Enemalta oil scandal: slush fund was hidden from businessmen, Farrugia says

The oil trader George Farrugia used a Swiss bank account as a slush fund to pay off Enemalta officials, unbeknown to his brothers and business partners.

But Farrugia, granted a presidential pardon in February 2013 to give evidence in a kickbacks scandal that rocked the state utility Enemalta at the time, has been unable to show a court of law evidence of his Swiss transactions.

Farrugia gave evidence on 14 October in a criminal case instituted against his five brothers, all principals of the Johns Group, who are themselves accused of knowing of their brother’s kickbacks system.

The case was instituted in 2014, a year after MaltaToday broke the Enemalta scandal – an evidence-based reveal of kickbacks paid by Farrugia to former Enemalta chairman Tancred Tabone and business partner Frank Sammut. Both men, and their two partners Francis Portelli and Anthony Cassar, were later charged. The case is ongoing.

Farrugia was then granted a pardon to turn State’s evidence. But he had been previously sued in court by his brothers, for having siphoned off profits from the family business on oil procurement, into a Swiss bank account which he also used for cash bribes.

In a sitting held earlier this month, Farrugia was asked by the defence to provide evidence of his claim, made in court back in 2015, of having paid some $500,000 to Tancred Tabone and Frank Sammut.

In court, the defence pointedly suggested to Farrugia he admit to running a secret slush fund that funnelled profits from family company Power Plan, to Aikon, his own company. “Your company Aikon was used to park this cash – you claim, on your brothers’ behalf – yet in seven years since setting it up you never had the chance of  telling them about it,” lawyer Steven Farrugia Sacco told Farrugia.

The oil trader set up his company Aikon’s bank account at the Edmond de Rothschild bank in Geneva some time in 2004; but his brothers sued him in 2010 for having funnelled cash from Power Plan into his Swiss bank account, at their detriment. “What you did was to create Aikon, and the money that came in started in part going to Power Plan and in part to Aikon. But you were its sole beneficiary,” Farrugia Sacco said.

To this, Farrugia claimed that his brothers were aware that Aikon was being used as a slush fund for officials such as then Enemalta chairman Tancred Tabone. “They knew of the payments and of arrangements, which I had told them about.”

Farrugia admitted he would split procurement quotations between Power Plan and Aikon, and that his brothers were unaware of how he organised this system. “Aikon was needed for local payments and for foreign traders... the payments were for contracts that were coming to Power Plan... the reason for the company was to have cash to spread around.”

Farrugia claimed he had no access to his Swiss bank account, after first presenting to the court a brochure from the bank itself as ‘evidence’ of his account’s activities. The defence has demanded he produce a statement of activity in court.

“Had I not paid out that cash we would have not got any contracts,” Farrugia told the court. “I am saying the truth,” he said, before confirming once again having paid out a cool $20,000 in cash to Tancred Tabone in one event at a Swiss hotel.

Farrugia has previously said that Tabone was still asking him for cash payments after his tenure at Enemalta was over in 2005. “He would say that he still had power inside Enemalta.”

The arraigned in the case are: Antonio Farrugia; Gaetano Farrugia; Raymond Farrugia; Saviour Farrugia; and Emanuel Farrugia, 59. All are pleading not guilty to charges of having known that their brother had been bribing Enemalta officials to secure oil contracts.

They are directors and shareholders of Johns Group and Power Plan Limited, the company through which George Farrugia used to deal in the procurement of oil.

Frank Sammut, who sat on the Enemalta fuel procurement committee, was allegedly paid bogus consultancy fees which he deposited in an HSBC account in Lugano, Switzerland.

Farrugia has also recounted in detail how he was regularly bribing Alfred Mallia, then head of the Enemalta petroleum division, Tancred Tabone, then chairman of Enemalta, and Sammut, who was chief executive of the Mediterranean Offshore Bunkering Company.

Despite the charges against them, many of the protagonists in the Enemalta oil scandal are still actively trading. Their former bunkering operation has been renamed Valletta Bunkers and is now run by representatives and relatives of the Tabone-Portelli-Cassar business groups or families.

Their interests are further consolidated in the company Valletta Petroleum Holdings, whose shares are held by Tabone’s Alta Investments, Portelli’s Virtu Holdings, and Cassar’s Cassar Marine Services.