Former Privatisation Unit chairman defends procurement of legal services

The former chairman of the Privatisation Unit defended a decision adopted by the entity whereby the PU would choose five or six legal firms and ask them to submit their offers legal services were required.

Manuel Ellul, who for 13 years served as the chairman of the Privatisation Unit (PU) within the Malta Investment Management Company Limited (MIMCOL), appeared before the parliamentary public accounts committee, debating the Auditor General’s findings into an investigation of the procurement of legal service by the PU between 2008 and 2013.

During the period under the review, the services of three legal firms – Fenech & Fenech Advocates, Mamo TCV and GVTH – were procured with cumulative fees amounting to €536,439.

During the same period, the PU undertook three privatisation processes: the privatisation of Malta Shipyards Limited (MSL), which commenced in 2008; the yacht marinas privatisation processes, also initiated in 2008; and the re-concession for the rights of the National Lotteries in 2011.

The total government’s income through these privatisation processes amounted to €180 million.

“When you have such a responsibility on your shoulder and when you have to make sure that the government is well represented legally in such huge processes, you just don’t go to any firm. You need a firm that is well-equipped to support you in any issue that arises; that it has the manpower to spare as many lawyers as it can to your project,” Ellul said.

In reply to government MPs, Ellul admitted that the same adopted by the PU may have excluded firms that were as equally good but insisted that nothing could be taken for granted.

“With my experience I knew who could help us and who could not. If a firm doesn’t have enough resources, who could it help us? When you are in a position of responsibility you have to make sure that the lawyers follow EU directives and EU regulations and if the tendering process is challenged you know that the firm which is representing you can win the case,” he said solidly.

Fenech & Fenech, who represented the PU in the privatisation of the Malta Shipyards, the Ricasoli Tank Cleaning Facility and the Yacht Marinas, took home €391,880.

Ellul said the criteria had always been the capability of the firm: “At the beginning, the PU used to issue calls but only recently graduated lawyers used to apply. And you can’t work with that. So, after five years of issuing a general call, we started going to five or six legal firms explaining to them what we required and they would explain their offer and the services that came with that. We knew that the companies we were going to were good.”

He explained that during the privatisation of the Malta Shipyards, a meeting was held with then finance minister Tonio Fenech and infrastructure minister Austin Gatt. According to Ellul, the privatisation process could not be delayed “because the EU was chasing the government”.

“The government told us it was urgent and, on the basis of their expertise, we immediately opted for Fenech & Fenech. They specialised in maritime, had already represented the dockyard in a court case – so they were well-informed of the situation – and they had also been representing the government contesting the EU’s call to close down the dockyards. On that basis we called Ann Fenech’s office and set an appointment there and then.”

In the case of the national lotteries re-concessions, the PU issued a request for proposal among six firms and the cheapest one was chosen.

Legal firm Mamo TCV were chosen for the privatisation of the Yacht Marinas but Fenech & Fenech Advocates were once again called in when concerns arose mid-way through the process.

“There were concerns that one of the preferred bidders – a joint venture among yacht owners – could kick out other yacht owners who did not join in. We could not ignore these rumours and decided that we should engage Ann Fenech who helped us eliminate this risk,” Ellul said.