Falzon brothers released on police bail after contraband investigations

The directors of the Falzon Group from Birkirkara, Carmelo Falzon, 68, and Joseph Falzon, 63, were interrogated by police over the possession of 168,000 litres of diesel on the MT Santa Marija registered to their company SL Ship Management company Limited.

Another three ships involved in the extensive police investigation on diesel contraband are the MV Xmun, belonging to Gordon Debono, 39, of Birkirkara, the MV Silver King, owned by Pierre Darmanin, 36, of Zurrieq and the MV Alice, owned by Philip Cardona, 37, of Zebbug. All the vessels have been impounded.

The Falzon brothers were released on police bail, but they surprisingly told the police that their activities were "well known to the customs department."

Unlike the previous oil and bunkering scandals, the names of the individuals interrogated by the police were not released to the public.

MaltaToday can confirm that the elder Falzon brother, Carmelo, told the police that he did not run the operation himself. However the brothers admitted that the transfer of diesel in international waters happened on an ongoing basis.

An Enemalta source said it was "common knowledge" that the Falzon brothers operated in the sale of diesel. The same official said that it was well known and that the "Falzon diesel" was characterised by its high sulphur content.

The Falzon brothers are well known in political circles and openly supported the candidature of former finance minister Tonio Fenech. In 2011, then opposition spokesman Leo Brincat asked the finance minister about the Falzon Group's involvement in contraband. The minister did not reply, and instead the Customs Department took the unusual step of issuing a statement that it had carried out intense enforcement work against diesel and fuel contraband, and also that it took the necessary steps whenever it found contraband trade to have taken place.

Brincat said that he had expected the minister to answer him in Parliament and not use the Customs Department to issue a statement.

Last October MaltaToday reported how Waste Oils Limited, a company owned by the Falzon brothers, had been chosen as the preferred bidder in the tendering process for the operation of a port reception facility for ship-generated waste oils at the Ricasoli Tank Cleaning Facility for the next 30 years.

A MaltaToday probe in May 2012 revealed that the call for tenders was issued on 4 May - only a day after the Malta Environment and Planning Authority board issued an Integrated Pollution Prevention Control (IPPC) permit for Falzon Waste Oils.

At the time, competitive tenderers had alleged that the Falzon group was being given preferential treatment because of their political connections. But nothing could be proved.

The tender conditions specified that only companies already in possession of an IPPC permit to operate a similar installation could apply.

Unbelievably, the tender conditions had specified that the bidder must have managed a hazardous management installation or a port reception facility for ship-generated waste for a period of at least 10 years. It also states that the company must already be in possession of an environmental permit to operate such an installation.  The tender fit the Falzon group portfolio perfectly.

A government spokesperson cited the "national interest" and the need to safeguard environmental standards to justify these conditions, but prospective bidders complained that these conditions have practically excluded most operators from the bidding process.

The Finance Ministry spokesperson justified this condition, citing "the national interest" and to ensure maximum environmental safeguards.

"Given Malta's obligation at international law to provide the facility coupled with the sensitivity of the area and the importance and technical nature of the operation, government cannot afford to risk entrusting such an important and sensitive operation to amateurs and therefore opted for practices enshrined in European directives," a finance ministry spokesperson told MaltaToday in May.

According to government, the 10 years' experience in running a similar plant was crucial, to ensure that the new operator would have already had the experience of executing similar maintenance programmes in the facility.

The government also changed its policy to relocate the Ricasoli tank-cleaning facility to a more environmentally suitable location, and has issued a call for tenders to lease the site for 30 years as a port reception facility for ship-generated waste oil and cargo residues.

But a spokesperson for the Ministry for Finance insists that the decision to issue the tender to retain the site for tank-cleaning activities was taken after all attempts to relocate this activity failed after MEPA failed to issue a permit for an alternative site.

And again in July 2011, Waste Oils Limited were cleared of dumping oils in the sewer system earlier in the month because the investigation had failed to satisfy criminal proceedings which could lead to conviction.

Manholes at Spencer Hill and Timber Wharf in Marsa were inspected in March 2009 after residents complained of bad odours. Two manholes were found to have a considerable quantity of oil which should never have been dumped into the drainage system.

Waste Oils was suspected to be the culprit after an investigation that involved the Water Services Corporation, the planning authority and Transport Malta. MEPA's head office at Hexagon House had to be evacuated after foul smells enveloped the building and one female staff member was retained in hospital for observation.

The company's property was inspected in April 2009, and a flexible pipe, the ends of which were covered in oil similar to that found in the drainage system, was found connected to the company's plant on one side and to an unused bathroom drain on the other.