Updated | Wasteserv denies attempt to influence auditors

Updated with Labour's statement at 5:36pm

The audit firm that complained about the overweening complaints of finance minster Tonio Fenech's head of secretariat Alan Caruana, is still carrying out audits for national waste agency Wasteserv, the company said in a statement.

Auditors BDO Malta, which said they are still carrying out audits for Wasteserv, were revealed yesterday by Labour MP Leo Brincat of having complained to Tonio Fenech in a letter that Caruana had called a 90-minute meeting in which "he opted to focus mainly on putting in doubt and questioning the integrity of the expressed opinion of BDO Malta as auditors."

In its complaint BDO said Caruana's doubts were "a threat to [our] independence as auditors by irresponsibly pressuring our firm to change" their opinion on Wasteserv's accounting practices.

In a statement, Wasteserv denied having attempted to pressure BDO to change their audit opinion, saying the auditors had asked for more information on asset purchases to fully ascertain their values and existence.

"Indeed in meetings after their correspondence [dated January 2008], this information was collected and the necessary verifications carried out, without prejudicing their independence, and filed with the MFSA in March," Wasteserv said.

"At no point did Wasteserv or any government official, including Alan Caruana, intend to influence the work of the auditors. On the contrary, there was full cooperation," Wasteserv chairman Ben Farrugia said, in a statement signed by BDO managing partner John J. Attard.

Meanwhile in a statement issued later this afternoon, Labour said yesterday's press conference was held after it came in possession of correspondence which it received from governmental sources.

Labour MP Leo Brincat said "One would have expected a clear and categorical statement on whether the published letter was authentic or nor."

Brincat stressed that Labour's criticism centred around Caruana's alleged behaviour which was subject to the auditor's complaints.

"If the letter is genuine we expect a clear and categorical statement with the reactions of the Ministry of Finance and not from Wasteserv and BDO," Brincat said.

The MP also asked why was the letter sent by BDO if it is truly had no qualms on Caruana's actions.   

He added that Labour will publish more details at a later stage.

In the complaint published by Leo Brincat, BDO specifically made reference to numerous shortcomings in their audit of the Wasteserv accounts, especially over an inadequate asset inventory that failed to reconcile a book value of €66 million with the original cost of €86 million. This allegedly prevented BDO from issuing an audit opinion on the existence and valuation of the six assets in question.

According to the letter, which BDO partners copied to the Malta Government Investments and Malta Investment Management companies, the audit firm said Caruana's suspicions were "highly unethical" given that the firm had pointed out its grievances during the three years we have held office with management letters as well as their auditors' report."

In another statement, MGI and Mimcol "categorically" denied any undue pressure from Caruana, who is also a Mimcol director. MGI and Mimcol are responsible for overseeing the financial standing of government-owned companies.

"Government and its agencies have every right to discuss the issues emerging from an audit in its role of shareholder, including the audit methodology utilised. At no time during such discussions was any threat made or intended against this firm, not even in the most remote of manners.

"This point was emphasised in the letter sent by Wasteserv on 6th January 2012, in reply to the original letter published by Labour MP Leo Brincat. However Brincat chose not to publish Wasteserv's reply to the auditors which amply clarifies government's position and which the auditors had accepted."

Mimcol CEO Vincent Mifsud said the audit was eventually completed successfully, without audit qualification, by BDO. "It should also be noted that the fixed assets referred to by Brincat are part-financed by EU funds. This makes the Wasteserv assets subject to intense EU controls and international audits."

Mifsud accused Brincat of being "unprofessional" for not verifying his facts with the finance ministry, claiming his press statement unfounded allegations. "Unfortunately, this was a clear example of unethical and malicious political play."

Alan Caruana was recently appointed as a consultant to the finance minister on a salary package amounting to €67,473. Caruana reportedly resigned from the roles of head of secretariat just a few days before Tonio Fenech appointed him as his consultant, on 13 June, 2012.