Legal firms on €170 an hour revealed

The two legal firms that received a total amount of €270 or €170 an hour are Ganado Advocates and Filletti & Filletti Advocates, MaltaToday has discovered.

A week ago, this newsroom revealed that legal firms were engaged by the energy ministry to set up the Maltese company to which the assets and liabilities of Enemalta Corporation were to be transferred. The hourly rate of €170 excluding VAT was first revealed by the National Audit Office.

Enemalta plc was set up after Shanghai Electric Power acquired a 33% stake in Enemalta Corporation.

The engagement, made on 2 January 2014, was followed by another letter of engagement for additional services on 12th March 2014, for the reduced rate of €156 per hour, excluding VAT.

Internal correspondence revealed that the draft engagement letter was already available in December 2013, prior to the request for approval for the engagement of this service provider – showing that the ministry made commitments with the legal firm in question, before forwarding a direct order request.

Such a practice is not in compliance with finance ministry rules and the energy ministry was in fact told by the finance ministry that the proposed €170 rate was “... quite substantial and ... could spiral out of control”.

In its counter-reply, besides providing the reasons for resorting to a direct order, the energy ministry claimed that this was “an average rate charged for the services of the top notch in respect of professionals and juniors working on this assignment”.

The ministry has claimed it issued the direct order because the services required “extensive knowledge of government to government agreements commissioned in the past and the time frames required to meet the deadlines of the MOU [Memorandum of Understanding] in place which do not permit the issue of a tender process and finally the level of trust required due to the sensitivity of the negations”.

The ministry described the person selected as “a top legal advisor with an undisputed reputation, with whom the Maltese government had worked in the past on similar issues.”

Although Konrad Mizzi’s ministry said the legal firm would forecast the hours of work required on a monthly basis, in order to ensure that expenses are kept in check, no evidence was traced showing that the monthly forecasts were actually submitted for verification.

The NAO’s testing revealed that no definite approval from the finance ministry was even traced for two of three payments selected for review, which amounted to €84,031 and €63,622 respectively. In contrast, a direct order approval was traced in relation to the third payment, covering up to €53,537.

It transpired that total payments made to the supplier during 2014 in relation to the legal services in question, totalled €260,494. Given that this amount by far exceeds the €120,000 limit established in public procurement rules, a tender should have been issued for the procurement of these legal services, subject to the regulatory and other functions of the Department and Director of Contracts, apart from publishing such Contract Notice in the Official Journal of the European Community.

A Contract Agreement for the services in question was neven drawn up to bind both parties in hourly fees for services to be delivered by the service provider, as well as a maximum amount payable to the same provider.