Whistleblower: ‘Why were Schembri’s abuses ignored by top brass?’

Whistleblower Philip Rizzo, whose testimony to the National Audit Office shed light on a serious breach of ethics committed by the head of governance and internal audit in the Office of the Prime Minister, has asked the Maltese political class to take the Rita Schembri case as a jumping board for serious reforms that must take place across the entire public service.

Rizzo, an auditor by profession, had blown the whistle on permanent secretary Rita Schembri when he revealed that she was conducting private business for the acquisition of a 40% stake in the Casinò di Venezia, from the offices of the Internal Audit and Investigations Department in breach of the public service management code.

The revelations led to an inquiry by the NAO that produced a damning judgement of Schembri's abuse of office, and raised new questions about audits carried out by the IAID and her conflicts of interest as one of the Prime Minister's highest functionaries.

Rizzo, one of the witnesses in the NAO inquiry, has now said that MPs must tighten up ethics rules to prevent slippages in public officials' administration of their office. 

"If a book were written, it would include questions such as whether political brass must operate 'the one removed' rules as for the judiciary, instead of the civil service head allowing civil servants to conduct private work on the dubious excuse that the experience may benefit the official intellectually where their public functions are concerned?" Rizzo told MaltaToday, referring to Schembri's unprecedented freedom to sit on a private board of directors with the blessing of the head of the civil service, Godwin Grima.

"And should Parliament review ethics and anti-corruption laws, and introduce much tougher penalties, so that all high-ranking officials have to declare their assets and income, including their spouses' and children's? Should a constitutionally-protected figure be charged with the necessary regular enforcement?"

Rizzo, whose civic contribution was essential to uncovering the state of management at the IAID, which also assisted the OLAF investigation on John Dalli, said that the NAO's judgement had now proven the "serious lack of proper governance" at the office.

"The 'gaps' have, in the absence of proof of passive, or even neglectful conspiracy, unwittingly allowed an official to deceive her two separate political and administrative superiors. Such gaps must be closed," he said of Schembri, who deceived Grima by not declaring her private income from Brait SE, an investment firm she was allowed to join as non-executive director; and about having used her official government address in carrying out business for FEE plc's multi-million bid for the casino acquisition.

The NAO established that Schembri had a "heavy involvement" in the casino acquisition bid, which she had denied both to Godwin Grima and to the NAO, and that she used her IAID office to meet auditor Philip Rizzo to get his perspective on the casino bid. Rizzo would later reveal himself as the whistleblower in the case, revealing the extensive email evidence that showed Schembri to be a node of communication for FEE chairman Colin Perkins and another shareholder, Schembri's personal lawyer Pio Valletta.

"The comparatively 'minor' wrongdoings proven to the NAO included abuse of email addresses and facilities, use of government office for private meetings, hiding of earnings from 'authorised' private work and making use of other public officials' emoluments records for claiming additional allowances for oneself," Rizzo remarked on MaltaToday's extensive reports into the NAO report.

"But the public concern is that all of these abuses are things that the Principal Permanent Secretary could easily have 'picked-up'; could not hundreds of private business emails on an official gov.mt email address not been routinely identified? Why did government's top-most administrator not react at all, upon receiving personal claims to additional monetary allowances quoting confidential information relating to others' arrangements?" Rizzo asks of Godwin Grima, who has now been replaced by new head of civil service Mario Cutajar.

Grima had used his role as head of the IAID's own supervisory board, to push the allegations of a breach of ethics away from the Public Service Commission - which handles such disciplinary inquiries - to the National Audit Office, which has no executive power except to produce opinions on government entities and their functions.

"No mega changes appear necessary other than the appointment of a new head of civil service with a willingness to control for reasons of proper governance and for the benefit of the public purse. After all, the NAO discovered reams full of abuses upon first check in the IAID, not in some remote agricultural or similar office," Rizzo said.

Rizzo however opines that the NAO's findings that Schembri would instruct civil servants from different departments to remove documents that had been officially filed in government departments' registry files, such as audits of projects that benefited from EU funds, could be a potentially criminal abuse.

He cites as an example the fact that when trying to justify why Rizzo had been called in at the IAID, Schembri tried to guise this as having interviewed him in his capacity as treasurer of the Inspire Foundation, a recipient of government funds.

"Abuses such as these, reporting facts known to be false, and lying under oath, must be seen by the public to be brought to the Courts for due judicial process. The value of the deterrent is critical to any true democracy: the rule of law requires that both lower and higher officials who offend should face fair trial."

Rizzo came forward in October 2012 with documented evidence of Schembri's participation in the casino acquisition, after claiming he was "intrigued" by the fact that Rita Schembri was herself a member of the OLAF supervisory board, which oversees that investigations by the EU's anti-fraud agency are carried out according to European law and rules. Schembri has since resigned the post.

"While back then I had the courage of one relating only facts that could be substantiated by incontrovertible tangible evidence, I confess that commenting on the outcome of the NAO inquiry are much more challenging," Rizzo says.

Schembri was promoted to permanent secretary in September 2012, shortly before the resignation of John Dalli as European Commissioner on the strength of the OLAF investigation, that also included the assistance of the anti-fraud coordinating service (Afcos) that Schembri headed as director of the IAID.

"In Rita Schembri's sad case, the NAO has established her guilt beyond reasonable doubt. It remains now for the Public Service Commission to determine the penalty relating to the unethical behaviour and illicit use of government resources and work-time for personal reasons, and for the law courts to deal with any criminal offences."