A tale of two cons

Nobody was surprised when former Labour minister – now independent MP – Konrad Mizzi refused to answer more than 100 questions when he was forced to testify at the public inquiry into the assassination of Daphne Caruana Galizia.

He appeared in the inquiry despite having previously announced he will not testify in the public inquiry into the assassination of Daphne Caruana Galizia – something for which he could have been fined or even get a prison sentence.

When he eventually appeared, Mizzi was asked questions on several issues with which he has been linked, including his relationship with Nexia BT, his offshore company Hearnville, his bank account, as well as the Vitals and Electrogas deals.

He refused to answer any questions and made only two short statements: first that he “never took kickbacks or rewards” during his political career and that all his actions were given the go-ahead by the then Prime Minister Joseph Muscat; and secondly that he was “very sorry” for the Caruana Galizia family and that he had no involvement in her murder.

Mizzi is subject to several magisterial inquiries and therefore he has a right to refuse to answer questions. It is worth recalling that, in mid-November, Konrad Mizzi was interrogated by the police force’s Financial Crimes and Investigations Department at their offices in Santa Venera.

If one studies the publicly known details of the two so-called ‘private-public partnerships’ in which he was directly involved and for which he is responsible, both politically and legally, one perceives a system that goes beyond ‘kickbacks or rewards’, as he put it. I refer to the Electrogas project and the privatisation of the management of three public hospitals.

In both cases, a mechanism was somehow included in the eventual system such that someone would be consistently syphoning money from the eventual running of the project.

This is very clear in the Electrogas project: in this case, this syphoning of money will continue for eighteen years. This became possible when the Electrogas consortium was obliged to purchase its gas supplies only from Socar – for 18 years at a ludicrously high price that is some four times that prevailing in the current international market.

Even so, Konrad Mizzi was probably correct when, on his resignation, he claimed that the Electrogas contracts were scrutinised by the European Commission and by the Auditor General, and that the government had conducted discussions on the contracts through a professional negotiating team.

The invisible hand that somehow included in the contract the obligation to buy gas from Socar did not get just a ‘kickback or reward’ as normally perceived in corruption cases. It took much more and in a very subtle way.

In the case of the Vitals contract it has resulted that a few months before Vitals was granted the deal to run three Maltese public hospitals, they actually financed the takeover of Technoline, a long-established local company dealing in hospital and clinic equipment and supplies.

Within a few months Vitals not only got the ‘concession’ to run three hospitals from the Maltese government, but also gave Technoline exclusivity of supply that practically meant that all purchases of medical equipment for the hospitals had to pass through Technoline.

When Steward took over the Vitals contract, they also took over the obligation to buy medical supplies exclusively from Technoline.

Once again, the invisible hand that included this obligation in the contract did not get a ‘kickback or reward’ as normally perceived in corruption cases. But it will be pocketing a lot of money, via Technoline, so long as the hospitals concession lasts – all of 30 years.

The principle behind the two cons is the same: create an undeserved constant inflow of money for many long years – 18 years in the case of Electrogas and 30 years in the case of Vitals/Steward.

This is the work of an evil genius. It is fascinating that this cannot be explained simply as ‘kickbacks or rewards’. Perhaps one can describe this system as corruption disguised as a convoluted business deal with malice aforethought. But corruption it is.

Konrad Mizzi was also the architect behind the Montenegro wind farm project in which Enemalta was involved. In this case, there are not enough details in the public domain that could lead to the existence of some long-term constant financial benefit for some anonymous player; and this case is also worthy of investigation from this angle.

Corruption, of course, takes many forms – not only ‘kickbacks or rewards’. That is why I find Konrad Mizzi’s declaration about ‘kickbacks or rewards’ intriguing.

More trouble in the Vatican

Pope Francis is on a mission to overhaul Vatican finances, but scandals that have erupted on his watch raise doubts about how much progress has been made.

The pope recruited executives from the worlds of business and finance to fill top jobs in the Curia as part of a drive to bring the Vatican’s accounting and budgeting procedures up to international standards. Momentum on reforms has accelerated this year, with several papal edicts, including one establishing a new code for public tenders to check corruption and conflicts of interest.

The latest scandal involves a questionable 2014 investment by the Vatican’s Secretariat of State in a former Harrods warehouse – in the Chelsea neighbourhood – that was projected to become luxury apartments. Pope Francis dismissed five Vatican employees over the deal, and an investigation was launched to determine whether the bureaucrats were scammed or if they themselves profited. The Vatican’s loss in the deal is estimated at £66 million to £150 million.

In the wake of the London scandal, the pope ordered the Secretariat of State to be stripped of its funds and the responsibility for the management of its assets was moved elsewhere.

In September, Pope Francis forced the resignation of Cardinal Giovanni Angelo Becciu – a close aide and former No. 2 at the Secretariat of State – over allegations he had channelled some €100,000 in Holy See funds to his brother’s charity. Becciu denied any wrongdoing, telling reporters he had the power to use its funds to support charities.

The Pope seems to be willing to publicize his battles to get recalcitrant administrators to toe the line. Obviously, Catholics, whose donations are the church’s lifeblood, want to be reassured that their hard-earned money is not being stolen or wasted.