Superyachts bribery trial | Mimcol head told minister to go to police with anonymous allegations

Mimcol chairman Ivan Falzon has told a court he had told Finance Minister Tonio Fenech to report anonymous allegations of impropriety in the superyachts' privatisation process to the Commissioner of Police, but that Fenech had been reluctant to do so.

The chairman of the government's investments arm Mimcol took the stand today in the prosecution of former chief executive Mario Mizzi, who has been charged with attempted bribery in a bid to influence the privatisation process of the Malta Superyachts facility.

Fenech had informed the members of the Privatisation Unit of the allegations, after a senior officer in the Office of the Prime Minister, Leonard Callus, had been told of the allegations in September 2009. Eight months later, the allegations surfaced in the House when Opposition leader Joseph Muscat raised the matter, leading to an investigation requested by the prime minister.

Falzon told the court that the first time he heard of the allegations of corruption was when the Opposition raised the matter in the House in May 2010.

Months before, he recalled meeting Mario Mizzi and Emanuel Ellul with minister Tonio Fenech, who asked if anybody knew of "obstacles" being made to the privatisation process. Fenech had produced an anonymous printout in which it was alleged that there was 'concern' at the way SYC were being treated by the board.

It was here, Falzon said, that he told the minister to summon the bidders to substantiate the allegation of not being treated correctly, but this could not be done because the document was anonymous.

He then told the Minister to do "like Prime Minister Lawrence Gonzi, when you have an allegation, call in the Police Commissioner" adding that the minister was "reluctant" at that stage.

In his testimony, Falzon was categorical in identifying Sue Hall - a consultant recommended to the Privatisation Unit by the former Malta Shipyards chief executive Chris Bell - as having been singularly responsible for the circumstantial evidence being used against Mario Mizzi, when she downgraded a bidder during the evaluation process.

"Unfortunately we are in this mess because of her," Mizzi told Magistrate Antonio Mizzi.

The main basis of the police charges against Mizzi are emails he exchanged with the UK expert, who originally allotted a 71% score to SYC, and subsequently downgraded them to 50% and then to 48%. In the email, Mizzi argued that despite being downgraded, the 48% mark still kept the consortium in play.

Magistrate Antonio Mizzi guided the witness in various parts of his evidence, and even suggested that the evaluation board had been "engaged in a masochistic exercise" to privatise the superyacht facilities, asking Falzon why they hadn't disqualified the SYC consortium any time sooner in the process.

Falzon replied that despite the serious financial difficulties discovered inside Couach, SYC's French partner - which later went into receivership - the Maltese partners deserved to be allowed to 'stay afloat' so as to protect their business solidity. "We said, 'let's give them a chance'. The Maltese partners were solid, it was only their partner that was in difficulty."

Falzon also said that him and his colleagues on the superyachts' evaluation board had been "under constant pressure" by Mimcol's privatisation unit to conclude the privatisation process and "collect as much money as possible."

Mimcol's Privatisation Unit had already cancelled the tendering process in November 2009, because it deemed the proposals for the superyacht facility by two main consortia were not "sufficiently satisfactory". The process was restarted and postponed again in January 2010.

Painting a chaotic backdrop to the twice-postponed privatisation of the lucrative facility, Falzon said he had been given just one month to seal a deal with bidders even when he had warned superiors that the time was "too short" to conduct delicate negotiations.

"Today I look back and say, thank God that we did not sell to the Super Yachts Consortium (SYC) who bid with French company Couach, which had later fallen into receivership," Falzon said.

Falzon said that he was adamant to stand his ground and resist the pressure to sell the facilities at all costs. "We were selling national assets. It is not my property and I did not want to just sell it off to somebody and the country regrets it in less than a year," Falzon said.

The two bidders were a consortium made up of Neapolitan firm Palumbo and the Manoel Island Consortium (who had just won the Shipyards and the Manoel Island yacht yard respectively in the privatisation of these units); and the SYC consortium, which included the Hili Group.

Falzon told the court that SYC had misled the evaluation board, for never raising the problems their French partner Couach was facing. "It was only for the sake of the Maltese partners' solidity that we kept their consortium 'floating' in the process, but we never initiated any negotiations with them," Falzon said.

Falzon said that when the board believed SYC could not be entrusted with the superyachts facilities, the board called on finance minister Tonio Fenech for guidance. "We needed direction, and although under pressure, we could not consider SYC, and this is what I wanted the minister to know," he said. "The minister understood this serious financial concern, and this is why we started to think about looking at the second preferred bidder."

Interrogation

Falzon said that during his interrogation, he described Mario Mizzi as "professional at his work" to Commissioner John Rizzo.

He complained of having been bombarded by three senior police officers, Rizzo included, during the interrogation. "It was pressure. We are not criminals," he said as justification as to why he agreed with Mario Mizzi's email to privatisation consultant Sue Hall, who had asked to have SYC's assessment re-evaluated before disqualification.

"Rizzo told me, 'come on admit, let's go home, I'm hungry!'" Mizzi said.