[WATCH] Spiteri Gingell in damning statements over Enemalta's management infrastructure

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

13:40 This live-blog ends here.

13:39 Meeting adjourned to Thursday morning. Witnesses Karl Camilleri, Pippo Pandolfino and Philip Borg. On Friday afternoon the witnesses will be Janice Mercieca and Antoine Galea.

13:38 PAC chairman Jason Azzopardi reminds Enemalta that information requested on the list of foreign consultants to FPC and oil agents last month has not yet been submitted.

13:37 David Spiteri Gingell's hearing ends here.

13:33 "The paper trail is very important. Because no matter how much your work is in good faith, perception is everything." Spiteri Gingell adds that if Enemalta had an internal audit department, issues such as proper record-keeping would have never featured in the NAO report as they would have already existed.

13:17 Asked by MP Kristy Debono, Spiteri Gingell says the cost of having a basic organisation design would have cost 2.5 million euros. However, the cost of not doing it was significant.

"ARMS Ltd cost 80 million euros. But because of the lack of capacity, I don't need to explain the problems which emerged afterwards. The comparison between a 2.5 million euro investment in capacity to have a basic organisation design against the cost of doing nothing is a no brainer. At the end of the day, Enemalta is an organisation with a billion US dollars turnover where efficiency lacked."

He reiterates he couldn't stay any longer at Enemalta. "During 11 months, I achieved nothing. And for me that was unacceptable. It was unacceptable that after 11 months, no one was recruited."

Spiteri Gingell adds that he enjoyed working under Austin Gatt because he never "interfered". "It was a no-no to even approach him for advice," Spiteri Gingell adds.

13:05 Focus turns on Delimara power station and the use of HFO. The plant, Spiteri Gingell says, is an ageing plant and the Marsa power stations had to be closed due to its inefficiencies. "We didn't have the time to build the gas infrastructure. From what I assessed and information passed on, to go for gas we required certain infrastructure. I believed we had run out of time to close down Marsa and go directly for gas. So I said we should phase it out. It wouldn't have been wise to wait until 2015 because there was no stability in security of generation."

"I think time had run out. The building of a refresh could have been much better. The circumstences were to stabilise the situation and go for cheaper oil (HFO) and then convert to a gas production plant. That was the reality I was facing."

12:46 Spiteri Gingell talks about his relationship with the media, insisting the media did not enjoy his trust. 

"I have no riches but my own integrity. Without that, I am nothing. And my integrity was attacked by the media," he says.

He says "the media is unfair, fails to give you a fair picture and takes your words out of context".

"My resignation had nothing to do with a clash with Austin Gatt. MaltaToday was not factual. I resigned because of my clashes with the finance ministry," he adds. Naming MediaToday, l-Orizzont and One TV, Spiteri Gingell says allegations of his involvement in corruption on the BWSC plant were made, "harming me and my family".

Today, Spiteri Gingell is a government consultant on renewable energy in street lighting and energy efficiency in government's buildings. "I want to have nothing to do with Enemalta."

12:36 Spiteri Gingell's clash with Tonio Fenech was to the point that he also resigned from MITA. "I had no other option but to leave MITA because at the end of the day, I would still have to face the ministry for finance... it was to that extent."

At one point, Fenech Adami asks whether he was referring to the finance ministry's permanent secretary Alfred Camilleri - PS to Tonio Fenech - Spiteri Gingell replies it was "the finance ministry as a whole".

He believes that his abrupt resignation and his insistence not to return to Enemalta raised the alarm bell to start acting seriously on Enemalta's problems.

He reiterates that he had a good working relationship with Austin Gatt and he therefore didn't see it as fair to go above Gatt's head and go through to the prime minister. "I never had an issue with Austin Gatt," he repeats, being clear that the problem lay within the ministry for finance.

12:29 Referring to the NAO report, Spiteri Gingell says he finds it "frustrating" to discuss normal business organisation design. "It's obvious that an entity should have an internal audit."

Referring to encrypted accounts through which bids came through, Spiteri Gingell says that "in all honesty this was the last of problems on my mind". To explain the extent of his worries, he refers to an incident where he had an oil tanker coming in but he had no money to pay it with, due to cash flow problems. To further explain the seriousness of the corporation's problem, he says the finance department did not even have accountants to chase debtors.

12:21 "Decisions which should have been taken by the corporation's CEO were being taken by someone else. This for me was unacceptable," he says referring to decisions taken by the finance ministry on recruitment and money.

He describes "sweet irony" the transmission of Enemalta to the finance ministry. "The problems I was facing were now being faced by that same ministry."

"I resigned without a job. That was the extent of how much I was fed up with the same situation. I had no power over the corporation I was tasked to reform," Spiteri Gingell says, appearing frustrated even now.

12:11 David Spiteri Gingell, who acted as chairman between July 2007 and February 2008, admits he never aspired to be chairman of Enemalta insisting he was not even interested in the post. But, he was head-hunted by then minister Austin Gatt to turn around Enemalta. Spiteri Gingell resigned within a year after he found lack of cooperation by the finance ministry - then responsibility of Lawrence Gonzi as the finance minister.

Spiteri Gingell explains that he used to deal with the parliamentary secretary within the finance ministry, in other words Tonio Fenech who would later become the minister for finance.

Following the February 2008 resignation, Austin Gatt had asked him to reconsider his decision. He accepted but left in June 2008 when he saw that things would remain the same.

Spiteri Gingell was promised all the required infrastructure in his bid to turn around Enemalta. The Nationalist administration of the time wanted an overhaul of the Corporation and Spiteri Gingell accepted on the premise that he would find no interference. But a year later, when the general election was announced, he submitted his resignation. Having served as a consultant to both Nationalist and Labour administrations, Spiteri Gingell was responsible of a number of reforms both in public service and a number of other entities.

During the Sant administration, he had carried out a strategic management audit of Enemalta. The report was presented in 1997. When he returned to Enemalta in 2007 "nothing had changed... not even the subbuteo turf curtains".

In a 2008 memo he sent to the Enemalta board, less than a year he had already insisted on the strengthening of the management support infrastructure, he flagged the importance of introducing an undergraduate trainee scheme. Like all witnesses, Spiteri Gingell refers to the lack of the finance ministry's lack of cooperation in employing new staff. The situation was to the point that Spiteri Gingell couldn't take it any more and resigned. "It was a waste of time," he says.

"The Corporation is weak in terms of a management support infrastructure. Graduates in various disciplines that are essential for the proper management of the corporation are scarce. In certain positions, such as for example, accountancy the Corporation is not succeeding to recruit staff leaving it exposed to meet basic fundamental work let alone to plan for new important changes that will affect the corporation: carbon trading, debt management et al," the memo read.

"My track record is not Enemalta but MITA. Today, ISO credited. If I were allowed to work, Enemalta would be the same as MITA."

11:39 Meeting suspended. Next witness is David Spiteri Gingell.

11:23 Gatt Baldacchino confirms that during his time as non-executive chairman, Enemalta had no written policy and he therefore followed "an inherited practice".

He is being questioned by Beppe Fenech Adami why Austin Gatt's decision was wrong. Gatt Baldacchino argues that, from a commercial point of view, it would have made more sense for Enemalta to wait a little bit more before hedging at the price it did in 2009.

"However, Austin Gatt said Enemalta should not risk any waiting time," he says, adding that he wouldn't know whether Austin Gatt had first consulted the RMC before taking his decision.

Pressed by Fenech Adami, Gatt Baldacchino adds that in terms of price stability, the decision made sense. But, in terms of commerical aspects, the decision could have had a negative impact on Enemalta.

"Price stability comes at a cost," the Nationalist MP points out.

Gatt Baldacchino adds that in the commercial world, one would have risked more time to get a better position. "And the price had decreased a little bit," he says.

11:08 The Opposition side's turn to make questions.

10:58 With reference to the famous email which Austin Gatt sent to Alex Tranter towards the end of 2009, setting a hedging benchmark, Gatt Baldacchino says "it was not the right decision". According to him, with the benefit of hindsight, the decision taken "was a bad decision".

In an email dated 10 November 2009 sent to Enemalta Chairman Alex Tranter and copied to a number of individuals, including Finance Minister Tonio Fenech, Austin Gatt wrote, "I would like to make clear that the direction to go for tariff stability in 2010 is a ministerial direction and therefore I assume responsibility for any variances between the actual market price and the SWAP price in 2010."

10:50 Gatt Baldacchino is asked about the "political interference" which is referred to in the 2008 Enemalta election dossier. Echoing the same words uttered by Alex Tranter last week, Gatt Baldacchino said Enemalta was passing through "challenging" times in 2008 with the rise in oil prices. Enemalta wanted to strengthen its manpower and required "more professional people" to strengthen their team.

By way of example, with the corporation's accounts repeatedly being submitted late, Enemalta wanted to employ more accountants but this engaging process would take forever.

10:33 Gatt Baldacchino admits there were "certain elements" within the procedure process that needed to be "clarified".

"I never witnessed any wrongdoing within the FPC's work and each and every member gave his utmost so that Enemalta negotiates the best deal. However, I did feel there needed an improvement in the procedure and for it to be documented. It's basically the same principle which emerged from the NAO report. I was living it and I wanted a proper paper trail with the necessary documentation of the whole process."

The PwC audit report which Gatt Baldacchino had ordered - concluded in February 2011 when he had already left the corporation - was not presented to the Auditor General during his inquiry.

NAO official Keith Merceica says they only became aware of the existence of this report through the FPC.

"And this independent report, which had nothing to do us, basically reflects and confirms our own NAO report," Mercieca says.

10:23 "I always believe in strengthening governance in anything I do. And in May I decided to restructure all Enemalta committees, including the FPC. I strengthened it by appointing a chief commercial officer and the deputy chairman, who was William Spiteri Bailey. I also felt that FPC governance should be strengthened. Not because there was something wrong, but I felt that procedure should be improved. Both Spiteri Bailey and I agreed that the process should be strengthened, our proposal receiving the support of Antoine Galea (CFO) and Karl Camilleri (CEO)," Gatt Baldacchino says.

PwC was therefore appointed to carry out a review of the procedures and controls of the FPC.

"I wanted better documentation and a better process which would have given the peace of mind that decisions adopted by the FPC were implemented... It was all about improving the procedure. There was a good paper trail but, like the Auditor General noted, there's always room for improvement."

10:16 Gatt Baldacchino, as a temporary acting chiarman, explains he inherited the system adopted by his predecessor. He says that bids would be received minutes before the FPC meetings starts. The chairman's PA would bring in all bids received in a file and the meeting would start off with the chairman reading out all bids.

"When I was acting chairman, Totsa were the ones who requested the most courtesy visits. I would meet with them together with Enemalta's management including the CEO and CFO," Gatt Baldacchino says, in reply to Bonnici's questions.

He also describes Tranter as an "intelligent and energetic person" who always tried to induce "enthusiasm" among his workers.

10:03 Gatt Baldacchino was appointed acting chairman in 2010, previously having held the position of deputy chairman. He was first approached by Gatt in 2006 to sit on Enemalta's board of directors. He admits that he didn't wish to act as a chairman of Enemalta because of his private business which kept him busy. He eventually accepted Fenech's offer in 2010 to act as a non executive chairman until a replacement to Tranter was found. In December 2010, David Spiteri Gingell was appointed chairman.

Gatt Baldacchino attended four FPC meetings under Tranter and other six meetings when he was acting chairman.

9:48 Bonnici has asked the Auditor General to carry a study of the bids received between 2008 and 2010. Bonnici's request is based on the revelation that before the MITA-enabled password came into force (to access submitted bids), bids would be sent via email or fax. The government is arguing that the NAO should explore the process, given that bids were handled by hand. 

9:45 There appears to be a technical problem with the live-streaming... Parliament's technical experts are on it to solve the problem.

9:36 Before the hearing starts, parliamentary secretary for justice Owen Bonnici is reading out from copies of email correspondence between former Enemalta CFO Pippo Pandolfino, Alex Tranter and then minister Austin Gatt. Some emails were also copied to Claudio Grech, now Nationalist MP, then Gatt's head of secretariat. As revealed during last week's hearing, it wasn't the fuel procurement committee's practice to keep minutes of the meetings. However, on occassions where the procurement would be "relatively substantial", Pandolfino and Tranter would email Austin Gatt with the results of the procurement bid.

The emails, Bonnici says, were sent out from Tranter's personal email address.

The National Audit Office didn't have access to these emails, although an NAO official said it would have been better if, during their audit, they would have had access to these records.

8:45 Good morning, proceedings are expected to start at 9:30am. Today's witnesses will be Edmond Gatt Baldacchino and David Spiteri Gingell. Gatt Baldacchino was appointed chairman of Enemalta in 2010 following Alex Tranter's resignation. Spiteri Gingell succeeded Gatt Baldacchino a year later.