Transparency and accountability: No cheap solutions

Last Sunday, the newspaper Illum carried an interview with Rabat mayor Charles Azzopardi in which he defended himself following a report carried by the same newspaper the previous Sunday that revealed that the mayor was being investigated for misappropriation, corruption and nepotism.

The original report had alleged that people close to the mayor had received dubious payments for works allegedly carried out in Rabat. The direct orders were, to say the least, suspect. One of them, to the value of €1,080, was given to a Chinese restaurant for cleaning work in Chadwick Lakes. It turns out that the Chinese restaurant is owned by the handyman of the local council, a certain Paul Tanti.

Apparently Tanti allocated payments to different businesses, and relatives, including two brothers and his father, with every payment shown against an entity with a different VAT number. The description of the works that were being paid for is also suspicious because many companies and individuals were paid for work that is not in their line of business.

According to the original story, a whistleblower within the local council had prepared a 16-page report on what was happening and this was sent to the police, different ministers, the Labour Party and the Local Councils Association.

This is an incredible mess.

What struck me most, however, was the mayor’s ‘defence’ that was published last Sunday as a ‘reply’ to the original article.

In short, the mayor practically admitted that he and his council were skirting financial regulations by splitting up jobs into smaller bits and pieces that had to be given to different entities with different VAT numbers. Splitting one job into small direct orders to the same contractor was against financial regulations.

More important than that, he stressed, is the fact that the council had saved money.

Abusing the system can save money, of course. But even if the mayor is the most honest person in Malta, he adopted a system that is open to abuse and therefore he cannot justify his actions.

The financial regulations aim at establishing a system that is as foolproof as is poossible. There could be other ways of procurement that are not foolproof but open to abuse. One honest person opting to sidetrack financial regulations to ‘save money’ encourages dishonest people to do so with malice aforethought.

The mayor does not seem to realise this, at all.

In short, transparency and accountability in public procurement – whether petty purchases made by local councils or multi-million contracts given by the state – do not necessarily come cheap and they have a cost.

Many people do not seem to understand this.

In awarding a contract to a private enterprise, another private enterprise can negotiate with bidders of different options. They can even change the rules of the game as they go along. Theoretically, an entity giving the contract cannot cheat itself, although a director or employee could cheat the entity.

In the case of public procurement, the money that is forked out is public money and does not belong to the people choosing a bidder and awarding a contract. The public, therefore, has a right to know that everything is being done above board. Rules to this effect had therefore to be drawn up: the financial regulations that, admittedly, are sometimes cumbersome and frustrating. But they are a necessary evil.

This problem is not limited to local councils paying for small jobs.

Investigating and taking action against the small fry breaking the rules is fine, but doing so while ignoring the abuses of the big sharks is, to say the least, hypocritical.

The 2018 report of the Public Contracts Review Board indicates that there are problems at a higher level where the costs of contracts run into millions. It results that 60% of appeals against decisions on contracts were upheld and that there was a 30% increase in appeals.

There was also an ‘alarming increase’ in appeals made before the tendering period had elapsed. This indicates that there is an increase in cases where interested bidders feel that conditions and specifications of contracts to be awarded were tailored to suit some particular bidder and not in the general interest. This is completely unaccepatble.

Even more unacceptable is the ‘explanation’ given by the Minister of Finance, Edward Scicluna, that the increase in appeals is due to lack of adequate training for staff involved in the process and underqualified members of selection boards. This is a very lame excuse. More so, because – more often than not – the system that Scicluna forms part of, chooses such people because of their political allegiance rather than because of their competence and expertise.

The declared intention of moving towards negotiating procedures in public procurement continues to exacerbate the concern about lack of transparency and accountability.

Ignoring or skirting the rules so as to save money risks undermining the standards of transparency and accountability. Cheap alternatives are open to even more abuse.

Good investment

Reading through the 2018 report of Malta International Airport plc, one cannot but be struck by how much the international airport is a success story.

After being built by contractors for the Works Department that scrupulously followed the financial regulations – in spite of allegations made at the time – the entity was then privatised, a move that provoked the harsh hostility of the Labour Party in Opposition.

Anyone now reading the debate in Parliament when the contract to transfer the airport was discussed and approved, would certainly be astounded by the unbelievable allegations made by the then MLP Opposition, despite the fact that no parts of the contract were redacted or hidden from public scrutiny.

The company kept on investing in our airport and is reaping a good return. It paid some 14 million euro in tax for 2017, increasing to some 16 million euro in 2018.

Had some government department kept on running the airport, its efficiency would have been ludicrous. Its financial results – if any – would have certainly been much poorer. Today, the shareholders and the state are making good money from the venture.

That is how privatisation should work.