Fenech unaware of 2009 directive not to award direct orders

Former finance minister Tonio Fenech was "not aware" that Austin Gatt's transport ministry had ignored recommendations by the finance ministry not to continue awarding direct orders to former PN candidate Georg Sapiano.

Fenech told MaltaToday he hadn't been "informed directly" that his ministry's permanent secretary warned Transport Malta not to keep on issuing contracts to Sapiano's legal firm, Aequitas, without a transparent call for tender.

"Frankly, I didn't even know the directive was issued," he added.

In the space of three months in 2009, the finance ministry issued two directives to the transport minister insisting that direct orders should not be issued to Sapiano's legal firm Aequitas.

While approving a €300,000 direct order to Aequitas dated 15 January 2009, the finance ministry directed the transport ministry to stop giving direct orders "to the same service provider for the sake of transparency, accountability and competitiveness".

But three months later, the same transport ministry requested the finance ministry to approve another direct order, this time costing €65,000.

Warning it was "only for the last time basis" it was granting approval, finance once again warned transport to stop "granting direct orders to Aequitas" for the sake of competiveness.

But Sapiano's firm still continued to benefit from direct orders: only the following year he received over €130,000 from Transport Malta. Direct orders from Transport Malta were also dished out to Aequitas in the succeeding years, garnering €40,857 in 2011, €53,288 in 2012 and €7,028 this year.

According to Fenech, today the Opposition's spokesman for finance, the ministry used to be "extremely cautious" in approving direct orders, ensuring that these would only be approved when necessary. But the weakness, he added, lay in the lack of sanctions available when someone would still opt for a direct order when other options were available.

"I had also changed the system where direct orders used to be approved retroactively and then ministries used to approach finance to ratify it. We adopted a system whereby the finance ministry approves a direct order before it is granted by the respective ministries," he said.

Turning his attention to Economy Minister Chris Cardona, whom the Opposition has accused of direct interference in the Privatisation Unit's selection of a legal firm for consultation on casino licences, Fenech insisted it was the finance minister's responsibility to issue direct orders and not any other minister's.

He also rubbished arguments that the Privatisation Unit's decision that was overruled by Cardona, had been "non-binding", as the government claimed.

Cardona is accused by the Opposition of having instructed the Privatisation Unit on which legal firm to choose in a recent competitive process for legal consultancy on an expression of interest for the granting of two new casino licences.

The government, on its part, argued that this was not a tender and therefore did not necessitate the involvement of the Privatisation Unit.

"An expression of interest cannot be used to bypass a tender," Fenech argued. "An expression of interest leads to a tender. The Privatisation Unit received a sealed offer. You can call it whatever you want, but at the end of the day it remains a tender."

The former minister went on to "challenge" government to name instances where a Nationalist minister forced the Privatisation Unit to change its decision.

"What was incorrect were the millions in direct orders awarded by the former government," Cardona had said when asked whether it was proper for a minister to intervene in public tenders.

According to the Auditor General's annual report, €45 million was dished out in direct orders in 2011 by the Nationalist government. Fenech's own ministry was the biggest spender, with over €15 million, followed closely by the health ministry, with almost €12 million.

"They want to 'accuse' us of giving out direct orders? Even they are giving out direct orders," he said, insisting the crux of the argument was that Cardona overruled a decision that belonged to the Privatisation Unit and not to the ministry for the economy.

Cardona has defended his actions by insisting he wanted other companies to be awarded contracts by the government "and not the usual five families".

According to Fenech, this failed to make sense: "If I want to give the chance to someone else, why do I call in the Privatisation Unit? Why do you ask a company to bid if you already know you want to give it to someone else?"