George Farrugia insists he had no option but to pay bribes

Welcome to MaltaToday's live blog of the PAC hearing into the Auditor General's audit of Enemalta's fuel procurement policy

EXPLAINER | Auditor General's report on Enemalta fuel procurement

9:46pm Farrugia says that his company had gifted a Daewoo car to the Labour Party, adding that his brother Raymond was in contact with former Labour official Manuel Cuschieri. He does not recall what had become of the car. Farrugia adds that he will check what Labour had done with the car and inform the PAC at a later stage.

He adds that the company also provided vehicles to both major political parties during electoral campaigns. The session is adjorned to Monday at 5:00pm.

9:36pm In the presentation he held at Castille in 2009, Farrugia recalls that apart from former Prime Minister Lawrence Gonzi, Austin Gatt, Edgar Galea Curmi, Leonard Callus and Beppe Hili were present. 

Farrugia adds that he had met Gatt's successor as minister responsible for Enemalta, Tonio Fenech when his brother had invited him to join him in paying a visit to the minister. On his way to Fenech's house, Farrugia learnt that his brother's wife had crafted a clock for Fenech. Moreover, another two similar clocks were given to the Nationalist Party. These clocks were not worth more than Lm 500 adding that he was informed that the PN had raffled these clocks. He also says that his family business had gifted a vehicle to the Labour Party.

9:26pm Farrugia says that he met Gatt over the possible investment in oil storage from a Middle Eastern company. He says that he must have forgotten the meetings at the garage which Gatt mentioned in court because he has no recollection of them at all. He hesitates when pressed to say how often he met Gatt. Farrugia says that on a few instances he spoke to Gatt on bills which the Nationalist Party had not paid for services rendered by John's Garage.

Quizzed by Bonnici whether he spoke to Gatt on the payments he gave Tabone, Farrugia says: "No, I was scared." He adds that he was scared because he was delving in illegal activities.

Asked whether he knew that Gatt and Tabone were relatives, Farrugia says that he only got to know years later.

Farrugia says that in his political relationships he was closest to former President Guido de Marco, adding: "I always tries to avoid politicians". At this point, he stirs a mini-revolt against him as all MPs are united in taking offence at his comment, which he later said was misunderstood.  

9:20pm Farrugia says that he never spoke to the minister responsible for Enemalta, Austin Gatt on oil procurement. Owen Bonnici reads out Gatt's testimony in court in which the former minister admits that he did meet Farrugia at the minister's office or Farrugia's family business garage. Describing these meetings as "intimate" Bonnici says that these meetings evolved around oil storage.

Farrugia denies meeting Gatt at the family business garage or offices. He explains that Gatt's office was situated a few metres away from the garage in Hamrun. He does confirm that he met Gatt in the minister's offices in Hamrun and Valletta.

Bonnici says that Gatt was the minister overseeing "this whole mess" and asks Farrugia what kind of relationship he had with the minister. At this point, Nationalist MP Beppe Fenech Adami intervenes and says that for clarity's sake, Gatt was not responsible for Enemalta between 1999 and 2003. Bonnici retorts that however Gatt was responsible for Enemalta in following years, when Farrugia was still paying bribes to Tabone. 

9:04pm He says that he has given a detailed list of all the gifts he gave and who was on the receiving end to the police. In order not to forget anything he says that he would prefer to compile a similar list and submit it to the PAC.

Farrugia then talks on his relationship with Alex Tranter as "cold" and adds that he suspects that Tancred Tabone must have told Tranter not to trust him, to ensure that Tabone maintains his control over him. 

8:59pm Farrugia says that the commissions he received from Total and Trafigura were paid into his foreign accounts. He adds that after deciding to pay no more bribes in 2006, he still continued working in the field.

Turning to the gifts he gave to his acquaintances, a hesitant Farrugia admits that these were illegal gifts and says that he gave three paintings, one to Enemalta's CFO Antoine Galea and another to former Enemalta deputy chairman William Spiteri Bailey. 

8:56pm Farrugia decided to stop paying bribes because he was "tired of being used and being a puppet." Farrugia adds that he was under the impression that Tabone had a hold of his successor at Enemalta, Alex Tranter.

8:51pm Oewn Bonnici tells Farrugia that businessmen do not pay money "for nothing," and Farrugia says that paying bribes guaranteed that he was awarded the contracts despite these being the most advantageous. 

8:42pm Farrugia says that he believes Tabone was bluffing when he demanded the payments and when his term at the helm of Enemalta came to a close, he had told Farrugia that he was still in control. In fact, Farrugia says that he kept paying bribes to Tabone for a whole year after Tabone's termination from Enemalta. He adds that most meetings between the two were held at Tabone's Forestals store in Sliema and the first payment was done by Farrugia in person in Switzerland. 

8:38pm Farrugia says that soon after MOBC folded and after his termination at IBOL, Sammut's consultancy role at Enemalta was also terminated.

"I do not know why I was paying Tabone and others from my own pockets. My bids were the cheapest and the most competitive. I paid Tabone $100,000 for the MOBC deals and another $300,000 to Tabone and Sammut for the Enemalta bids."

8:32pm MOBC was folded because business would have shifted from MOBC to IBOL, bringing bunkering services to a halt in the process. Farrugia says that at the end of the day, Frank Sammut was always in control. 

8:27pm As Sammut's retirement from Enemalta was nearing, Tancred Tabone had called Farrugia and at a meeting in Tabone's Forestals store, he had told Farrugia that  he would now start pocketing Sammut's share. 

8:25pm Sammut who was a consultant to Enemalta chairman Tancred Tabone,  had justified the decision to reduce Total's stocks by claiming that Enemalta was incurring losses. The 600 ton reduction was probably transferred to another tank, Farrugia says. He adds that Enemalta was not suffering any losses through evaporation from tanks at Hal-Saptan and the fuel was being stolen. 

8:21pm Farrugia says that at one point he had called on Tancred Tabone, by than Enemalta chairman, because he felt hard done by Tarcisio Mifsud who had informed Total that their stocks would be reduced and the rental fees would increase, for no apparent reason. 

8:15pm After informing Sammut that Trafigura were unhappy about his request, Sammut had retorted that he would inform Tancred Tabone if Trafigura refused to pay. Farrugia says that from what has come out from the oil scandal, "it is evident I was paying for nothing." He says the contracts would still have been awarded to the lowest bidder, regardless of the kick backs. 

8:07pm Farrugia says that Trafigura at first refused to pay Sammut and after finally giving in they paid $18,000 to ensure that things do not get out of hand and informed Farrugia that "this is the first and last time" they would give in to such demands. Owen Bonnici tells that this version was not credible, because it does not make much sense for a company to be annoyed at being asked to pay illegal kick backs while accepting to do so. Farrugia says that Trafigura's decision to pay the kick back was a purely financial consideration. 

7:58pm Farrugia adds that Frank Sammut was known as "Mr 10 per cent." In December 2003, Farrugia met international commodities trading company, Trafigura employee Tim Waters over the sale of oil for MOBC. At a meeting with Sammut at the MOBC headquarters in Marsa, Sammut took Waters apart and had a 20 minute chat. Later that evening, Waters told Farrugia over dinner, that Sammut had told him that if Trafigura pay a bribe they would also be guaranteed Enemalta fuel oil contracts, although Sammut was not an Enemalta employee. Waters had told Farrugia that he was "annoyed" by this proposal, yet a few months later Trafigura started bidding for Enemalta contracts. 

7:45pm Farrugia says that he had told Tabone's consultant Frank Sammut about the money he was giving to Mallia and Mifsud when the two were in contact over the possibility of MOBC purchasing oil from Total through Farrugia. When the two were in a car, he was asked by Sammut "what's is in for me?" Farrugia says that he had told Sammut that he could take half of his consultancy commissions from Total. This amounted to around $2,500 per month.

7:40pm Farrugia says that he came into contact with former Enemalta chairman Tancred Tabone who was then the MOBC chairman. Farrugia says that he informed Tabone of the bribes Mallia and Mifsud were taking because Tabone had been informed by Frank Sammut, who in turn had come to know about the kick backs from Farrugia himself.  

7:32pm Former Enemalta finance manager Tarcisio Mifsud entered the fray after Mallia was hospitalized. Farrugia says that he was advised to meet Mifsud by Mallia himself. Asked Farrugia answers in the affirmative as he was involved in previous meeting he had with Enemalta. In was only then, Farrugia adds, that he learnt that Mifsud was also on the take.

7:29pm Half the commissions Farrugia earned from Total went to Mallia. He says that Mallia earned Lm 40,000 on each tender he was awarded. "You either pay or you do not work at all," Farrugia says, explaining that in order to win the bids he had to pay Mallia. He did this after receiving the commissions from Total and delivering the money personally to Mallia at his home.

Azzopardi momentarily stops the meeting as Farrugia's lawyer Franco Debono is told not to record the hearing on his phone. Debono explains that he was only following a live blog which was streaming the hearing. 

7:27pm Farrugia said that he started bidding for Enemalta procurement contracts following a strike in 1999 when he had given 10,000 US dollars to Mallia for a 20,000 tonne consignment. Farrugia says that at that stage he believed that Mallia did not share this money with anyone.

7:17pm Farrugia says that when he gained permission to store oil in Halsaptan he had to bribe former head of Enemalta's petroleum division Alfred Mallia. Farrugia says that he met Mallia firstly when he was offered the opportunity to store oil in Hal-Saptan which was offered on the condition of bribing Mallia. Farrugia says that in 1999, he had won the right to sell oil stored in malta to Enemalta, once again on the conditions set by Mallia.

7:09pm Farrugia explains that in the past he had started off at the family business, John's Garage and later started importing oils and fuels, mainly Total products. In 1996 he came into contact with Total. In 1999 he came into contact with Enemalta which tried to convince him sell oil stored by Total in Malta to the stored in Malta to the state company. 

7:07pm Owen Bonnici asks Farrugia what is his profession, to which the state witness says that he imports lubricants and offers services to petrol stations. He adds that in the past he provided services to oil multinationals and represented French oil company Total.

7:04pm Tabone is dismissed and in walks George Farrugia. He is flanked by two lawyers, including former MP Franco Debono.  

7:00pm After consulting his client, Tabone's lawyer says that he would prefer to study the Speaker's ruling and appear on another date. PAC member Beppe Fenech Adami says that Tabone's lawyer cannot attempt to convince the PAC members that the Speaker's ruling was unlawful. Tabone's lawyer agrees. 

6:56pm Tabone's lawyer says that the Speaker's ruling is in breach of his client's fundamental rights. Bonnici insists that while having a right to make such submissions, the PAC reserves the right to evaluate the request because the Speaker's ruling was very clear. PAC chairman Jason Azzopardi says that "whatever these legal arguments are," the PAC is bound by the Speaker's ruling. The ruling made it clear that as long as questions do not incriminate the witnesses, nobody can refuse to answer any questions. He adds that the PAC would have no difficulty in giving Tabone and his lawyers time to study the ruling and postpone Tabone's hearing to a later date. 

6:54pm PAC member Owen Bonnici says that as long as the questions do not incriminate the former Enemalta chairman, Tabone cannot refuse to answer. 

6:48pm The former Enemalta chairman, Tancred Tabone, has been summoned and after a short wait he walks into the room, flanked by his legal advisor Dr Henri Mizzi. The lawyer says that since Tabone is undergoing legal proceedings, he "would rather not answer any questions." PAC chairman Jason Azzopardi says that the Speaker's ruling given yesterday made it clear that legal proceedings have no bearing on PAC hearings.

6:43pm The former Enemalta chairman, Tancred Tabone, who is currently facing proceedings in connection with the oil procurement scandal, will be the first to appear tonight. However, his presence is not expected to last long as he will officially ask the PAC to postpone his testimony because his lawyer Gianella de Marco is currently abroad. Yesterday, the lawyer wrote to the Public Accounts Committee requesting her client should not appear before the parliamentary committee due to the ongoing court case. 

6:40pm Farrugia turned State's evidence after being granted a presidential pardon, when MaltaToday revealed back in January 2013 that one of the companies he represented - Dutch commodities giant Trafigura - was paying an Enemalta consultant a "commission" on the supply of oil to Enemalta. The resulting criminal investigation revealed a network of bribery reaching up right to the top echelons of Enemalta management.

6:37pm Welcome to the tonight's PAC hearing which will see oil trader George Farrugia appear for the first time in front of the committee. Former MP Franco Debono, Farrugia's defence lawyer is also present. All is set for an interesting night.