A rushed and mistaken pardon that should be withdrawn

On Thursday I testified before the Public Accounts Committee that is considering the NAO’s audit of Enemalta’s fuel procurement, in which I declare that State evidence George Farrugia did not deserve the presidential pardon for his role in a system of bribes he devised in the procurement of fuel oil.

The important source of insider information crucial to the oil companies was the availability of fuel stocks, and this is a factor in the Enemalta oil scandal that has yet to be established.

George Farrugia, one of the Farrugia brothers of the John’s Group that ran the subsidiary Powerplan, had nurtured good contacts with particular officials at Enemalta and the Malta Resources Authority, who crucially kept him informed of existing stock levels of fuel oil in Enemalta’s tanks and in offshore bunkering spots, to give him the competitive edge on fuel procurement. 

Police investigations have so far failed to identify conclusive evidence that bribes were paid to key Enemalta officials like former chairman Tancred Tabone; and Farrugia unjustly accused people like Ray Ferris, who was subsequently acquitted of the charges levelled against him.

That much is already a sign that Farrugia should have been charged with bribery of certain officials, as well as with money laundering. 

The “water-tight” system of procurement established by the fuel procurement committee (FPC) at Enemalta meant that there must have been a loophole somewhere in the process for George Farrugia to clinch lucrative deals for his clients, oil companies Totsa and Trafigura. It was either this or that Farrugia was bluffing when he said that he had people on the inside.

Between 1984 and 2003 Malta acquired its fuel from Libya at a discounted price. There had been no attempt to change the procurement arrangements which were carried out by the transmission of simple orders in a fax.  The Libyan government informed the Maltese government that it would stop selling discounted oil in November 2003. Before that, Libya was not even paid for the fuel – instead, the Central Bank would pay those Maltese companies for the money they were owed by the Libyan government.

During the 2000s, Farrugia had been running Powerplan, an agent for commodities and an importer of lubricants.

But in court action by his brothers it was later revealed that he was running a secret operation for himself through a fiduciary company and his personal company Aikon Limited, with oil giants Totsa and Trafigura as his clients.

How the FPC bought Enemalta’s oil

Under Tancred Tabone, the FPC would meet for two hours on a designated day when it awaited emails from tenderers for the procurement of oil for Enemalta. During these two hours, the FPC would shut itself in a room and receive tenders based on three criteria: price, specifications, and stocks available for provision. 

The FPC would meet at a precise hour, and the tender would be issued and publicized; tenderers had to provide oil specifications, the price of oil and the quantities of oil they could provide. They could only provide these specifications at a specific time during which the FPC met, between 12 noon and 2pm. The board secretary and another secretary, receiving the offers, would come into the FPC boardroom as the offers come in.

At this point, Pippo Pandolfino as chief financial officer would read out the offers and work out the maths for them. They would rank the two most favourable offers, and in a telephone call before all FPC members, the chairman would ask the tenderer whether this was their best offer – they would concede a 20 minute lapse to get a better price, and the FPC would choose the best tenderer. All members would then sign the paper where the CFO’s calculations had been jotted down and these would be sealed.

I am convinced that all decisions by Enemalta would be communicated to then investments minister Austin Gatt, who had the knack for being precise and on the ball when it came to the micro affairs of his ministry. 

Upon revisiting the cache of emails that MaltaToday used to reveal the scale of corruption in the provision of fuel to Enemalta, it is clear that technical officers would communicate stock levels to Farrugia, keeping the businessman in the know on this crucial aspect of tendering – especially considing that these were Excel sheets being passed on to Farrugia detailing the stocks of fuel on the island.

The person who was passing this information on to George Farrugia was a person who would receive minor gifts from Farrugia. The person, Emanuel Mizzi, was investigated by police and I believe charged. What I know is that in his PAC testimony, Farrugia never mentioned the information he would receive secretly from Mizzi.

George Farrugia was economical with the truth at his PAC hearing, having said nothing of the role of the Malta Resources Authority official Godwin Sant – now charged in court with bribery – played in providing him with confidential information related to tenders from Transport Malta. It’s no coincidence that at TM, there is today the CFO, now a director of procurement – Ray Stafrace – who acted as accountant for Farrugia’s personal company Aikon and also offered his own registered address for the company, used to hide away oil commission profits and kickbacks from family company Powerplan.

And yet, people like Ray Stafrace was not investigated, while others had been emotionally destroyed by over-zealous investigators. Ray Ferris was destroyed, emotionally and physically, by Farrugia’s allegations. And yet he was acquitted. Today George Farrugia is still trading as if nothing had happened, travelling as he sees fit while so many other people accused by Farrugia have their assets frozen. 

And all this because Lawrence Gonzi chose to believe only George Farrugia. And to add insult to injury, the people who are whistleblowers, the Farrugia brothers, are themselves charged with bribery today.

Gafà spoke to the John’s Group Farrugia brothers soon after the MaltaToday story broke, to supply the police with information on George Farrugia; but still, after Farrugia was given the presidential pardon, the police instead went ahead and charged the Farrugia brothers with bribery. The charge sheet had been prepared on 9 March, 2013 by former police chief John Rizzo but never issued; and then issued only on the eve of the resignation of former acting police chief Ray Zammit.  Why? Only God knows.

Aikon’s illegal activities

But it was the discovery of Farrugia’s illegal activities at Aikon that led to the rupture with the rest of his brothers in John’s Group, who started taking legal action against him to recover millions he siphoned off in oil profits and deposited through another fiduciary firm in a Swiss bank. 

In the course of their legal action, Farrugia warned his brothers that if his activities were disclosed “the government would fall”. 

At the same time that the Farrugia brothers took court action – where they deposited a cache of Aikon emails that detailed the corruption at Enemalta – a member of the Farrugia family passed on the incriminating cache of emails in August 2012 to a security service officer detailed with then Prime Minister Lawrence Gonzi.  Gonzi was told that the Farrugia brothers wanted to pass on the information to him but the prime minister told the security detail to pass the information on to his superior – the head of the Security Service, Godfrey Scicluna – who passed on the files and documents [later published by the newspapers] to Bernard Pace, a senior member of Austin Gatt’s secretariat.

No such investigation ever took place, save for a mere tax compliance investigation into the activities of Powerplan. 

When MaltaToday broke the first story in January 2013, it was an invoice from Trafigura showing it had paid a commission or kickback to Frank Sammut, then director of the Enemalta subsidiary Mediterranean Offshore Bunkering Company and a consultant to Enemalta – an official who had direct control of fuel stocks, so important to Farrugia’s operations.

Indeed Farrugia had known Frank Sammut and Enemalta official Alfred Mallia from their prayer meetings in the Neocatechumenal movement. Apparently they had no problem praying while discussing their kickbacks.

Farrugia would later provide a regular stream of extravagant gifts to Enemalta officials during the time in which Totsa and Trafigura took most of their contracts from Enemalta, mainly under the chairmanship of Alex Tranter.

Farrugia spoke in his emails of having had regular meetings or conversations with ministry officials from Austin Gatt’s ministry, and this might have not been strange at all. In fact Farrugia offered Nationalist MPs the John’s Group Valentine’s Hall in Hamrun for election events in 2008, as well as BMWs, and even allowed MPs to garage their personal cars in John’s Group property. 

I have doubts about why Farrugia was given a presidential pardon, and it is clear that there was familiarity between the Gonzi and the Farrugia families – Cathy Farrugia was in fact a secretary to Lawrence Gonzi when he was Mizzi Group chairman. The period she worked together with Lawrence Gonzi must have been over eight years and they had ample time to chat together.

The person who was the real mastermind behind this whole affair, George Farrugia who has still retained his oil trading business, is still out there doing business with his presidential pardon, travelling to and from Malta to Libya as if nothing had ever happened.