IAID head Rita Schembri used sensitive data for profit - NAO report

Permanent Secretary Rita Schembri made illicit use of highly sensitive and personal data for her personal gain, the National Audit Office found in an audit of her professional conduct.

MaltaToday last week saw the contents of the NAO report that revealed Schembri, 47, had lied under oath over her private interest in a casino share acquisition, which this newspaper had broken back in November 2012. The allegations led to head of the civil service Godwin Grima recommending, unorthodoxly, an audit by the NAO.

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The resulting report passed scathing judgement on the way Schembri compromised her position as head of governance, by failing to put herself beyond reproach.

As head of the sensitive IAID (Internal Audit and Investigations Department) she was highly paid by the State, allowed to enjoy the perk of a director's fee from a private investment firm, and even received high performance bonuses.

But Schembri still abused of sensitive information made available to her in her official capacity to request adjustments to her pay package, the NAO said.

An email sent in 2010 by Schembri to Godwin Grima was considered to be unacceptable on ethical grounds by the NAO's investigative board, when she made a direct reference to the remuneration package enjoyed by another senior officer of the same grade, to draw comparisons between the duties she was responsible for and those of the officer.

Schembri made use of this comparison to justify her demand for a personal allowance, but the NAO's board opined that this was an abuse of government intellectual property and data that was personal and sensitive.

"The use she made of these government assets is simply not justified even more so in view of the fact that she is aggressively and illicitly making use of data for her personal gain... the offence is serious on its own merit. That it is carried out by the permanent secretary responsible for governance makes in unacceptable," the NAO said.

"NAO notes once again, the lack of ethical standards in Ms Schembri's actions and considers these deficiencies to be sufficiently critical to render Ms Schembri eligible [sic] to occupy [her] post."

In his testimony to the NAO, Godwin Grima said that the sole reason that Schembri's pay package was higher than that of other officials was that she was expected to consider herself to be 'the one removed' - a behaviour similar to that expected of the judiciary, "a professional life of seclusion, exclusive dedication to the profession and of a very cautiously conducted private and social life".

But that dedication to her professional remit was effectively compromised by her equal dedication to assist a private consortium acquire a 40% stake in a casino.

Compounding this case was evidence obtained by the NAO under oath from "multiple, separate and distinct sources" which revealed that Schembri would instruct civil servants from different departments to remove documents that had been officially filed in government departments' registry files.

In its report, the NAO said that filed documents from audits of projects that benefited from EU funds, had been removed. "Such action is a serious offence in the case of any public serving officer. That the officer involved should be none other than the permanent secretary responsible for governance raises the offence to indescribable heights. The officer in question is blatantly committing an offence she is responsible to see that others do not commit."

The NAO said that the severity of the case was accentuated by the fact that, rather than remove the documents herself, Schembri "attempted to lure other officers, all being her junior in grade, to carry out the illicit act themselves."

It is unclear whether the documents were actually removed in one particular incident, since the NAO says that officers present during this incident expressed their reservations. But the NAO said there may have been other instances which had a different outcome.

"This issue by itself raises serious doubts as to the suitability of Ms Schembri to hold the post of permanent secretary of governance," the NAO said.

Private earnings

Schembri was promoted to the role of permanent secretary in September 2012, shortly after having assisted the EU's anti-fraud agency OLAF in its investigation into former commissioner John Dalli, who was accused of trading in influence by failing to report an attempt to bribe Swedish Match in return for the lifting of an EU ban on the sale of snus (a smokeless tobacco product).

Back in April 2012, the then head of the civil service Godwin Grima gave Schembri official permission to avail herself of a private directorship with investment firm Brait SE. But when she received her first payment in June 2012, she did not inform Grima accordingly.

In fact, information of her payment only emerged in her interview with Grima, as chairman of the IAID's supervisory board (IAIB), in November 2012, after MaltaToday broke the story of Schembri's consultancy in the Casinò di Venezia.

When Grima later recommended that the NAO carry out an inquiry into Schembri's professional conduct, he also suspended her permission to serve on Brait's board of directors.

Publicly, Grima did not explain the reason for this decision - after all, Schembri had followed regulations on requesting permission to accept this directorship. But as he told the NAO, Grima revealed that Schembri was availing herself of a handsome quantum.

"He felt let down when Ms Schembri failed to inform him of the quantum of the remuneration... the feeling was accentuated by the fact that the amounts in question were substantial."

The NAO's board said it was "perplexed" how it was humanly impossible for Schembri to handle all her commitments: her main job as director of the IAID, her ancillary commitment on the EU funds' audit, her OLAF and Afcos-related work, occasional lecturing, and then her private work: the Brait directorship, her presidency of the Farmers' Wine Cooperative, and her assistance to FEE plc in acquiring the 40% stake in the Casinò di Venezia.

In fact, the NAO pointed out an instance in which Schembri apparently deemed it was below her station to ensure that her orders were carried through, in this case that an officer in charge of investigations was actually filing the cases' working papers.

"This is further evidence of the conflict of interest that Schembri's private activities were causing. While she found time, even during office hours, to handle personal issues, she was unable to detect a very critical and serious deficiency that was maturing but a few metres from her office."

But when the NAO attempted to establish the level of Schembri's presence at the IAID on a daily basis, it resulted that no record was maintained of her attendance. Instead, the NAO had to rely on the perception of IAID staff, which claimed that "as a rough estimate, since Schembri had taken up OLAF and related work, her physical presence on IAID premises had dwindled down to around 50% of working time."