Suspected fraud uncovered by MFSA enquiry

An allegedly fraudulent document from a Spanish bank that certified the capital solidity of Spanish photovoltaic manufacturers Solarig, was uncovered during an enquiry by the Malta Financial Services Authority (MFSA), MaltaToday has learned.

In July 2014, Spanish bank Bankia informed the MFSA that it was not in a position to confirm the authenticity of the document – issued by a branch of Bancaja Bank, because it lacked the necessary signature.

The letter had been presented by Solarig in 2012 in its bid to secure a €35 million contract to install PV panels on government buildings. But following an investigation by the Prime Minister’s internal audit and investigations department (IAID), the Maltese police are now to start investigating allegations of fraud.

The letter from Bancia Bank in reply to an eqnuiry by the MFSA on the validity of the banking document presented by Solarig. The Spanish bank said it was unable to verify the authenticity of the Bancaja statement, leading to suspicions of possible fraud

MaltaToday is informed that George Barbaro Sant, the managing director of Alberta, the partners in the Solarig bid, will be among those to be called in for questioning.

In the letter to the MFSA, Bankia Bank’s director of business banking Gonzalo Alcubilla, told the regulator: “It should be mentioned that the letter [from Bancaja] has no signature, so it is not possible to confirm the authenticity of the same.

“In any case, it should be noted that on the date the letter would have been issued (February 9, 2012) the banking business of [Bancaja] had been transferred by spin off to Bankia, so any sponsorship letter could not have been issued by the above mentioned Savings Bank.”

Solarig was part of the Alberta Photovoltaic Consortium which in 2012 was granted a letter of intent by the resources ministry, confirming them as the successful bidders of a tendering process for the installation and operation of PV systems installed on government buildings in Malta.

The discovery of the unsigned bank guarantee – the suspicious document – has however raised questions about the process leading to the successful bidder.

As part of the investigation by the IAID – first revealed by MaltaToday months ago – the MFSA’s legal and international relations unit wrote to the Spanish bank conglomerate Bankia, requesting a verification of the authenticity of the bank document.

Barbaro Sant, his daughter Liz Barbaro Sant, form the Alberta Photovoltaic Consortium, and Antoine Busuttil of Solarig Overseas Holdings, all gave MaltaToday identical statements when asked to comment on the potentially explosive allegations.

“We would not like to get involved at this stage. We are not releasing any information. At this point we prefer to let the political parties talk,” the three individuals said in separate comments.

Energy minister Konrad Mizzi revealed in parliament on Monday a letter of intent, signed by former resources ministry permanent secretary Christopher Ciantar, confirming the acceptance of the Alberta-Solarig offer for the lease of 67,000 square metres of rooftops and sale of energy at 23 cents per kWh.

During Monday’s edition of Reporter on TVM, former resources minister George Pullicino denied having anything to do with the tendering process, insisting that the contract was the responsibility of the Malta Resources Authority, the Department of Contracts and the Finance Ministry.

On his part, Mizzi claims that Pullicino was responsible for the contract, and that while two out of three bidders were excluded over administrative issues, Alberta was confirmed as the successful tenderer despite clear shortcomings over the Bancaja letter.

Adding to the controversy of the PV project was the fact that the Malta Resources Authority approved of the higher-than-normal feed-in tariff of 23c per kWh that government would pay Solarig, three months after the letter of intent was sent to the Alberta Photovoltaic Consortium in September 2012.

The concession agreement was signed in December 2012, whereas the letter confirming the MRA’s approval for the feed-in tariff was issued on 5 December, 2012. Normally, Enemalta paid clients 16c per kWh fed into the national grid.

The letter of intent from Christopher Ciantar stated that it was “intended to create a legally binding contract between the two parties”.

Reacting to the government’s claims, Ciantar said that originally a 29c per kWh feed-in tariff was suggested by a Big Four firm, before the resources ministry re-evaluated the cost due to the decreasing cost of panels.

“A tariff of €0.225 per unit was judged reasonable during these analyses,” Ciantar said, adding that payroll and security costs for the 25-year project were also taken into consideration.

Three bidders were shortlisted from a list of 15 applicants by the adjudicating committee. A tender was subsequently issued by the contracts department. “The whole process was governed by it and not the Ministry for Resources and Rural Affairs. MRRA acted in full compliance with the instructions received from the contracts department,” Ciantar said.

Ciantar said that only one tender was received because the project was “innovative, of significant risk to the investor and as one potential bidder put it, too onerous in favour of the government.”

According to the tender, the government would pay €35 million for the PV panels and then buy the electricity at 23c per kWh.