Enemalta chief officer denies claims of NAO inquiry derailment

Former chief technical officer seconded to energy ministry • denies having downplayed security problems with smart meters

Enemalta’s chief technical officer, Peter Grima, has resigned his senior post at the state utility after claims that he had misled the National Audit Office way back in 2012, in information he supplied on the operation and alleged tampering of smart meters.

Grima, who denies the allegation, was seconded to the ministry for energy where he has been working there since the beginning of May.

This newspaper was told that Grima, one of Enemalta Corporation’s senior management officers who oversaw major changes such as the smart meter transition and the phase II extension to the Delimara power station, was faced with the claims that the Auditor General’s first foray into the allegations of tampered smart meters had been derailed. 

In 2012, alarm bells rang at the finance ministry over allegations of the massive fraud taking place due to tampered smart meters. The Auditor General was tasked with a report into ARMS Ltd’s operations in 2012, as a follow-up to a report commissioned in 2011.

MaltaToday’s source said that the NAO had concluded, based on responses provided by Enemalta and chief technical officer Peter Grima, that the smart meter technology was robust and tamper-proof.

Indeed, Enemalta claimed in 2012 that Maltese media reports that it was possible to tamper with the smart meters were “untrue” and that the technology deployed in the meter-to-back-end connection “works in a manner as to render this impossible.”

In a letter from his lawyer, Peter Grima has “unreservedly” denied that he had misinterpreted the facts to the NAO or in any way attempted to mislead the inquiry.

“All the replies given to the NAO in their 2012 questionnaire were based on information that was available to Enemalta and my client at the time,” Grima’s lawyer said.

Grima has denied having been “interviewed” by Enemalta in connection with the replies to 2012 NAO investigation, or that he was ever made aware that he was under investigation in connection with the NAO replies.

“To date [he has] neither seen the internal Enemalta report which is apparently the basis for this article nor has he been requested to explain any of the replies given to the NAO questionnaire in July 2012. Moreover his resignation from Enemalta took place over a month after he had accepted a secondment with the Ministry for Energy where he has been working since the beginning of May, and the terms of his resignation were mutually agreed with Enemalta.”

NAO’s 2012 inquiry

In its replies to a questionnaire frpom the NAO, Enemalta had said that any discrepancy between totals billed against total generated power “raises an automatic alarm”.

“EMC claims the models of meters deployed have a high degree of built-in protection against tampering,” the NAO was told in 2012. “In conclusion NAO is reasonably assured, basing on the technical information supplied by Enemalta Corporation, that as long as the necessary steps to ensure a continuous and adequate ‘detect and inspect’ approach are taken by the ARMS/WSC/EMC triumvirate, the phenomenon of meter fraud will be controlled through a regime of a combination of prevention and corrective techniques.”

And yet, just a year later in 2013, the government was faced with proof of massive fraud involving an organised racket of tampering of smart meters with no check and balances in place.

MaltaToday was told by a government source that in 2012, during the NAO audit and questionnaire, Peter Grima had downplayed the possibility of tampering with smart meters.

But in his statement to MaltaToday, Grima said the information provided to the NAO was based “on the information available to Enemalta at the time – up to July 2012 – and that there was evidently no intention on [my] part to in any way or manner derail the NAO investigation. At no time, was there any attempt made to downplay the possibility of meter tampering.”

According to the information received by the NAO, Enemalta claimed that “the logs of any such tampering gets recorded. These may be accessed at a later stage and discovered through data analytics.

“In this regard, one should keep in view the fact that smart meters deployed have the functionality of comparing total billed against total generated power. A discrepancy of these figures raises an automatic alarm”.

The corporation submitted that the framework included physical and communications protectors against tampering, and that Enemalta had audit trails in place with a process for surprise inspections.

What transpired however was that Enemalta had at the time of this report, no active inspectors’ unit and neither surprise inspections, with no comparative checks on electricity generation going out, and whether this was being adequately bills.

Furthermore, there was no audit trail and more importantly, no effective ‘automatic’ alarm.

Grima not responsible for meter section after July 2012

The smart meters and the automatic metering system used by Enemalta were procured from IBM and ENEL after a competitive call for tenders in 2009, and the smart meters were equipped with security features and anti-tampering devices which were believed to make them resilient to tampering.

“These numerous features were described in detail to the NAO by my client and it was obviously underlined that these protection features were only operational once the meter has been installed at the consumer’s end and communicating with the central meter management system,” Grima’s lawyer said.

“Compared to the meters which were being replaced, the smart meters were designed with extensive protection features. However, as stated, to fully make use of the audit capabilities, including reconciliation of energy balance between the energy supplied by the substation and that billed, it is imperative that the meters are in communication with the meter management and billing system, where data analytics could be developed to identify potential tampering.

“The anti-tampering philosophy was designed to rely both on hardware protection and data analytics which would be carried out on the consumption data sent by the meter to the meter management and billing system. Unfortunately however, in July 2012 only a small percentage of the installed meters were communicating with the meter management and billing system and hence for the majority of the smart meters installed the main protection was based on hardware and meter sealing.”

Grima said that he was then only responsible for the Enemalta distribution section, including the meter section until June 2012, after which following an internal reorganization, the responsibility was no longer held by him.

Grima said that after July 2012, following “important advances” in developing anti-tampering measures with IBM and ENEL, he was no longer involved in their implementation.

Grima also said the tampered meters discovered in 2013, relied on the use of “inside knowledge by Enemalta employees in carrying out the work by opening the meters, and physically tampering with the components, then closing them back up whilst hiding any traces.”

Grima said that that this was something which was not believed possible in 2012, at least not without breaking the case, as these were believed to be factory-sealed.

When the first tampered meters were recently sent to ENEL for investigations, it was reported that ENEL could not believe that the meters had been opened without leaving any visible traces.”

Enemalta investigation

In the summer of 2013, Enemalta had obtained information about tampered meters, and by October it hit upon the first evidence that tampering had occurred.

The investigation was run jointly by Enemalta Corporation and the police, with the scam being finally revealed in 2014. By May 2014 it was clear that the NAO’s 2012 report, in which Enemalta’s technical superiors had discounted the possibility of tampered smart meters, had been extremely inaccurate and that the NAO had been misled.

The estimated theft ran into millions of euros, according to the energy ministry, although this has not yet been established. But government claims the racket was organised within a formal framework that included professional middlemen.

Sources claim that Enemalta chairman Louis Giordimaina, who today is heading national airline Air Malta, had also based his conclusions on the security of the smart meters in 2012 on advice of the corporation’s chief technical officer.

Enemalta is said to be treating the matter seriously, given that the 2012 NAO report was presented to the House of Representative, with the misrepresentation of the facts possibly having led to those implicated in the scam to continue with their illicit activity for another two years.

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