Opposition puts Auditor General on the defence in seven-hour grilling

Two things were clear from yesterday's Public Accounts Committee grilling: the government believes the shortcomings were symptomatic of the oil scandal that rocked the country while the opposition is seeking to exonerate a former Nationalist minister from any shortcomings flagged by the National Audit Office.

Yesterday proved to be a long and tiring day for Auditor General Anthony C. Mifsud who endured a seven-hour grilling by members of the parliamentary committee scrutinising the report compiled by his office on Enemalta's fuel procurement between 2008 and 2011.

Mifsud, who has declared assuming full responsibility of the report, has refused to have his staff put under the spotlight by the PAC - unless their intervention was necessarily required.

In fact, he was only accompanied by deputy auditor general Charles Deguara, NAO official Keith Mercieca and Profs Ian Refalo as his legal consultant.

The Auditor General's main concern was that canons would be turned on those who compiled the report. Agreeing to appear before the committee, but refusing to be considered as a witness, Mifsud's concern soon proved to be correct.

No sooner had the Auditor General finished his presentation, Nationalist MP Beppe Fenech Adami calmly turned towards Mifsud inquiring how the NAO carried its audit.

But his line of questioning soon changed from seeking to know the names and qualifications of the audit team to asking whether anyone of them had worked on the BWSC report.

Calmly, Mifsud replied that since it was an audit report and not an investigation, different persons were employed.

The questions on the staff's competence however put the NAO officials on the defensive, to the point that the Auditor General said, "I feel that certain questions are unacceptable as they are a ferocious attack on the independence of my office."

Throughout the grilling, the NAO officials kept highlighting they had been tasked with carrying out an audit on the strategy employed by Enemalta in its procurement of fuel and not an investigation on the procurement carried out.

Based on the salient points that emerged from the damning report, the PAC raised questions on the "undue ministerial interference", the poor-record keeping and the hedging strategy adopted by the state energy entity.

It was clear that, on one side, the Opposition was seeking the Auditor General's own words to "confirm" that former minister Austin Gatt "had simply done his job as a minister". At the same time it attempted to cast doubts on NAO's decision not to interview persons mentioned in the report, such as Austin Gatt, for their shortcomings.

On the other hand, the government sought Mifsud's confirmation that the "abysmal record-keeping" and the lack of transparency 'fit the puzzle' which saw Enemalta at the heart of the oil scandal, the U-turn in the Nationalist Cabinet's decision to go for HFO despite a 2006 declaration to go for gas and, subsequently, high utility tariffs.

But the Auditor General refused to be dragged into the issues.

"Agreeing to disagreeing" with the Nationalist MPs, Mifsud said Austin Gatt had been wrong, dubbed "ministerial interference", when he instructed the Risk Management Committee on the parameters to be followed during hedging negotiations.

"While it is true that the minister responsible of the corporation has the right [and obligation according to law] to give direction on policy, he shouldn't have interfered with the strategy as per good governance practices," the Auditor General said.

NAO officials kept insisting it was the Risk Management Committee who was responsible of the hedging strategy. The minister should have stopped at guiding the committee towards price stability and leave the strategy up to them, they argued.

Pressed by Fenech Adami, they also "confirmed nowhere in the report does it state that Austin Gatt interfered in the procurement of oil".

The Auditor General refused to link the misgivings he found with higher utility tariffs paid by consumers.

Parliamentary secretary for justice Owen Bonnici at one point asked Mifsud whether any alarm bells rang once their findings had been concluded. 

"You have written a hard-hitting summary which taken into the context of the Enemalta oil scandal and the decision taken by the previous administration to go for heavy fuel oil despite an agreed policy to go for gas, is cause for concern," Bonnici pointed out.

However, the Auditor General kept firm to his position that his office hadn't been "looking out for fire" but carrying an audit. 

"At this point I think you have to listen to what the other witnesses have to say," Mifsud said.

He also refused to comment when asked whether the correct decision was taken when Energy Minister Konrad Mizzi asked the police to investigate the findings.

"This was a ministerial decision and it's not up to me to comment," he said.

The same neutral position was adopted when asked whether he should have investigated further the contracts awarded to TOTSA - represented locally by oil trader George Farrugia who was granted presidential pardon in return for information on corruption in the trade and supply of oil products to Enemalta - even though theirs wouldn't have been the most preferable bid.

But Mifsud kept on insisting it hadn't been in their remit to investigate further. "I repeat we were tasked with carrying out an audit and not an investigation. Moreover, the case was then sub judice."

While refusing to confirm or deny that the hedging strategy adopted by the RMC, as ordered to be carried out by Austin Gatt, had resulted in higher bills, the NAO officials however noted that Gatt's instruction "tied Enemalta's hands" in its hedging formula.

"Because of this, Enemalta might have failed to capitalise on favourable conditions," he said.