[WATCH] Frank Sammut paid $500,000 cash to leave IBOL - live blog

Welcome to MaltaToday's live blog of the PAC hearing into the Auditor General's audit of Enemalta's fuel procurement policy

EXPLAINER | Auditor General's report on Enemalta fuel procurement

 13:30 This live-blog ends here. Thank you for following us.

13:36 Meeting adjourned to 10 September at 4pm. Witnesses Alex Tranter, Pippo Pandolfino, Edward Gatt Baldacchino, Janice Merceica and Philip Borg to appear before the committee.

David Spiteri Gingell and Karl Camilleri, asked to appear on the same day, informed the committee's secretary they couldn't make it. Their hearing has been rescheduled to a future session.

13:22 "We have endured 16 hours of interrogation. You are fishing for something in the hope you find a shortcoming from our end," the Auditor General tells Beppe Fenech Adami.

Fenech Adami says that is not the point. "I am trying to understand how minutes, approved in a following meeting, could be sealed in that same envelope," he says.

NAO official says the policy doesn't specify at which point the envelopes are sealed. "Ask Enemalta and see at which point envelopes are sealed," the NAO official said.

13:13 Back to the scribbled minutes. Fenech Adami asks whether there existed the legal obligation to keep minutes.

"It's good governance," Charles Deguara replies, adding the keeping of minutes should be "understood".

Fenech Adami, who says minutes of meeting should be kept, points out that the 2011 policy does not call for the keeping of minutes but specifies that bids should be sealed in the envelope.

The policy refers to "working documents". He also says that the 2011 policy "which according to the Auditor General is excellent", does not specifically call for the keeping of minutes.

"Adjudication sheet is part of the minutes. Working documents include minutes," the NAO insisted.

Fenech Adami says minutes are formalised and approved in the following meeting, "which means that minutes cannot be found in the same sealed envelope which includes the bids of the day".

13:06 Azzopardi is asking why the scribbled minutes were kept in sealed documents. The deputy auditor general says because the envelope included submitted bids.

In 2008, Charles Deguara said, NAO said there was an instance when they didn't even find a contract leaving questions on who had adjudicated the bid.

Azzopardi comments he "couldn't wait for moment to make the questions" to FPC members. He also asks whether the keeping of mintues was "a ministerial responsibility" - to which NAO says no.

He also asks whether Austin Gatt was "directly involved" in the procurement of fuel.

"The evidence we found referred to the risk management committee, as shown by the email," Auditor General says.

12:58 Floor back to the Opposition.

"Would I be correct in saying that the privatisation is not the responsibility of Enemalta but of the Privatisation Unit?" Azzopardi asks, referring to the privatisation of the barge transfer services.

"We didn't delve into the issue. But effectively it is Enemalta who should initiate the process. I think the question should be made to them," NAO replies.

12:52 PAC currently analysing NAO report on fuel specifications, fuel consignments, adherence to specifications and so on.

12:43 Owen Bonnici declares that "I never spoke to Tarcisio Mifsud. He also requested to meet me, but I refused".

Bonnici made the statement after Beppe Fenech Adami passed a comment on Tarcisio Mifsud while Bonnici was referring to Tabone, Sammut, Portelli and Cassar.

Fenech Adami replies that he never said Mifsud approached Bonnici.

12:35 NAO points out that on two cases, Enemalta provided no information on the port of origin of the fuel. NAO to check who had been awarded the contract during these two instances.

12:27 Beppe Fenech Adami and Owen Bonnici are locked in an argument, Fenech Adami says that it was only during 2013 that this information came out. He was acting in defence of Austin Gatt after Bonnici quoted him denying any private interest by MOBC members in bunkering as stated in parliament in 2004.

12:05 It was outside audit scope to establish who owned IBOL. "Can you confirm that IBOL is involved in the Enemalta oil scandal? Bonnici asks.

"We don't interfere with sub judice cases," the Auditor General replies.

Owen Bonnici explains that IBOL was set up in 2002 by Tancred Tabone, Frank Sammut, Francis Portelli and Anthony Cassar. Quoting from a 2004 report by Bunkerspot - described as an independent intelligence on global bunkering - Bonnici said the report had flagged concerns on Frank Sammut's involvement. Bunkerspot reported that Frank Sammut, than CEO of MOBC (owned by Enemalta), would soon leave the company to become an independent consultant. It also reported suspicions of him being closely linked to IBOL, which was to be set up.

The independent intelligence said there were concerns in the industry that IBOL might inherit "some or all of MOBC's business and could be favoured in the award of bunkering contracts".

"In 2004, Austin Gatt told parliament that no one from MOBC had private interest in the bunkering industry. It then transpired that IBOL started operating in 2002, led by Francis Portelli and Anthony Cassar. Tancred Tabone and Frank Sammut had an interest, but was never declared. And to hide that interest, they sought advice from Switzerland," Owen Bonnici said, reiterating that during that time, Tabone was Enemalta chairman and Sammut consultant to Enemalta and fuel procurement.

Sammut, Bonnici added, left his consultancy position and went to IBOL for six months. Sammut, who eventually dropped out of IBOL, was paid $500k in cash to leave IBOL.

Bonnici said that from the court case, it also transpired that every time Trafigura won diesel barge transfer contracts, it paid kickbacks to Frank Sammut - at $1 per metric tonne of diesel.

Fenech Adami intervenes to point out Tarcisio Mifsud's involvement, to which Owen Bonnici replies he was talking about the setting up of the company.

Auditor General reiterates NAO did not delve into the issue because of the ongoing court case.

11:52 When it came to the administration of the diesel barge transfer contacts, the NAO found poor contract management practices where in January 2008, Island Bunker Oils Ltds (IBOL) was awarded such a contract for period of six months, with a further six-month option. The contract was subsequently extended for an additional 26 months.

"One extension after the other was issued for almost three years without a call for tender, which we considered as an affront," the deputy auditor general said. The contract was even revised upwards. Enemalta explained this was to provide for the repeated cleaning of the tanks to avoid diesel contamination.

Between January 2008 and mid-2011, Enemalta spent €820,000 on these contracts, paying €51,000 a month to IBOL. Enemalta told NAO that this cost "was marginal" when compared to the total cost in procurement. NAO confirms that, depsite spending €51,000 a month, Enemalta never felt the need to issue a call for tenders.

According to Enemalta, the decision to extend the iBOL contract was due to the "imminent privatisation" of the barge transfer services. Five years later, this privatisation has not yet occurred.

11:45 Committee resumes, government side takes the floor. Topic: fuel storage facilities and procedure.

Bonnici asks for a short explanation. Deputy auditor general explains that Enemalta's procurement includes storage facility. Every Monday, Enemalta issues a report on its storage capacity. In Malta, oil is stored Has Saptan, Marsa, Delimara and Birzebbugia. The storage facilities are owned by Enemalta but it also leases from private sector. MOBC originally carried out bunkering, but eventually government decided that MOBC should only focus on storage. MOBC is owned by Enemalta.

NAO official couldn't confirm that the change in MOBC services carried out under Austin Gatt and when Tancred Tabone was chairman at Enemalta.

11:39 Session suspended for a few minutes for a short break.

11:30 Fenech Adami and the deputy auditor general are locked in an argument about an Enemalta legal action "to reserve the right to refuse the most advantageous bidder". The MP asks whether this was good governance. Profs Ian Refalo, NAO legal advisor, says that would be a legal advice. Deputy auditor general says he is not aware that Enemalta ever availed itself of this right.

11:17 Beppe Fenech Adami now asks whether it is "good governance" that only a short email is sent to the unsuccessful bidder informing them they didn't make it.

"I don't know what you are trying to fish for, but the way you are making the questions makes me feel you're doubting what I'm saying," the deputy auditor general replies.

11:09 As Owen Bonnici asks Beppe Fenech Adami to explain the policy - Jason Azzopardi, acting as chairman, intervenes and objects to the question "because we didn't interrupt you".

Fenech Adami, reacting to the name of the 2011 policy document, asks what's the difference between the 2011 report and 2006 report called "Fuel Procurement Policy Recommendations" - prompting the government side to point out the "recommendations".

Fenech Adami goes back in time to 1987 to say that former Labour Prime Minister Dom Mintoff continued negotiating fuel procurement on behalf of Malta, in reply to Owen Bonnici's statement (quoting Enemalta official) that the fuel procurement committee was set up in 1986.

11:00 Jason Azzopardi, who is chairing the Public Accounts Committee, has turned to the NAO officials and, in a tone verging on sarcastic, said: "So you would not consider a report prepared by Roderick Chalmers as a policy, but a report on email procedures is a policy?"  The email report he is referring to is a detailed guideline on how the FPC should receive, access and which procedure to adopt while the fuel procurement committee awards its tenders.

The Opposition MPs continue to harp on "the existence of a policy" before 2011. They also deny that the 2011 email report is a 'procedure' not a policy. The report's name is Fuel Procurement Policy.

10:53 Nationalist MP Jason Azzopardi is currently reading excerpts from the Roderick Chalmers report on hedging to mitigate price volatility and move towards price stability.

10:42 NAO official quoting from report which confirms that the 2006 Fuel Procurement Advisory Committee report was not a policy but a recommendation on hedging strategy.

"All recommendations are related to hedging and none refer to fuel procurement," NAO official Krista Vella says.

10:35 Back to the policy vacuum with an NAO official insisting with Beppe Fenech Adami that no policy existed. The email infrastructure existed, but before 2011 no policy regulating security such as password change, existed.

10:10 It turns out that on 12 May 2011, when no new password was requested - as per procedure - the contract had been won by TOTSA.

On a second occasion, 12 July 2011, the same thing occurred and the contract was again awarded to TOTSA.

On a third occasion, the contract was awarded to BB Energy.

9:56 The generic email was also registered on the chairman's address as a secondary username. The NAO says it "does not necessarily mean" that the chairman had access.

Beppe Fenech Adami asks whether whoever requests password before the day of the bids would still be able to access the bids.

"It is not clear who sets the password," the deputy auditor general says.

9:51 To summarise: PAC members are asking NAO officials further clarifications on the use of a generic email account and passwords used by the fuel procurement committee (FPC) in receiving and awarding oil tenders.

While procedure dictates that before every FPC meeting, members would call MITA who provide them with a new password to access the email address. This would take place during the same meeting when the tender would be awarded.

However, there were instances when FPC would access the account presumably using an 'old password' - there were instances when a call from Enemalta to MITA would have been made two or three days before.

9:41 There was a generic account where bidders would submit their tenders. Before every meeting, FPC members would contact MITA to provide them with a new password - a process repeated before the start of every meeting. The password would provide them access to the submitted tenders. They would proceed to analyse and adjudicate the tenders and contact the final bidder during the same meeting.

This generic email account was created in April 2011, three months after the procurement policy was implemented.

However, according to MITA's records, the FPC contacted MITA to change password on three out of seven occasions when contracts were awarded.

By way of example, during an FPC meeting on 12 May 2011, no calls to MITA were made - always based on information submitted by MITA.

However two calls were made three days before. The NAO doesn't know who called and about what.

However a call was made on 13 May 2011, presumbaly to disable the password.

9:37 Fuel procurement members told Times of Malta that procurement process was "the Chairman's domain", receiving bids on his email.

Bonnici says things changed for the better after then Enemalta chairman Alex Tranter left the leadership of the state entity. He asks the Auditor General to confirm and comment on The Times' report.

"As NAO, we don't give much attention to reports quoting 'anonymous' sources," the Auditor General replied simply.

after Tancred Tabone and remained chairman until march 2010.

9:33 The bidders list was updated mid-2012, following the so-called policy. Caruana asks whether the NAO had gathered info on how the list had changed between 2008 and 2011 and information on the suppliers.

However the NAO says it did not delve into the issue.

9:23 Labour MP Justyne Caruana asks whether Enemalta's explanation "was enough" to convince the NAO there was nothing dubious.

While Deguara explains that as auditors, the explanation did make sense, Auditor General Anthony C. Mifsud said they did not carry out an investigation and therefore the questions should be referred to Enemalta.

The NAO also could not provide further information on the 'Russian' bidder. The governemnt side asks whether Enemalta had sought further information on the Russian bidder since it would be the corporation itself to hold the expression list.

9:17 NAO deputy auditor general Charles Deguara explains there was also one time when TOTSA, even though not having the cheapest bid, was awarded the tender because it gave the best credentials. The other bid, Deguara said, had been "too cheap" and submission was mostly in Russian.

9:15  Parliamentary secretary for justice Owen Bonnici asks officials from the National Audit Office to explain why TOTSA would have been awarded contracts even though it would have not been the most preferable bid - as stated by the NAO report.

9:00 Good morning and welcome to the live-blog, the fourth session into the Auditor General's hearing.