Investigation finds ‘flagrant breach’ of rules in €469,000 PBS car lease deal

After sacking of CEO John Bundy,  Contracts department orders repeal of PBS car lease deal

An investigation by the Department of Contracts has found a “flagrant breach” of procurement rules when the Public Broadcasting Services – on former CEO John Bundy’s watch – took out a €398,000 car leasing contract for eight years.

The investigation has led to the director-general contracts to terminate the contract.

“There are sufficient grounds to determine that procurement regulations have been blatantly breached and that such breaches irremediably vitiated the award of this procurement process. Consequently, it is being decided that, given the breaches are of a serious nature, the contracts awarded in terms of these class for quotations are terminated with immediate effect.”

The decision was communicated to the PBS board of directors, that recently terminated the employment of John Bundy after his political appointment to CEO of the national broadcaster, in August 2016.

The board and CEO locked horns over Bundy’s profligate spending, with the car leasing contract – which totals at least €469,000 when including VAT – becoming the subject of an internal inquiry by auditors RSM.

In September 2017, the PBS board passed a motion of no confidence in Bundy after learning of the car leasing contract. Bundy had only raised the issue once at board level on 18 January, when he sought advice on replacing PBS’s ageing car fleet.

The new investigation confirms previous reports by MaltaToday that PBS ignored clear rules to issue a public call for tenders, and instead obtained quotations from leasing suppliers.

But it has now emerged that meetings were held with the prospective supplier, Burmarrad Commercials, before the company submitted its ‘winning’ quotation.

“It is clear that the conduct by [PBS] seems, a prima facie, to have been focused to advantage the award of the quotations to Burmarrad Commercials. This is in flagrant breach of the procurement regulations.”

It was only after a meeting with Burmarrad Commercials’ representatives at PBS, that the company’s final quotation was actually submitted. In an email, the representative later told PBS employees: “…It was a great pleasure meeting you this morning. As discussed please find attached the revised quotations for the leasing of a fleet of vehicles for PBS.”

Contracts Department director-general Anthony Cachia said the email and the fact the company had submitted its winning quotation after the meeting, meant Burmarrad Commercials was “an accomplice” in PBS’s breach of rules.

“This by its very essence breaches the principle of equal treatment and transparency. Apart from the fact that it is very unorthodox that quotations are subject to discussions, especially if such discussions took place with one of the potential suppliers, such conduct is clearly in breach of the fundamental principle which should underlie each procurement process.”

There was an additional breach: the €398,000 contract was artificially split into 13 individual contracts, each representing the cars being leased – one of which was for John Bundy.

The Contracts DG said there was “no justifiable objective reason” but for the express aim of circumventing public procurement rules. “Such a breach is to be considered an extremely serious breach… consequently, the ensuing contracts should be terminated.”

Each contract was also in excess of €20,000, which in itself should have instantly necessitated a call for tenders. Only contracts whose value is less than €10,000 can be procured by direct order.

The investigation sought Burmarrad Commercials’ version of events, and the company has 10 days to appeal the Contracts Department’s decision.

Bundy sacked

The investigation’s decision will vindicate a decision by the PBS board of directors to sack John Bundy, a veteran television presenter appointed to the PBS job in 2016 without a public call for appointment.

In late September, the PBS’s board of directors unanimously passed a motion of no confidence, after directors accused Bundy of showing a “lack of awareness of what the relationship should be between CEO and the board of directors.”

They accused Bundy of taking arbitrary decisions, which were presented to the board as a fait accompli, and the directors were faced with threats of legal action against them personally and the company.”

The directors said they could no longer tolerate the situation and declared they had no faith in Bundy.

Bundy was said to have only once alerted the board of directors about the possibility of car leasing. But the contract itself was never green-lit by the board.

Suspiciously, the person actually responsible for procurement at PBS, corporate services manager Edmund Tabone, was completely side-lined and left in the dark about the deal. Instead, it was left up to Mario Micallef, the manager for advertising sales, to gather the quotations.

Although MaltaToday reported a total of 14 different contracts signed for a car lease, the contracts investigation dealt with 13 cars, all leased for a total of eight years, varying from the cheapest for €230 monthly (plus VAT), to the highest being €600 (plus VAT), which was meant to be Bundy’s car.

One of the more curious aspects of the deal was that – according to board minutes seen by MaltaToday – one of the cars was for the exclusive use of Natalino Fenech, the former PBS head of news, who in 2013 stepped down from his position after Labour’s election.

According to the directors’ minutes, Fenech was “still on PBS’ payroll with all perks and allowances”, despite his secondment to the University of Malta as a lecturer.

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