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Caruana Galizia public inquiry | Edward Scicluna admits Panama Papers was 'elephant in the room'
Caruana Galizia public inquiry hears Edward Scicluna slam Projects Malta, 'it was not transparent' • Finance Minister defends decision to vote with parliamentary group against a no confidence motion in Konrad Mizzi
12 August 2020, 9:37am
Matthew Agius
Matthew Agius
3 min read
'Daphne was right', protesters say as they call for justice
Edward Scicluna has told the public inquiry into the murder of journalist Daphne Caruana Galizia that Konrad Mizzi should have resigned after being outed in the Panama Papers.
The Finance Minister said he had applied pressure on then prime minister Joseph Muscat to force Mizzi out and distance himself from Keith Schembri but to no avail.
In his testimony, Scicluna admitted that he was "let down" and the Panama Papers remained the "elephant in the room".
Scicluna had at the time of the Panama Papers revelations in 2016, voted with the rest of the Labour Party parliamentary group to reject a vote of no confidence in Mizzi when this was raised by the Opposition.
No free vote
Justifying his decision to toe the party line at the time, Scicluna said there was no free vote. “I was comfortable in Brussels but I chose to leave a salary of over €100,000... my responsibility is pensioners, the disabled – I was very happy to see them getting more. When it came to that vote, it was unfair because it wasn't a free vote. It meant that as a government MP you either carry your weight with it or you resign. I'm sorry but it was my first political decision. I weighed all the options and I decided not to resign,” he replied.
The minister said that in 2014 he had been offered to become a European Commissioner by Joseph Muscat but rejected the offer. Scicluna told the inquiry that he was not part of Muscat's kitchen cabinet that included Keith Schembri and other consultants.
Scicluna slammed Projects Malta, an agency set up under Mizzi's remit soon after Labour came to power, which was responsible for key public-private partnerships. He said the agency lacked transparency.
On the Electrogas power station tender, Scicluna said his involvement came at a late stage when the company, which had already been awarded the contract was seeking international bank finance and a government guarantee was required because the project had not yet received clearance from the European Commission.
'Keith Schembri and Brian Tonna have all the answers'
Of particular note in today's sitting was the remark of retired judge Michael Mallia, who picked on Scicluna's testimony on how government operated: "At the end of the day the common denominator in this is Keith Schembri and Brian Tonna. Have you never called them to account? They have all the answers to what is happening in this country."
Scicluna insisted his job was not being a police officer but ensuring that the institutions did their job.
The public inquiry is tasked with, amongst other things, determining whether the State did all it could to prevent the murder from happening.
In the previous sitting, MEP David Casa told the court that had received threats after he started digging into Yorgen Fenech’s secret Dubai company 17 Black. Casa said that he also had started receiving anonymous phone calls, some of which came from Azerbaijan.
READ MORE: Casa faced threats after digging into 17 Black, public inquiry hears
Caruana Galizia was murdered in a car bomb just outside her Bidnija home on 16 October 2017. Three men, George Degiorgio, Alfred Degiorgio and Vince Muscat, have been charged with carrying out the assassination, while Yorgen Fenech is charged with masterminding the murder.
Melvin Theuma, who acted as a middleman between Fenech and the three killers, was granted a presidential pardon last year to tell all.
The inquiry is led by retired judge Michael Mallia, former chief justice Joseph Said Pullicino and Judge Abigail Lofaro.
12:51 That's it for today. Thank you for following.
Kurt Sansone
12:49 The inquiry will continue on 19 and 21 August for the Commissioner of Inland Revenue and the chairman/CEO of the Planning Authority to testify.
Kurt Sansone
12:47 The board upholds the request and orders the documents in connection with the granting of the guarantee in the possession of the ministry of finance to be placed at the board's disposal. Scicluna's testimony is suspended.
Kurt Sansone
12:47 Scicluna does not object and will be giving the board all the documents he had in his possession at the ministry, but points out that most of them dealt with the guarantee.
Kurt Sansone
12:46 Comodini Cachia: “This because when one sees the timeline of how this project took place, in the light of the publications made by Daphne Caruana Galizia, there are clear indications that the motive for her assassination could be found in this contract. Therefore, it is important for this inquiry to see the relevant documents upon which questions could be made.”
Kurt Sansone
12:45 She asks the board to order the minister or his representative to exhibit documents relating to the work done by the ministry and entities like Projects Malta and the Programme Review Board with regards to the Electrogas project.
Kurt Sansone
12:44 Comodini Cachia says she wants to show that the work of the murdered journalist had caused fear in the corridors of power and provided a potential motive. “It is evident that given the persons charged with the murder, this contract [Electrogas] is one of the principal aspects.”
Kurt Sansone
12:39 Frustrated by the reply, Comodini Cachia asks the board to order that the ministry files be presented to the inquiry. The board asks what for.
Kurt Sansone
12:38 Scicluna: “I don't remember.”
Kurt Sansone
12:38 Comodini Cachia: “But Prof., when was the first bank guarantee for this project given?”
Kurt Sansone
12:37 Scicluna: “As a minister I can say that when I was asked to sign the bank guarantee some weeks before, there were negotiations to see that the government financial regulations were followed.”
Kurt Sansone
12:37 Scicluna says he does not remember. “It isn't my job. Otherwise I wouldn't need a ministry.”
Kurt Sansone
12:36 Comodini Cachia points out that the RFP said nothing about a government guarantee and despite this the ministry still evaluated the bank guarantee eventually given to Electrogas.
Kurt Sansone
12:32 The request for proposals for the new gas power station and LNG terminal was published in 2013, shortly after the election returned Labour to power. Scicluna says he did not meet the project review board and could not recall its composition.
Kurt Sansone
12:24 The subject turns back to the State guarantees given to Electrogas. He reiterates that the guarantees were required at a very late stage when everything was finished and the companies went to get money from the bank. Four international banks were prepared to provide the loan but they needed clearance from the European Commission, which was not yet available at that moment.
Kurt Sansone
12:22 Scicluna says he was not involved and added that there was also a foreign consultant involved. He had seen a Power Point presentation before the election. “There was an English consultant present who was very knowledgeable about energy,” Scicluna recalls.
Kurt Sansone
12:21 Comodini Cachia asks whether he was involved in the drafting of the Electrogas deal before the 2013 election.
Kurt Sansone
12:20 The minister says Malta built its financial services and the law of trusts on the English model but this got out of hand.
Kurt Sansone
12:12 Scicluna: “No, but it is a hypothetical question.”
Kurt Sansone
12:12 Azzopardi: “Can you exclude that the owners included Keith Schembri and Konrad Mizzi?”
Kurt Sansone
12:11 Scicluna: “No. I don't know.”
Kurt Sansone
12:11 Azzopardi asks whether the minister knew who the real owners of VGH were. The company was registered in Jersey.
Kurt Sansone
12:10 Scicluna: “I saw it very unfair that an independent body be approached and influenced before it comes over to Malta. It was unfair to leak the document halfway through and undermine the efforts being done by the government. I believe lines were crossed by going abroad and damage was caused to the country. We could have stood back a bit.”
Kurt Sansone
12:08 Azzopardi asks about Moneyval and confronts the minister with an article from March last year that appeared in MaltaToday about David Casa and Moneyval. “Do you still believe that those who are talking about corruption are doing a disservice to their country?”
Kurt Sansone
12:06 The reference here is to a vote of no confidence that the Opposition had put forward in parliament in 2016 to force minister Konrad Mizzi out. The vote was defeated after all the PL parliamentary group supported the minister despite several critical voices.
Kurt Sansone
12:05 Scicluna: “I was comfortable in Brussels but I chose to leave a salary of over €100,000... my responsibility is pensioners, the disabled – I was very happy to see them getting more. When it came to that vote, it was unfair because it wasn't a free vote. It meant that as a government MP you either carry your weight with it or you resign. I'm sorry but it was my first political decision. I weighed all the options and I decided not to resign.”
Kurt Sansone
12:02 Azzopardi: “You had publicly and politically defended those who you had advised the PM to fire. Why?”
Kurt Sansone
12:02 Scicluna explains that in this case, his ministry had not been asked to investigate or assist. However, he says that overall there were large efficiencies to be gained from the project. “Malta saved a lot of money, without prejudice to what happened at the micro level,” he says.
Kurt Sansone
12:00 Azzopardi: “What steps had you taken to reign in the losses on the Electrogas deal?”
Kurt Sansone
12:00 Scicluna: “As minister the buck stops with me but I still depend on input from other quarters.”
Kurt Sansone
11:59 Azzopardi asks about an article that appeared in British newspaper The Guardian, which described Malta as losing money “hand over fist” in the Electrogas energy deal.
Kurt Sansone
11:58 Scicluna: “Certainly.”
Kurt Sansone
11:58 Azzopardi: “Had certain projects been done differently and better if they had been left under your remit and not Projects Malta?”
Kurt Sansone
11:58 Scicluna: “Because the prior government created a structure, Schedule 3, with good intentions to expedite matters. Potentially it could have been misused.”
Kurt Sansone
11:56 Azzopardi: “But this kitchen cabinet had bypassed this experienced man. Why?”
Kurt Sansone
11:55 The minister says he might have heard the rumour. The Nationalist administration of 2008 was toying with the idea of buying St Philips Hospital, a private hospital, to increase beds in the public health service but the deal never went through.
Kurt Sansone
11:54 Azzopardi: “Perm Sec Alfred Camilleri was the most powerful and important civil servant in government. He had stopped the government from buying St Philips Hospital…”
Kurt Sansone
11:53 Scicluna: “Yes.”
Kurt Sansone
11:53 Jason Azzopardi takes over questioning. He asks about the systems. “Your permanent secretary is the same one as before 2013, is that correct?”
Kurt Sansone
11:52 Comodini Cachia asks the board to have the witness exhibit his correspondence with the NAO. Scicluna says it is mostly questions about when the report will be ready.
Kurt Sansone
11:51 Scicluna says that from experience, people with a lot of dodgy companies were to be avoided. “But Siemens (a company that formed part of the Electrogas consortium) had a proven track record in the area. On VGH, from what I saw in the NAO report, they are those type of people, who, when I was a consultant in private practise, I would suggest keeping away from.”
Kurt Sansone
11:45 Asked if he thinks Valletta had a conflict of interest, Scicluna says it was his understanding that the board of the FIAU was not to interfere in any investigations. “In 2013, Valletta was a high ranking and trusted police official. I take it that the due diligence would be carried out by the police. I don't even remember talking to him, if he was present at some party with his wife. I never spoke to him about any cases.”
Kurt Sansone
11:44 Scicluna says that he knew Valletta was married to a cabinet minister colleague.
Kurt Sansone
11:42 Comodini Cachia asks about the other candidates. Scicluna says that one candidate was going to retire before the term was up and the third was not senior enough. He cannot remember if any of them were specialised in economic crimes.
Kurt Sansone
11:41 The context here is the appointment of former deputy police commissioner Silvio Valletta to the board of the FIAU.
Kurt Sansone
11:40 Scicluna confirms that he received three names. “Normally you’d go for the most senior... I remember I went for the most senior. One of the nominees was going to retire, I was informed. The Data Commissioner had told me that I cannot reveal the names of the other two persons nominated by the police commissioner.”
Kurt Sansone
11:39 Comodini Cachia asks whether he had received three names from the police commissioner for the force’s representative on the FIAU board.
Kurt Sansone
11:38 Scicluna insists: “From day one, before everything started I did the first national risk assessment for the FATF and Moneyval and I had sent for the police commissioner and AG and told them that where economic crime was involved I had a blank cheque for them because I knew it was very expensive work. That was in 2013.”
Kurt Sansone
11:37 The judges’ panel suggests that there was collective responsibility.
Kurt Sansone
11:26 Scicluna: “But politically I was let down, yes.”
Kurt Sansone
11:25 Scicluna: “I can’t answer, because there were cases where allegations turned out not to be true.”
Kurt Sansone
11:24 Comodini Cachia asks if he still believed in the political integrity of Joseph Muscat, Konrad Mizzi and Keith Schembri.
Kurt Sansone
11:23 Scicluna: “I was one of those putting enormous pressure on Konrad Mizzi to resign. I am disappointed... at this point, the investigations are still underway. I want to know more before I use the word ‘betrayed’. I was let down.”
Kurt Sansone
11:23 Judge Mallia interjects. “At the end of the day the common denominator in this is Keith Schembri and Brian Tonna. Have you never called them to account? They have all the answers to what is happening in this country.”
Kurt Sansone
11:17 Scicluna says he was not happy with what was happening but relied on the institutions to do their job. “I always allowed the FIAU to do its work,” he adds.
Kurt Sansone
11:16 Scicluna says that he is very satisfied with his work in government. “But on the other hand there was that shadow which nobody was happy about. You didn't need to articulate it in words, it was there. It was there, the elephant in the room.”
Kurt Sansone
11:14 Scicluna: “I didn't have the close friendly relationship... I had a ministerial relationship with him. I didn't have the intimacy to speak to him about these things.”
Kurt Sansone
11:13 Comodini Cachia: “In 2018 did you speak to Joseph Muscat again about this?” (In November 2018, Reuters had revealed that 17 Black was owned by Fenech).
Kurt Sansone
11:12 Scicluna: “I expected to be told about it. Our remit is not investigations.”
Kurt Sansone
11:12 Comodini Cachia asks about 17 Black, the Dubai company that belonged to Yorgen Fenech and which was listed as a target client for the Panama companies owned by Mizzi and Schembri.
Kurt Sansone
11:09 Scicluna: “Absolutely not. I'm not of the same age or social circle.”
Kurt Sansone
11:09 Comodini Cachia: “Were you aware of the friendship between Yorgen Fenech and other ministers?”
Kurt Sansone
11:08 Asked about Konrad Mizzi’s wife, Sai Mizzi, and her employment as a commercial ambassador of sorts in China, Scicluna says she fell under the foreign ministry.
Kurt Sansone
11:07 Scicluna: “I am interested in everything but there are many things, which the ministry is not involved in. I am not going to act as a policeman… my office had requested information about Macbridge.”
Kurt Sansone
11:06 Scicluna binds himself to present a copy of the relevant documents if he had them at the ministry.
Kurt Sansone
11:04 Scicluna says he had only been involved in the financial aspect of the deal through which Chinese company Shanghai Electric Power bought a share in Enemalta. Scicluna says he had never met Cheng Chen, who appeared for Shanghai Electric Power. “I know that minister Konrad Mizzi had a number of consultants, both Maltese and foreign. What I wanted to look at was the impact of the deal on the budget and the shareholding.”
Kurt Sansone
11:02 Comodini Cachia asks him about his reactions in the media on corruption and money laundering. “You were quoted as saying ' don't blame the victim if a robber has been to his house and stolen things'. Were you involved in the China agreement?”
Kurt Sansone
10:59 Scicluna: “There were a lot of explanations and attempts at explaining away what happened. The majority of the parliamentary group were advising the PM to distance himself. It was crystal clear. The Prime Minister knew what the opinion of Cabinet was.”
Kurt Sansone
10:58 He is asked again about the immediate aftermath of the Panama Papers revelations.
Kurt Sansone
10:57 Scicluna: “We would try to obtain information.”
Kurt Sansone
10:56 Comodini Cachia: “As a minister of finance, when you didn't really believe in their integrity, didn’t you feel the need to perform your own due diligence on a project whenever they came forward with a memorandum of understanding or project, before approving it?”
Kurt Sansone
10:46 Scicluna goes on to explain that businessmen try to have a finger in the pie through lobbying. “I see it every day… all trying to influence government. We are talking about an annual public budget of €5 billion.”
Kurt Sansone
10:44 Scicluna: “I spoke to the PM on Panama [Papers]. I told him you have to distance yourself in an absolute manner… I asked the PM to remove Konrad Mizzi and when he didn’t, it was a great disappointment for everybody.”
Kurt Sansone
10:42 Comodini Cachia says that despite the Panama Papers, the allegations by journalists and the FIAU investigations, he didn't approach the kitchen cabinet members with his concerns. “Was this because you were convinced of its integrity?”
Kurt Sansone
10:39 Scicluna: “The agreement was ready, but when they came to borrow money the banks needed a guarantee since clearance was still being sought from the European Commission and this took two years. By giving the State guarantee, the loan was less and this is the correct EU method. We gave the guarantee on a financial bridge loan.”
Kurt Sansone
10:37 Comodini Cachia: “Why did you sign the bank guarantee for Electrogas when you were worried about the deal?”
Kurt Sansone
10:36 Scicluna: “Why yes? You don't go up to the PM and tell him that.”
Kurt Sansone
10:36 Comodini Cachia: “Why not?”
Kurt Sansone
10:35 Scicluna: “No.”
Kurt Sansone
10:35 Comodini Cachia asks him about his quote; about not being able to go anywhere in the world without hearing Malta and corruption. Had he asked the prime minister and Konrad Mizzi about the allegations?
Kurt Sansone
10:34 Scicluna says that in the Electrogas deal the ministry was involved only after the deal was done and only because a government guarantee was required.
Kurt Sansone
10:33 Scicluna: “Electrogas was on the Cabinet agenda and a presentation was given by Projects Malta. I couldn't find an agenda item for Vitals.”
Kurt Sansone
10:31 Comodini Cachia asks whether the Electrogas project was handled by Projects Malta and therefore Konrad Mizzi.
Kurt Sansone
10:30 He is asked whether the due diligence on the American University of Malta was carried out by the Education Ministry and hence fell within the responsibility of Evarist Bartolo. “Yes,” Scicluna replies.
Kurt Sansone
10:27 He explains that once a ministry has a Cabinet sign off, it must enter a line item in the Budget. Scicluna says he had absolutely no control over due diligence exercises, however projects under Schedule 3 meant that the ministry involved had to follow the same standards as the government.
Kurt Sansone
10:26 He is asked whether he had ever been involved in negotiations. “Categorically no. I was never involved in negotiations and signings and so on,” Scicluna replies.
Kurt Sansone
10:26 Scicluna: “We had a case where an MOU, not mentioned in the newspapers, was approved by Cabinet but we refused to pay.”
Kurt Sansone
10:25 Scicluna is asked whether he just shrugged his shoulders and paid up if there was a memorandum of understanding.
Kurt Sansone
10:24 He defends the ideas behind the VGH hospitals deal and the Montenegro wind farm investment undertaken by Enemalta. “When you hear, we are going to build a wind farm in Montenegro, you pigeon hole it and say it is a good idea. But you are now talking about implementation…”
Kurt Sansone
10:19 He says that the problem his ministry had was to be kept informed of these projects (VGH, Premier and others). “Project Malta, I can say, was not transparent. It was something we were experiencing regularly. The data would eventually come but you would require great effort to acquire it.”
Kurt Sansone
10:17 Scicluna: “I would express concern at the time that lawyers are not meant to lead negotiations… I don’t know if any businessmen were involved.”
Kurt Sansone
10:17 Scicluna adds that the ‘kitchen cabinet’ included lawyers and consultants from top legal firms, who were involved in the Electrogas and VGH deals. “It was lawyer-led,” he says.
Kurt Sansone
10:15 Scicluna: “As a concept, there are a group of persons, which the prime minister was more intimate with. I wasn't part of it, that's what I can say. I was slightly awkward at first. In my second year, I was approached to become a European Commissioner and I refused.”
Kurt Sansone
10:14 Comodini Cachia: “Was Projects Malta part of this inner core you mentioned?”
Kurt Sansone
10:13 Comodini Cachia takes over the questioning.
Kurt Sansone
10:13 Scicluna: “The ministry needed a Cabinet decision. Everything must be approved by Cabinet. Certainly, we don't release funds unless it is either in the Budget or approved by Cabinet outside the Budget.”
Kurt Sansone
10:12 The board press him on this. “Can Keith Schembri go and bind the country in some deal and you are bound to pay for it?”
Kurt Sansone
10:11 Scicluna: “They know me as Mr No. But whoever wants to hijack a system, it is that person who is responsible. I am not.”
Kurt Sansone
10:10 He refuses to disclose what is said in Cabinet.
Kurt Sansone
10:10 Scicluna: “Good question. If there is an item on the agenda on a Cabinet paper you go and study it and prepare. If it’s not on the agenda... it could be important…”
Kurt Sansone
10:09 The judge asks whether these decisions are discussed at cabinet level.
Kurt Sansone
10:08 Scicluna: “We pass money to ministries. My ministry received a minute from the PPS, and must act on it. It must follow the direction of the government.”
Kurt Sansone
10:07 Judge Abigail Lofaro tells him that if a collective decision is taken, then all are responsible. “You can't say ‘we aren't policemen’ and get out of it.”
Kurt Sansone
10:07 Scicluna: “Mr Justice, I assure you that your concern is my concern.”
Kurt Sansone
10:06 Scicluna tells the board of his plans to fix the problems identified, but Said Pullicino tells him that they are looking to find out what happened in the past, above all.
Kurt Sansone
10:06 Former chief justice Joseph Said Pullicino asks Scicluna what happened in Cabinet. “I cannot condemn anyone. But if there is a case it must be investigated… we have weaknesses that must be addressed,” Scicluna says.
Kurt Sansone
10:03 Scicluna: “We aren't the police. When we suspect something we either refer to the Auditor General or the police. We are there to ensure the systems are fool proof. Now, if there is fraud, these are cases where we hope the authorities will proceed against the perpetrator.”
Kurt Sansone
10:02 Scicluna says that in 2018, the finance ministry submitted to a fiscal transparency evaluation by the IMF. “We risked it and we passed. In 2019, a reform of public contracts was done. Also, in 2019 old laws were replaced by the Public Finance Management Act.”
Kurt Sansone
09:59 Scicluna says the division has the power to choose how contracts are drafted and who is involved in them under Schedule 3, but the ministry is not involved. It can only ask for oversight “Government doesn't have an accrual system of accounting yet. It is just being introduced now, to replace the cash flow system,” he continues.
Kurt Sansone
09:57 Scicluna explains that as finance minister he is responsible for the systems in place. "I entered politics to bring about good change," he says, adding that in his first year he set up structures to ensure this happened. He adds that in 2016 he applied all the EU laws to public procurement and in the same year, he passed the guidelines for concession regulations. This meant that the contracts division saw €700 million in contracts pass through them.
Kurt Sansone
09:55 Scicluna says it depends on what was at stake. "Everyone knows about the closeness of Keith Schembri and the then prime minister; they were one and the same team. There was Konrad [Mizzi] with them in the hospital deal," he replies when the name Konrad Mizzi is suggested to him.
Kurt Sansone
09:53 Comodini Cachia presses him for names of this kitchen cabinet, which was mentioned for the first time by Foreign Minister Evarist Bartolo when he testified in front of the inquiry.
Kurt Sansone
09:52 Scicluna says he wasn't part of the "kitchen cabinet" of the Prime Minister. There were ministers who were quite close to the inner core, but he wasn't.
Kurt Sansone
09:50 Scicluna: “Joseph Muscat and Keith Schembri were a united team and were capable of building a team. They would go into every detail, they had a good relationship with everyone and had a lot of teamwork between them.”
Kurt Sansone
09:49 Retired judge Michael Mallia is asking the questions. Scicluna says he had been minister for finances since the very beginning.
Kurt Sansone
09:48 Edward Scicluna arrives and takes the oath.
Kurt Sansone
09:41 Lawyers Therese Comodini Cachia and Jason Azzopardi, who represent the Caruana Galizia family, have arrived, as has Maurizio Cordina from the Office of the AG. Both of Caruana Galizia's sons are present in the courtroom. No sign yet of Finance Minister Edward Scicluna, who is scheduled to testify today. The three judges presiding the inquiry have also emerged.
Kurt Sansone
09:39 Good morning.
Kurt Sansone
Matthew Agius was Senior Reporter on Law and Court Affairs at MaltaToday from 2014 to 2024...
