Farrugia took ‘double commission’ in ruse devised by MOBC chief

The former chief of the MOBC, Frank Sammut, devised a way of paying oil trader George Farrugia a 'consultancy commission' that was paid back to him, MaltaToday has learnt.

Farrugia, who turned State's evidence after being awarded a presidential pardon to reveal information on the network of bribes inside Enemalta, did not tell the parliamentary Public Accounts Committee that MOBC chief Frank Sammut paid him a "double commission".

By storing diesel fuel at the MOBC tanks before June 2004, Farrugia received not just his regular commission of $1 per metric tonne of oil he sold for TOTSA, but Frank Sammut would pay him another dollar in the form of a consultancy fee, so that Farrugia could give him a 50 cent cut.

MaltaToday is informed that this system of commissions took place behind the backs of Powerplan shareholders, the brothers of Farrugia, whose company acted as agent for TOTSA and Trafigura.

Farrugia would later use a similar plan, funnelling commissions paid to Powerplan to his own company Aikon Ltd - a system which blew apart when his brothers accused him of siphoning off millions in commissions.

It is still unclear as to how Farrugia paid an alleged $400,000 in bribes to Frank Sammut and former Enemalta chairman Tancred Tabone. Under the latter's chairmanship, Trafigura and TOTSA only clinched five fuel tenders out of 16. Farrugia did not tell the PAC this week that 23 contracts were secured  under the chairmanship of Alex Tranter. 

Police investigators looking into the case of the bribes paid to Enemalta officials for the procurement of fuel to the state energy corporation, have not yet established any cash trail that confirms the alleged $300,000 that oil trader George Farrugia says he paid Tancred Tabone, the former Enemalta chairman - or any cash deposits made in any account, local or overseas, belonging to Tabone.

Farrugia, an agent for commodities firms TOTSA and Trafigura, this week told the parliamentary Public Accounts Committee that he had met the Enemalta chairman in Geneva, ostensibly to facilitate a cash transfer he was to pay to Tabone.

Farrugia this week said he paid some $100,000 in bribes to Frank Sammut, formerly the chief of Enemalta's bunkering subsidiary MOBC until 2003, and then to Tancred Tabone, so that he retains a fair share of business in supplying oil to Enemalta.

"Farrugia is giving the impression that he was asked to fly to Geneva to facilitate a cash transfer," a source privy to the ongoing criminal investigations told MaltaToday. "It is known that Tabone did carry out a visit on official Enemalta business in Geneva, but he says that he was invited to dinner by TOTSA's Olivier de Richemont and George Farrugia made a surprise appearance. Tabone claims no money was ever offered."

Farrugia suggests the opposite, although police are now interested in learning more about the fact that the trader was also representing another company that took fuel contracts from Enemalta - Spanish traders Sempra - a fact so far undisclosed to the PAC.

Emails in MaltaToday's possession certainly confirm the intimacy Farrugia had with Frank Sammut, the petrochemist who headed the Mediterranean Bunkering Oil Corporation before his post was terminated and he was later reappointed in 2003 as a consultant to Tabone at Enemalta.

Farrugia went out of his way to arrange a visit for Sammut to the Sempra offices, with the help of the Maltese embassy and diplomat Cecilia Attard Pirotta which, on its part, acceded to the request.

The friendship between the two is indicative from the way they communicated with each other. Farrugia tells Sammut in one email: "Hi Frank in-nittien ix-xiħ (Hi Frank, you dirty old man)."

Farrugia has claimed that the $400,000 in so called "commissions" he was paying to Sammut and Tabone up until around 2006 (both men were up until this time, silent partners in Island Bunker Oils Ltd, a rival to state bunkering firm MOBC) had been unnecessary, learning as he did later that Enemalta was awarding its fuel tenders to the cheapest bids irrespectively of his bribes.

Farrugia has told the PAC that he was hassled by "unknown" Enemalta officials, and emails to TOTSA show him making the assumption that Enemalta had accepted his tender even though it was not the cheapest.

But an analysis of the fuel tenders awarded by Enemalta shows that TOTSA was in fact the cheapest offer compared to three other bidders, at the time of this email: Naftomar with $53 per metric tonne, Vegaz at $59, and Eni at $65. TOTSA's price was $53.

The question is whether Farrugia was giving the false impression to the trading companies he represented that his alleged insider contacts were indeed putting him under immense pressure to pay bribes; or that he needed to exert some form of pressure himself, when in reality he could not even do so.

Farrugia may have availed himself of the genius of Frank Sammut in withholding the true scale of the commission he reaped on fuel sales to Enemalta, from his own brothers and co-shareholders in family business Powerplan, a subsidiary of the John's Group.

Farrugia told the PAC that in November 2003, the Libyan government halted what was previously believed to be a "preferential" rate on the sale of fuel to Malta. The purchase of oil was then handled single-handedly by chief financial officer Tarcisio Mifsud, while the purchase of jet fuel and other fuels were handled by Enemalta's head of petroleum Alfred Mallia. Both men are facing criminal charges of accepting bribes in relation to the fuel scandal.

So far Farrugia has been keen on pushing the fact that he was asked directly for commissions by these individuals.

Police investigators however believe there is more than meets the eye. "We know that he paid a lot of cash in alleged bribes, and that he also continued gifting people in Enemalta middle- and top management, for example a very expensive pen to [acting chairman] William Spiteri Bailey after 2010, and silver tray to Ray Ferris. If Farrugia is blaming everyone for asking him for bribes, isn't it also possible that Farrugia himself was persistent in his own offers?"

In Frank Sammut, Farrugia found the makings of a creative mind that combined his knowledge of industrial chemistry with the law of the marketplace. A former chemistry teacher at De La Salle College, he was a consultant at Enemalta under

Tabone and two former chairmen before 2003, and worked closely with ministers like Ninu Zammit and Josef Bonnici.

In 2003 Enemalta discovered that when the Libyan 'preferential' supply was halted, the real price of fuel on the open market was actually far cheaper. And it was here that Enemalta started to buy fuel at far cheaper prices than before.

"The Libyans took Malta for a ride and the government did not even realise it," a former Enemalta official told MaltaToday. "It's highly unlikely Enemalta was not aware of this when it started buying fuel at prices 25% cheaper than the Libyan price."

From November 2003 onwards, Enemalta informed trading companies they would be invited to bid for the supply of fuel, which would then be decided by a new fuel procurement committee. Frank Sammut is known to have been present on just one of the meetings. And as data released by Enemalta shows, under Tabone's chairmanship Trafigura and TOTSA won five out of 16 contracts; they altogether took 23 contracts under the chairmanship of Tabone's successor, Alex Tranter.

It's clear that Farrugia has set much store during his PAC testimony, in accusing Tabone as one of the main recipients of his bribes. But he seemed equally intent on blurring any sort of relationship he might have had with Tranter. In fact, although the companies he represented enjoyed more success under Tranter's chairmanship, Farrugia described Tranter's relationship with him as "cold", even suggesting that Tabone had poisoned the well in order to keep Farrugia under his influence.

But emails seen by MaltaToday show a different kind of relationship between Farrugia and Tranter.

It is known for example that the Tranters and Farrugias had shared a dinner table in Miami during a business visit. And on the 22 October, 2009, Tranter's wife requested a sponsorship for her dance company from Farrugia himself, the email starting off with a "Dear George... hope you are well."

If Farrugia truly shunned politicians, as he so loftily declared to the PAC, his continual attempts to meet investments and transport minister Austin Gatt - who was responsible for Enemalta up until 2010 - belies this claim.

He even went out of his way to contact Prime Minister Lawrence Gonzi by email, to transmit a complaint from some Swiss acquaintances who had travelled to Malta - it was necessary, it seems, for Farrugia to actually remind the prime minister that his wife Cathy Anne Farrugia had been his secretary during Gonzi's time at Mizzi Organisation.

At the PAC, Farrugia has been careful to dispel his proximity to politicians - enduringly illustrated by the gift of an artisan Maltese clock to finance minister Tonio Fenech - by claiming that the John's Group had donated a Daewoo vehicle to the Labour Party. A Labour Party source has since told this newspaper that the car, allegedly valued at some €4,000, was "paid" by the John's Group in repayment of a €9,000 bill for adverts carried on Super One between 1999 and 2002.

There is also more to be understood about Farrugia's relationship with Trafigura. One of the telling correspondences leaked to MaltaToday is a Yahoo Messenger Chat between Farrguia and Naeem Ahmed of Trafigura, whom Farrugia told the PAC that he had lost contact with him in 2003.

The Yahoo chat, which takes place in July 2010, shows that Farrugia was still in contact with Ahmed. And the conversation contains a telling and perhaps, give-away comment.

Ahmed asks Farrugia: "Did the dragon like the diamond?" - a suggestive comment referring to a gift. Later on in the chat, Ahmed demands that Farrugia returns a "50K" paid to him. Farrugia says he can reverse the transaction in two weeks' time, but Ahmed wants it done sooner. So Farrugia asks Ahmed if he has "a bank account in Switzerland???" so that he sends him a bank draft from a Swiss bank.

What transaction did George Farrugia have to reverse to a Trafigura official?

"Trafigura could have given different options - prices - for the sale of oil to Enemalta, depending on the time it took for them to be paid in full," a former Enemalta official told MaltaToday. Trafigura had not won a contract with Enemalta since 2006, but in 2010 it won two fuel tenders.

There is a risk that incomplete investigations into the way fuel tenders were worked out and commissions paid, has resulted in a partial explanation of the Enemalta fuel scandal.

Even Gonzi's decision to grant Farrugia a presidential pardon to turn State's evidence, now takes on a new dimension given the fact that the former prime minister knew Farrugia's wife during his time at Mizzi Organisation, where he worked as a lawyer on a special concession during his time as Speaker.

Police investigations may have to be widened and the PAC's questioning intensified to establish what really happened inside Enemalta.