Ten years on: no justice served on Enemalta oil scandal

Ten years ago, MaltaToday published what had arguably been the kind of exclusive evidence that had been languishing in a cache of documents presented in an unknown court case between feuding siblings.

The crucial piece of evidence had been an invoice, made out to Dutch commodities giant Trafigura, by a former Enemalta consultant – Frank Sammut – for a ‘consultancy fee’ on the supply of oil to Enemalta. The money was requested to be paid into a Swiss bank account for a company that Sammut owned, in Gibraltar.

That 2004 document – mirroring in shape and form the kind of scandal that would later be magnified in the scale of the Panama Papers of 2016 – confirmed the long-held speculation of kickbacks paid for purchases of oil for the state’s energy corporation.

The Enemalta oil scandal, as it became known, rocked the island right at the start of the 2013 elections. A criminal police investigation was launched, with seven persons arraigned, but one man, George Farrugia – perhaps the chief instigator – was immediately granted a presidential pardon to turn State’s evidence. With countless hours held inside the public accounts committee on Enemalta’s fuel procurement scandal, Malta today remain none the wiser as to the scale of kickbacks that went on inside the national energy corporation or how this system could have gone on for years without anyone inside the then Nationalist administration ever suspecting anything.

As pardoned oil trader George Farrugia, one sibling from the John’s Group family being sued by his brothers over his fraudulent practices, would later declare, the illegal commissions he started paying in 1999 almost set in motion a chain of kickbacks he would continue paying up until at least 2006. Farrugia said he had paid these bribes to various Enemalta officials, although not all prosecutions have been successful, especially against minor players. The main accusations, against former Enemalta chairman Tancred Tabone, his consultant Frank Sammut, and oil bunkering partners Francis Portelli and Anthony Cassar, remain pending – ten years on.

The PAC hearings revealed the common practice of dining between top Enemalta management and the lubricants trader George Farrugia, who ensure that fuel he imported from TOTSA and Trafigura would be purchased by Enemalta thanks to a system of timely bribes for the top men – even when he was submitting the most favourable offers on oil prices anyway. “I didn’t pay the kickbacks to win the tenders but because the tenders were won... one either had to pay or you don’t work at all,” Farrugia told the PAC.

Under Tancred Tabone’s chairmanship (Tabone is the owner of the Forestals company and was a former Chamber of Commerce president appointed by the Nationalist administration to Enemalta chairman) won five out of 16 contracts. The payments Farrugia – as a representative of the John’s Group subsidiary business Powerplan Ltd – had to make simply to be “allowed to work”, were unknown to the rest of the shareholder-directors, his own brothers – as they claim. His counter-claim has now led to their prosecution in court by police.

Farrugia not only cut in Enemalta’s top people in his profits; but his brothers accused him of funnelling Powerplan income into his secret bank account, representing a company called Aikon Ltd. In 2010 they sued him over €40 million in alleged ‘commissions’ he took from Powerplan.

The cache of emails presented in that case revealed various aspects of the relations between businessmen and politicians: one of them was the gift, a souvenir Tal-Lira clock constructed by Farrugia’s own wife, for finance minister Tonio Fenech, of negligible value; emails from Powerplan chairman Tony Debono to Lawrence Gonzi and other Nationalist Party officials apparently suggested ways of assisting the PN, always hoping to curry influence with the powers that be; Farrugia even transmitted some complaint from Swiss acquaintances travelling in Malta to Gonzi; and he held numerous meetings with former minister Austin Gatt, although never about fuel procurement, he claims – but he did donate €2,000 from John’s Group for Gatt’s 2008 electoral campaign (Gatt denies recalling the donation).

It all sounds petty when compared to the systematic corruption that the Panama Papers would later reveal – a concerted plan to connect major government projects to a chosen magnate, Yorgen Fenech, and his secret business partner, Keith Schembri, the chief of staff to prime minister Joseph Muscat. But perhaps, the Enemalta oil scandal was scratching the surface of Malta’s ‘bribesville’ establishment.

For example, Farrugia had declared being privy to information as to when Tancred Tabone would be appointed chairman of Enemalta in 2004; or that clients of the Malta Oil Bunkering Corporation, the national oil bunkering company, would be shifting to IBOL – Island Bunker Oils Ltd – a company Tabone and Frank Sammut had formed with the two other co-accused, Francis Portelli and Anthony Cassar. Today that company has been renamed Valletta Bunkers and remains owned by the same people.

Farrugia also claimed he paid $400,000 in commissions to Sammut and Tabone up until around 2006, when both men were silent partners in IBOL. While Sammut’s contract as chief executive of MOBC was terminated in 2004, after a Cabinet decision for the MOBC to cease bunkering operations and instead assume the role of an oil storage depot, he became a consultant to Tabone that same year.

It was Sammut who allegedly devised a way of paying Farrugia a ‘consultancy commission’ that was, in reality, paid back to him: by storing diesel fuel at the MOBC tanks before June 2004, Farrugia received not just a regular commission of $1 per metric tonne of oil he sold for TOTSA, but Frank Sammut allegedly paid him another dollar in the form of a consultancy fee, so that Farrugia could give him a 50-cent cut.

Fair hearing delays

But the Enemalta oil scandal’s prosecutions of 2013 were immediately crippled by court delays from the prosecution and the actions of the Attorney General, with a majority of court cases achieving “absolutely nothing”. It was a fact instantly noted by Malta’s Chief Justice.

The ineffectiveness of the Maltese prosecution in the oil scandal after 2013 were placed in a harsh light by the Constitutional Court, during a fair hearing complaint by former Enemalta functionary Tarcisio Mifsud – also accused, yet acquitted, by Farrugia of having accepted a gift or bribe.

In 27 sittings for the compilation of evidence against Mifsud, nothing had happened in 15 of these sittings.

Mifsud had been a member of the Enemalta fuel procurement committee as the State energy company’s financial controller. He was accused along with former Enemalta petroleum chief Alfred Mallia of corruption and trading in influence, largely on claims by Farrugia that he had paid them Lm40,000 (€100,000) in cash for him to win Enemalta tenders for the supply of oil.

Mifsud, today 77, had protested the extended duration of the proceedings against him: he sat for 27 sittings between March 2013 and October 2015 in the compilation of evidence against him.

The Attorney General then issued the bill of indictment to have Mifsud tried in a criminal court, but instantly delayed the possibility for a summary procedure by conditioning the court to hear the testimony of co-accused Alfred Mallia and Tancred Tabone.

A referral to the Constitutional court suspended the criminal court hearing, then dragged on for three more years. Despite protests from the Mifsud defence, the case dragged on. Mallia died in November 2019. “At his advanced age, he has every right to have these proceedings take place within a reasonable period of time, even as one of the co-accused Alfred Mallia passed away over the course of these delays. So what is the prosecution waiting for? That all the witnesses die, including Tarcisio Mifsud?” the Chief Justice said, ordering proceedings to be closed within four months.

Money laundering case

Also pending in court is the money laundering case against Portelli and Cassar: a judge has already ruled that the Attorney General had breached the fundamental human rights of the two men by delaying their case for over six years and ordered the prosecution to close its evidence by the end of 2019.

The two men are being charged for their role as directors in Island Bunker Oils and its subsidiaries Eldaren Shipping, Oarsman Maritime, Anchor Oils, FP Holdings, AOH Ltd, Gringrams Holdings, Island Oils Holdings and Anchor Bay Maritime, for having corrupted former Enemalta chairman Tancred Tabone and Frank Sammut, the former chief executive of Mediterranean Offshore Bunkering Company Limited (MOBC), between the years 2002 and 2005.

Portelli and Cassar were also charged with complicity to trading in influence in public tenders and money laundering.

Although proceedings began with great momentum, this soon dwindled and no progress was registered in the case for six whole years. Between 2015 and 2019, 22 sittings were held in which practically nothing was done, after which the prosecution declared in no uncertain terms that it was not going to declare its evidence closed before Frank Sammut testified.

The end result was that the case has been stuck for six years. Letters rogatory to the Swiss prosecutors, where the accused used Swiss banks to hide their transactions, had taken an inexplicable 11 months to be sent.

Where are they now?

George Farrugia

Arguably, the villain of the piece in the Enemalta oil scandal emerged as the lucky protagonist: an instant presidential pardon recommended by the Gonzi administration, while his first accusers, his own brothers, were later charged with having been aware that he was offering kickbacks and bribes in return for being awarded oil contracts. Brothers Antonio, Gaetano Farrugia, Raymond,Emmanuel and Salvatore pleaded not guilty to the charges.

Francis Portelli (centre) with Anthony Cassar (right) emerging from court

Tancred Tabone, Anthony Cassar, Francis Portelli

Tabone, although still accused in the eyes of the law, runs his profitable retail business, Forestals; while Island Bunker Oils was renamed Valletta Bunkers and is now run by relatives of the Tabone-Portelli-Cassar 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.

Francis Portelli, who along with Cassar still faces charges of bribery, continued unhindered in business as 50% shareholder of Virtu Holdings, with the company issuing a €25 million bond in 2017. At the time the company’s prospectus had specified that the allegations against Portelli relate “to the set-up of IBOL at the time of the privatisation of Mediterranean Offshore Bunkering Co Ltd (MOBC). It has been alleged that the simultaneous involvement of two other persons (not Portelli) in both companies gave rise to… bribery and malversation, and… money laundering offences.”

Portelli and Cassar are charged with corruption and money laundering through their dealings in IBOL in a separate case to the oil corruption scandal.

Cassar was photographed alongside the Pakistani businessman Shaukat Ali during a meeting with former President George Abela, sometime before 2014.

Austin Gatt

Nationalist minister, Austin Gatt

The former minister Austin Gatt had sued MaltaToday for libel after reporting that George Farrugia had met the Nationalist minister over oil supplies to Enemalta. Gatt denied ever meeting Farrugia to discuss oil procurements, but emails MaltaToday had in its possession showed that Farrugia had met with Gatt – without inferring that the minister aware of or involved in any illicit deals.