed that the real reason for the termination of Frank Sammut's contract as head of Enemalta's bunkering arm was down to a conflict of interest.

The latest declaration conflicts with earlier accounts from the finance ministry that Sammut's contract was officially terminated in 2004 when the MOBC was sold off by Enemalta to the state as part of a recapitalisation process, for which Sammut was eventually paid €95,000 in a golden handshake, before being reappointed as a consultant to Enemalta and MOBC chairman Tancred Tabone.

"At the time it was because of conflict of interest, because he was in some kind of a business and at the time the decision was 'no you should not be part if it'," Gonzi was reported by The Times as saying during a question and answer session with the newspaper.

Although Sammut was removed over a conflict of interest, the decision still does not explain why he was still paid a golden handshake.

The OPM has insisted that the government was aware of the conflict of interest, despite never having officially made it known after it was revealed that Sammut - alleged to have been paid kickbacks by fuel supplier Trafigura for the supply of oil to Enemalta - had his role as chief executive of MOBC terminated in 2003 before being appointed as consultant to Tancred Tabone up until August 2004.

The finance ministry has stated that the termination of the role of chief executive was the reason Sammut's contract was terminated. The OPM now claims it was aware of the conflict of interest when it was flagged in parliament by Labour MP Leo Brincat in 2004.

At the time, investments minister Austin Gatt had been told that Sammut was planning an exit to join Island Bunker Oils Ltd, a private company that was tendering for the spare storage capacity freed up by the cessation of MOBC's bunkering operations in 2004.

Tancred Tabone, who is also being investigated over the graft allegations, would later become a shareholder of Island Bunker Oils in 2008.

Leo Brincat had told Gatt in April 2004 that Frank Sammut, then chief executive of the Mediterranean Oil Bunkering Corporation, was planning to leave MOBC when his contract expires and become an independent consultant for the recently formed company Island Bunker Oils.

The report published in the April 2004 issue of Bunkerspot, an intelligence publication for the global bunker industry, read that Sammut's move had created concern in the industry who felt that Island Bunker Oils "might inherit some or all of MOBC's supply business and be treated more favourably than its competitors in terms of obtaining storage capacity at the terminal."

The Bunkerspot report however coincides with the sale of MOBC, which led to the termination of the role of MOBC chief executive. Instead Sammut was then being employed as a consultant to Enemalta and MOBC chairman Tancred Tabone to "reorganize and rationalize" the storage of petroleum products.

Earlier in January 2004, again in reply to a PQ from Brincat, Gatt told the House that the MOBC "was not aware of the allegation that a director had an interest in bunkering operations. The company says no director has a conflict of interest. But the Honourable member is invited to be more specific, even confidentially, and I ensure there will be no problem to carry out the necessary investigations."

Then in April 2004, in a reply to Brincat, Gatt specifically referred to allegations being made against Island Bunker Oils, and said that he had received many "written" allegations of conflicts of interest, but that the accuser had not supplied any proof that could give anything concrete.

"I suggested that if he had any suspicions he should make a report to the police, the ombudsman, or the Permanent Commission Against Corruption. I know this person who made these allegations filed a report to the Ombudsman, and that the Ombudsman is investigating. This is what I can report," Gatt told Brincat.