PAC: Meetings with Gatt over oil terminal, and $400,000 in bribes to chairman [video]

The former minister for transport Austin Gatt, one time responsible for Enemalta, has declared meeting oil trader George Farrugia in his Hamrun constituency office and at Farrugia's family business's garage, in an affidavit he submitted in defamation proceedings against this newspaper.

Gatt, who sued managing editor Saviour Balzan in the aftermath of this newspaper's revelations of commissions being paid for the securing of oil procurement tenders at Enemalta, denied discussing "fuel procurement" matters with Farrugia.

Yesterday Farrugia - State's evidence in the criminal charges brought against former Enemalta chairman Tancred Tabone and former MOBC director Frank Sammut - sat for his first appearance before the public accounts committee, where MPs are dissecting the National Audit Office's investigation of fuel procurement policy at Enemalta.

Farrugia adds that he had met Gatt's successor as minister responsible for Enemalta, Tonio Fenech when his brother had invited him to join him in paying a visit to the minister. On his way to Fenech's house, Farrugia learnt that his brother's wife had crafted a clock for Fenech. Moreover, another two similar clocks were given to the Nationalist Party. These clocks were not worth more than Lm 500 adding that he was informed that the PN had raffled these clocks. He also says that his family business had gifted a vehicle to the Labour Party.

Yesterday Farrugia denied having discussed oil procurement with Gatt, but confirmed meeting the former minister in Valletta and Hamrun. Farrugia did confirm discussing an investment in oil storage - Farrugia is an oil trader and importer of lubricant oils - with Gatt, on behalf of a Middle East company. But he said he had no recollection of meeting Gatt at John's Garage, the family business's garage.

"The few instances I spoke to him were on bills the Nationalist Party had not paid for services rendered by John's Garage."

Farrugia told MPs he had not told Gatt about the bribes he had been paying Tancred Tabone, during his time as Enemalta chairman, on the supply of fuel to Enemalta. "I was scared because I knew this was illegal."

Parliamentary secretary for justice Owen Bonnici, leading yesterday's grilling, also pointed out the fact that Tabone and Gatt are family relatives - a fact which Farrugia said he only got to know much later.

Farrugia yesterday also confirmed a 2009 meeting together with entrepreneur Beppe Hili, to discuss Dubai-based Horizon Terminals' interest in setting up an oil terminal at Benghisa, with then prime minister Lawrence Gonzi, his PA Edgar Galea Curmi, Austin Gatt and Leonard Callus.

He also revealed a list of 'gifts' to Enemalta officials: three paintings, of which one was for chief financial officer Antoine Galea and another to former deputy chairman William Spiteri Bailey; and also a Daewoo car from John's Garage which the family business donated to the Labour Party.

Start of the bribery chain

Farrugia recounted how, as an agent for Total lubricants, in 1999 he came into contact with Enemalta's head of petroleum Alfred Mallia, in a bid to sell oil stored in Malta by Total to the state company. Farrugia was granted permission to store oil in Has-Saptan, where he had to bribe Mallia for this permit and then again to sell Total's oil to Enemalta. He paid $10,000 to Mallia for a 20,000 tonne consignment.

"Half of my commissions from Total went to Mallia. He earned Lm40,000 (€100,000 approx.) on each tender I was awarded... 'you either pay or you don't work at all', I was told. I delivered the money personally to Mallia at his home."

Soon after, Farrugia said he realised that Enemalta finance manager Tarcisio Mifsud was also on the take, in tandem with Mallia; and then he got to know Tancred Tabone, who was MOBC chairman.

"Tabone got to know of the kickbacks from Frank Sammut," Farrugia said of the petrochemist who was a director of MOBC and would later be seconded as Tabone's consultant when the latter was made chairman of Enemalta, the owner of MOBC, in 2003.

"I told Sammut of the money I was paying Mallia and Mifsud, when there was discussion over MOBC purchasing oil from Total. I was in the car with Sammut, and the latter asked me 'what's in it for me?' and I told Sammut he could take half of my commission from Total - $2,500 monthly."

He said Sammut from then onwards became known as 'Mr 10%'. In December 2003, Farrugia met Trafigura representative Tim Waters over a possible sale of oil to MOBC. At the meeting at MOBC's headquarters in Marsa, Sammut took Waters apart for a 20-monute chat. That evening, Waters told Farrugia over dinner that Sammut had asked for a bribe for Enemalta fuel oil contracts - even though Sammut was not part of Enemalta. "He was annoyed at the proposal, but a few months later Trafigura started bidding for Enemalta contracts."

"Trafigura at first refused to pay him, but then they paid him $18,000 to ensure things don't get out of hand. They told me it was 'the first and the last time'," Farrugia said.

But Bonnici challenged Farrugia, saying this version of events was not credible. "It doesn't make sense for a company to be annoyed at being asked to pay illegal kickbacks while accepting to do so."

Farrugia claims he eventually learnt that, while paying the kickbacks himself to both Sammut and Tabone, he had been paying them for nothing since the fuel contracts were going to the cheapest bidders nevertheless.

He said that at one point, MOBC reduced Total's storage capacity by 600 tonnes and increase rental fees. Then later, after Sammut no longer stayed on as consultant to Tabone, it was Tabone who started collecting the commissions, at his Forestals business premises.

€400,000 in bribes

By 2003, MOBC was folded by Enemalta - its business having shifted into the hands of private company Island Bunker Oils which Tabone and Sammut secretly set up with Francis Portelli and Anthony Cassar, also facing criminal charges. "I paid Tabone $100,000 for the MOBC deals and another $300,000 to Tabone and Sammut for the Enemalta bids."

Farrugia said the commissions he received for fuel consignments from Total and Trafigura, were then paid into his personal foreign accounts. He decided no longer to pay bribes in 2006. "I was tired of being used as a puppet."

But Bonnici challenged him again on this point. "No businessman pays money for nothing... you paid Tabone $400,000 just like that?"

Tancred Tabone yesterday got leave from the PAC to return on another date to answer questions with his lawyer, Gianella de Marco, who was abroad at the time. His other defence counsel, Henri Mizzi, told the PAC that a Speaker's ruling that Tabone must answer all questions, except those that might incriminate him, was in breach of his client's fundamental rights.

Both Bonnici and PAC chairman Jason Azzopardi insisted that the committee was bound by the Speaker's rules and that there was no time for the lawyer to make any submissions on this legal point. Mizzi earlier on had indicate that his client, facing charges of bribery and corruption, would not be answering any questions.