Auditor General to investigate breach of ethics by IAID director Rita Schembri

The Office of the Prime Minister has announced that permanent secretary Rita Schembri will be temporarily stepping down from her position as director-general of the Internal Audit and Investigations Department, pending an investigation from the Auditor General on allegations of a breach of the estacode's ethics.

In a statement, the Prime Minister said he had asked principal permanent secretary Godwin Grima to refer reports appearing in MaltaToday pointing to the alleged breach of ethics, to the Auditor General for investigation.

The recommendation comes from the Internal Audit and Investigations Board, headed by Grima himself.

"Rita Schembri has asked that she takes time off work on leave to concentrate on her defence, until the Auditor General's investigation is completed. In the coming days, a new director-general will be appointed on a temporary basis."

Investigations carried out by the Auditor General do not necessarily result in indictments where breaches of the public service management code are concerned: such matters tend to be taken up by the Public Service Commission.

Past cases such as the ministerial procurement of airline tickets from private companies, a factor in the resignation of John Dalli as minister in 2004, or the €2 million direct order issued to Group 4 Security by the Office of the Prime Minister in 2008, were referred to the Auditor General: the result was a series of recommendations to ministries to avoid such 'impolitic' spending.

The decision to refer MaltaToday's reports to the Auditor General follows the public declaration by whistleblower Philip Rizzo, whose detailed email correspondence showed Schembri was conducting private business that could have been undeclared to her superior, Godwin Grima, from her government office in Valletta.

The detailed trail of correspondence handed to this newspaper by Rizzo confirmed that Schembri used her government office at Valletta Buildings, in South Street in Valletta, to discuss an investment proposal by Far East Entertainment Group plc to acquire a 60% stake in the Casinò di Venezia, of Birgu.

Apart from using the IAID offices for a private business affair, Schembri's relations with the FEE Group and their interest in the Birgu casino did not have the official approval of principal permanent secretary Godwin Grima.

Both instances could suggest a serious breach of the estacode's code of ethics: using official IAID facilities for private purposes; and failing to declare a possible financial or other interest in FEE's casino bid.

Schembri, a member of the supervisory committee of OLAF, the EU's anti-fraud office, has denied having carried out any business advisory services to private firms.

On his part Rizzo said he was prepared to hand to an appropriate judicial or police authority the conclusive documentary evidence in his possession, "as well as to testify as to my 70-minute meeting on 15 March, 2012 at what to my surprise turned out to be official government offices with Ms Rita Schembri, who was until that date wholly unknown to me."

Rizzo had told MaltaToday: "I remain prepared to perform such civic duty to the appropriate authority as determined by government... I am merely a witness to Schembri's lack of professional ethics in the public sphere. I am neither an investigator nor a prosecutor and permit me to say, before anybody starts shooting at me instead, much less an accused.

"I will do nothing more than feel that this society has been corrupted by vested interests if this matter is swept under the proverbial carpet."

The email correspondence shows Rita Schembri as being an integral part of talks between FEE chairman Colin Perkins and Maltese lawyer Pio Valletta, whom she described as "her representative" - according to Rizzo's version of events when meeting her at the IAID office - for FEE to buy a 60% stake in the Casinò di Venezia.

On 25 February, Colin Perkins informed Rizzo that Rita Schembri was awaiting his callm and supplied him with her mobile phone number. That same day, Rita Schembri set up a meeting at the IAID office with Rizzo.

Schembri has a non-executive directorship with the South African private investment holding company Brait SE, which is based in Luxembourg, for which she was given official approval by Grima on 14 April, 2012. It is understood that Schembri's role in FEE's bid for the Casinò di Venezia is not part of her directorship in Brait SE.