Muscat in Electrogas PAC: Caruana Galizia inquiry factually incorrect over project

Former prime minister Joseph Muscat returned to the parliamentary public accounts committee in his fourth appearance as a witness on the NAO report dealing with the procurement of the Electrogas gas plant.

Many of the questions he fielded dealt with previous matters he has testified on, with clarifications sought on other statements made by former finance minister Edward Scicluna and former permanent secretary Alfred Camilleri.

In a new development, the Opposition MPs leading the grilling of the former Labour PM asked Muscat to justify the alleged absence of the finance ministry on the procurement process of the Electrogas deal.

Caruana Galizia public inquiry | Edward Scicluna admits Panama Papers was ‘elephant in the room’

With some questions based on conclusions emanating from the Caruana Galizia assassination public inquiry, Muscat at one point expressed his disagreement with the conclusions of the three-judge panel.

While the inquiry’s conclusions remarked at the “utter lack of involvement” of then finance minister Edward Scicluna from the negotiations on the Delimara gas plant with Electrogas, Muscat said this was “totally incorrect”.

“The public inquiry is not understanding the remit of the ministry and the extent of its involvement. Numerous Cabinet documents will attest to its involvement, sometimes with other lead ministries. Here the judges are saying it was never involved. Many Cabinet documents will disprove this claim. If the witness statements the inquiry heard gave them this impression, it is a wrong conclusion.”

Muscat insisted that Scicluna was involved “at all stages where the ministry of finance had to be involved in” and that his testimony to the public inquiry had been “strongly extrapolated.”

Muscat, reacting to PAC chairman Darren Carabott’s read-out of the judges’ conclusions, reiterated his belief that their interpretation of Scicluna’s testimony was “incorrect” and bereft of any experience grounded in the workings of government.

As Nationalist MP Robert Cutajar took issue with Muscat’s doubts about the conclusions of the public inquiry, Muscat replied saying that his wholesale belief of the inquiry should be extended to the conclusions of the ‘Egrant’ magisterial inquiry, which had disproved his ownership of a secret Panama offshore company.

Later, with more questions delving into the public inquiry’s conclusions, it was Labour MP Glenn Bedingfield who raised the point that Auditor General Charles Deguara should substantiate whether the Electrogas procurement had been a pre-electoral deal as claimed by the judges in the public inquiry.

With Muscat asked to leave the PAC committee room, Deguara testified to the MPs that there was no way that such a complex procurement as the Delimara gas plant could “either be good or bad… it is a human process after all.”

“We did not find clear evidence to strengthen the argument that this was a pre-electoral deal. The NAO lives or dies by its evidence. Clear evidence of a pre-electoral agreement was not found… unfortunately in every assignment we have had in the last 15 years, nobody has ever sent us all the information we requested.”

Muscat, brought again into the committee room, then commented that it was the NAO’s published view that the irregularities over parts of the procurement system had been down to the fact that there were no guidelines for a contract of this nature. “We had to create the guidelines as we progressed on this contract.”

Muscat later challenged Carabott over questions dealing with private business matters that belonged to his former chief of staff, Keith Schembri. “This is not the PAC’s remit right now… this country does not have clear rules on whoever is in private business and working in the public sector, to have clear reporting guidelines on this kind of business.”

Questions from Carabott related to an article by blogger Manuel Delia claiming that Keith Schembri had received $430,000 in “unexplained funds” in January 2015, five weeks after a trip he made to Azerbaijan capital Baku. Joseph Muscat had back then said that his chief of staff had “categorically” denied the allegations.

In other matters dealing with the Electrogas deal to have Enemalta pay some €2 million a year in excise duty for the private company, Muscat insisted that the trade-off was still advantageous to the taxpayer. “The excise is being absorbed as part of a final settlement on demurrage and other conditions, with the trade-off being in favour of Enemalta… a number of these advantages were costed, with a positive balance in favour of Enemalta.”

15:49 The PAC is now adjourned for 26 September. Matthew Vella

15:45 Muscat now challenges Carabott over questions dealing with private business matters that belong to his former chief of staff. “This is not the PAC’s remit right now… this country does not have clear rules on whoever is in private business and working in the public sector, to have clear reporting guidelines on this kind of business.” Matthew Vella

15:42 Muscat turns guns on the alleged corruption Schembri is charged with over the procurement of the Progress Press printing machinery. He says that had there been real suspicions of corruption in this alleged $430,000 payment, then he would have been charged with such allegations. Matthew Vella

15:41 Carabott asks Muscat over a blog post claiming that Keith Schembri received $430,000 in “unexplained funds” in January 2015; the claim made by Manuel Delia was that he had seen documents showing Schembri receiving the six-figure sum from “unexplained sources” five weeks after a trip he made to Azerbaijan capital Baku. Joseph Muscat had back then said that his chief of staff had “categorically” denied the allegations. Matthew Vella

15:40 Carabott asks Muscat about his flight to Baku ahead of the Delimara procurement process. “We made a mistake not inviting the press. There were government officials with us. I struggle to remember why we did not avoid all the speculation about the lack of press, by inviting them… no, we did not discuss any government guarantee for Electrogas during this meeting.” Matthew Vella

15:38 Muscat comments on the NAO conclusions: “the NAO’s view that there were irregularities over parts of the procurement system is down to the fact that there were no guidelines for a contract of this nature, and that we had to create the guidelines as we progressed on this contract.” Matthew Vella

15:28 Muscat again denies the existence on any working group of energy inside the Labour Party, or that Keith Schembri, his former chief of staff, was its chairman. He says that the working group, for a short period of time, was about the procurement of subsidise fossil fuels from Libya, and this when Labour was in opposition. He says there was no committee dealing with the power plant project. He confirms that Schembri was part of the manifesto drafting team that penned the energy policy pledge. Matthew Vella

15:15 Charles Deguara says the NAO cannot say that such a complex procurement can “either be good or bad… it is a human process after all.” “We did not find clear evidence to strengthen the argument that this was a pre-electoral deal. The NAO lives or dies by its evidence. Clear evidence of a pre-electoral agreement was not found.” Now Nationalist MP Robert Cutajar asks whether the NAO requested any such documentation or information which ultimately was not furnished. “Yes, unfortunately in every assignment we have had in the last 15 years, nobody has ever sent us all the information we request.” Matthew Vella

15:12 Now Muscat is asked to leave the PAC after Labour MP Glenn Bedingfield asks that the committee hears the Auditor General clarify the contents of the NAO report. Matthew Vella

15:12 After minutes spent debating a point on quoting previous testimonies in the PAC, Carabott turns to the public inquiry conclusions once again (note: this PAC is dealing with the NAO audit of the Delimara plant procurement but the DCG public inquiry also heard similar witnesses related to that gas plant). Muscat reacts to Carabott’s read-out of the conclusions saying “there is nowhere written that this plant was decided as a pre-electoral deal.” Matthew Vella

15:03 Muscat tells Bencini that he should not be quoting a news report from The Shift but by seeing the previous accounts and audits of Enemalta. “Telling me just about one particular year - when problems related to COVID and other energy industry issues cropped up - you are extrapolating one issue only. God forbid the government does not subsidise the energy rates… are you saying Enemalta should not subsidise electricity rates?” Matthew Vella

15:00 Nationalist Graham Bencini refers to losses incurred by Enemalta in 2022, compared to the Delimara 3 owners, Shanghai Electric Power, had posted profits from operating the former BWSC turbines. Muscat says Enemalta was destined to stay a bankrupt entity without the sale of the Delimara 3 plant to SEP. Matthew Vella

14:54 Nationalist MP Robert Cutajar takes issue with Muscat’s doubts about the conclusions of the public inquiry. Muscat says that should anyone wish to accept the conclusions of that inquiry wholesale, so should the conclusions of the ‘Egrant’ magisterial inquiry - that disproving his ownership of a secret Panama offshore company - be accepted. Matthew Vella

14:44 Muscat, reacting to Carabott’s read-out of the judges’ conclusions, reiterates his belief that their interpretation of the testimony is “incorrect” and that it is bereft of any experience grounded in the workings of government. Matthew Vella

14:43 Labour MP Alex Muscat says the public inquiry’s conclusions have got nothing to do with the PAC’s remit on the Delimara gas plant audit by the NAO. Carabott says he will continue with his questions. Matthew Vella

14:42 Carabott again refers to the judges’ conclusions to the Scicluna testimony in the Caruana Galizia assassination public inquiry. Labour MPs say it should be Scicluna’s actual testimony that must be quoted. Matthew Vella

14:41 Muscat says Scicluna’s testimony to the public inquiry has been “to frame it gently, strongly extrapolated.” He says his relationship with Scicluna is a strong one. He says on the matter of the government guarantee, Scicluna was involved. Matthew Vella

14:40 Muscat says Edward Scicluna was involved “at all stages where the ministry of finance had to be involved in.” Matthew Vella

14:37 Carabott says that in the case of the Electrogas plant, the public inquiry into the assassination of Daphne Caruana Galizia, they remarked at the “utter lack of involvement” of then finance minister Edward Scicluna from the negotiations on the Delimara gas plant with Electrogas. Muscat: “It is totally incorrect… the public inquiry is not understanding the remit of the ministry and the extent of its involvement. Numerous Cabinet documents will attest to its involvement, sometimes with other lead ministries. Here the judges are saying it was never involved. Many Cabinet documents will disprove this claim. If the witness statements the inquiry heard gave them this impression, it is a wrong conclusion.” Matthew Vella

14:35 Carabott asks Muscat why finance ministry officials, such as the permanent secretary, were excluded from particular discussions. Muscat says the office of the permanent secretary was involved on matters related to payments or exemptions on payments. “In certain situations dealing with contracts, the finance ministry was not necessarily involved except where its expertise might be needed; and it’s nothing different from previous administrations… there are points where the ministry is involved, and others where it is not involved. It might have not been ‘normal’ - as far as he said it - because it was the first time a government guarantee of that type was being made for a private entity [Electrogas], and then [Alfred Camilleri] proceeded to say that a great deal of these similar guarantees were issued during the COVID recovery period.” Matthew Vella

14:26 Labour MP Alex Muscat rekindles the one-time proposal for a gas pipeline from Algeria passing next to Malta to proceed to Italy. The project was deemed too expensive at the time, this being the pre-EU accession period. Muscat said the prospect of Malta now being supplied gas via a pipeline is a “question of time.” Matthew Vella

14:24 Carabott turns to published correspondence between Electrogas officials over compensation owed to the company should a gas pipeline be built to replace the floating LNG terminal that supplies gas to the Delimara gas plant. Muscat says he was not privy to any such discussions. Matthew Vella

14:20 Carabott asks at what point did the government decide to change a condition within the contract to have Enemalta absorb the excise, rather than have the successful bidder, Electrogas, pay for it. “If it was something that benefited the taxpayer, we would have changed the contract… I don’t see anything exceptional about this.” Matthew Vella

14:18 Muscat says this trade-off was communicated to him by the energy minister at the time, Konrad Mizzi. He cannot confirm whether the matter was discussed at Cabinet. He says he “imagines” that “within the context”, it would have been a point of information featuring in Cabinet talks. Matthew Vella

14:16 The first questions deal with the payment of excise tax, otherwise payable by Electrogas, but being absorbed by Enemalta, the state utility company. Muscat confirms the €2 million a year in payment of excise for Electrogas, and says that the trade-off is advantageous for Enemalta. “They are being absorbed as part of a final settlement which, among other things, on demurrage and other conditions, the trade-off being in favour of Enemalta… a number of these advantages were costed, with a positive balance in favour of Enemalta.” Matthew Vella

14:14 Muscat is accompanied by long-time assistant Mark Farrugia. Matthew Vella

14:12 The PAC is chaired by Opposition MP Darren Carabott, who is reading out correspondence on various requests made by the PAC on witnesses and other documentation pertaining to the Electrogas procurement. Matthew Vella

14:11 Good afternoon, we are live from the House of Representatives where the public accounts committee is in session. Matthew Vella

Carabott asked at what point did the government decide to change a condition within the contract to have Enemalta absorb the excise payable by Electrogas. “If it was something that benefited the taxpayer, we would have changed the contract… I don’t see anything exceptional about this,” Muscat said.

Former prime minister Joseph Muscat returns to the parliamentary public accounts committee in his fourth appearance as a witness on the NAO report dealing with the procurement of the Electrogas gas plant.

Muscat has so far provided a staunch defence of Labour’s chief policy plank in 2013, which led to the commissioning of a €200 million gas plant from Electrogas, a consortium of Maltese business groups, the Azerbaijan state gas company Socar, and German multiational Siemens.

[WATCH] Muscat mounts strong defence of Electrogas contract

[WATCH] Muscat parries with Carabott as former PM is needled over Keith Schembri

Electrogas’s shareholders included the Tumas business group and its CEO Yorgen Fenech, now accused of having masterminded the assassination of journalist Daphne Caruana Galizia in 2016, largely over revelatory reports concerning Fenech, the Electrogas plants and its dealings with the government, as well as a secret business connection with Muscat’s then chief of staff Keith Schembri, through the use of offshore companies.