Finance permanent secretary had objected to Electrogas state guarantee

Miguela Xuereb

Tista' taqra bil- Malti.

The permanent secretary to the finance ministry will continue testifying on Friday morning during the proceedings of the public inquiry.

When first summoned, Camilleri had testified that he had requested an urgent meeting after the ministry heard from the banks that Electrogas was defaulting on its loan repayments. This transpired following a question by Dr Jason Azzopardi.

The emails exchange between the stakeholders including the then Minister of Tourism Konrad Mizzi but excluded the finance ministry.

12:27 Thank you for following us.
Monique Agius
12:23 The witness walks off the stand.

Comodini Cachia says that on Wednesday, Lawrence Cutajar will continue testifying and on Friday Louis Grech will testify.

Witnesses to be called to testify: Minister Owen Bonnici (18.09), Chris Fearne (16.09) and José Herrera (no date) will be summoned to testify.
Monique Agius
12:15 Dr Azzopardi asks the witness whether he is aware that Malta is in the process of signing the status of forces agreement (SOFA) with the US which would help Malta in its evaluation.

The permanent secretary says that the representative from the Finance Ministry present at the meeting was not him, saying that he only heard about it through the press.
Monique Agius
12:10 Are you aware why the accountancy board had not revoked the licence of operators who because of their abuse had tarnished Malta's reputation? Dr Azzopardi asks.

"The accountancy board is autonomous and independent. Was established in 1979. Has the same status as the MFSA. I am only aware of the administration of the accountancy. I never attended their meetings. They have no obligation to inform me about their discussions. I know what you are referring to. I'm not stupid. Certain things were public. But I have no right to ask what action was taken. The reply would be 'stay out of it', the moment I do it I would be breaching the law," he explains, adding that the responsible person should be summoned to reply if they had a specific question.
Monique Agius
12:10 Dr Azzopardi asks how the system failed after an STR was not filed on Pilatus Bank, who has the duty to act if this was not done?

The regulator, the witness replies.
Monique Agius
12:08 Chief Justice Said Pullicino asks the witness whether he gave this lecture to Cabinet.

"Yes and in more detail," he replies.
Monique Agius
12:06 "If we manage to pass through this exam successfully and the next day we forget the lesson, then it would have been all wasted," Camilleri says.
Monique Agius
12:04 "This is to our collective benefit, for the whole country. We need to do this for the country's good," he says.

"We must be resolved to do the right thing. If there are suspicious transaction reports (STRs) to be filed, they must be filed. There are certain sectors which are still lacking. This is a collective problem, if you are not prepared to do your work hand in hand with the authorities, then the chain is broken," Camilleri says.
Monique Agius
12:03 "Not everyone believes in the need for reform. Am not referring only to people within government institutions, the private sector is also involved in the reform process," Camilleri underlines, about the reforms based on the Moneyval recommendations.
Monique Agius
12:01 "Banks are businesses not charitable institutions. The moment a bank sees such risks, it would be more cautious. The moment the regulator flags a suspicious or risky transaction, the bank may be subjected to a fine. There are also reputational risks," he says.
Monique Agius
11:58 If grey listing happens, you have this detailed programme which has to be implemented under close monitoring, Camilleri says.

"One may not be correct in saying that the country's institutions will collapse. International institutions are already factoring in the possibility of the country being grey listed. On a day to day basis we might not see such a great difference. It will have an impact on investment on which we greatly depend. We will become less attractive," he says.

"Our success depends on owning the project (based on the Moneyval recommendations)," he says.

"Hu l-fama u ntefa l-bahar," he says, as he explains that this will have an impact on correspondent banks.
Monique Agius
11:56 In the Moneyval report, you have the whole framework which looks like a chain. We failed in nine out of eleven, he explains.

"We have an action plan which we are implementing. In October, Malta has to send in its first report. This will be evaluated. We don't when they will decide on Malta. We're doing our best to avoid grey listing," Camilleri says.
Monique Agius
11:53 Camilleri says that it is not easy to explain in a few words.

"Grey listing means that a detailed programme of reforms would have to be drawn up and that the country would be closely monitored by the FATF," Camilleri says.

FATF was setup by the G20. Moneyval falls under the Council of Europe, it is not the European Union, he explains.
Monique Agius
11:52 Dr Azzopardi asks the witness to describe the effects of grey listing.
Monique Agius
11:49 "Someone had told me 'look me in the eyes' am not involved in anything," Camilleri says referring to an incident at Parliament in December 2019 during the protests.

Dr Azzopardi tells the witness that he does not know what the witness is on about.

Camilleri repeats, adding "I had replied to him, I don't look anybody in the eyes."

"Who are you talking about? Can you tell us?" Dr Azzopardi says.

"Konrad Mizzi," the witness mumbles.
Monique Agius
11:48 Dr Azzopardi asks what was his reaction on direct orders.

"When you found out that the chairman had gone behind your back, did you ask about it?" Azzopardi says.

Camilleri says that he wrote to Waitt as explained before.
Monique Agius
11:47 Dr Comodini Cachia asks what was Julia Farrugia Portelli's role at Projects Malta.

Camilleri says that Farrugia Portelli was appointed as Public Relations Officer by Minister Konrad Mizzi.
Monique Agius
11:45 Camilleri had objected to the direct orders in writing, but in general. When it comes to direct orders of professionals there is an element of trust, he adds.
Monique Agius
11:42 Direct orders went to the director of contracts above a certain threshold.

The direct order would be first approved by the ministry concerned. The ministry would have to conduct the research, justify the direct order and the ministry in question would sign it, and it is signed either by the Minister or his delegate. They take responsibility for the direct orders. It only goes to the finance ministry for financial clearance, explains Camilleri.
Monique Agius
11:41 "There is the law and there is policy direction which explains how direct orders function," he says holding the law in his hand and showing it to the board.
Monique Agius
11:38 The board of directors of Projects Malta would only get to know after the direct orders have been issued.

Dr Comodini Cachia points out that a number of direct orders were given to Nexia BT, Beat Consultancy, Mifsud Bonnici advocates (at the same time Aron Mifsud Bonnici was company secretary), William Waitt, among others.

Camilleri says that it is wrong to think that all direct orders are given from Finance Ministry. He reads out an email sent to Projects Malta CEO where he had expressed his concern on the number of direct orders given out. He had recommended that the procurement system is opened to more competition.
Monique Agius
11:37 Camilleri says that he went to a cabinet meeting some three times: one related to a presentation on the state guarantee given to Electrogas, a second one related to Moneyval and another issue.
Monique Agius
11:35 Camilleri says that the people appointed to evaluation committees, were chosen by Konrad Mizzi. The technical expertise chosen by Projects Malta would consist of architects, etc.
Monique Agius
11:34 Minister Konrad Mizzi had done a presentation on the hospital's concession deal to Minister Edward Scicluna and Camilleri.

The presentations were usually carried out at the Finance Ministry.
Monique Agius
11:33 The aim behind public private partnerships is to have a private entity financing the project. This allows the government to do more projects.
Monique Agius
11:32 Camilleri says that Projects Malta only features once in the NAO report on the deal.
Monique Agius
11:28 Projects Malta was not asked to do anything in relation to VGH.

"Nothing. And I asked about this. On 4 June 2015, I asked about the board's function vis-a-vis the concession of the three state hospitals. The reply I was given was "the project does not fall under Projects Malta but its a government project. Projects Malta is administering the project for the government. The contracting authority is the ministry of energy and health,"' he says.
Monique Agius
11:26 The questions are now on his directorship on Projects Malta.

The Energy Minister appointed him on Projects Malta. It was Konrad Mizzi who had appointed him.

Asked he answered to Konrad Mizzi, Camilleri says that he did not answer to anyone.

"We were a service provider, like Mimcol and others," he says.
Monique Agius
11:26 The witness was not involved in the negotiations of Cafe Premier.
Monique Agius
11:24 Dr Comodini Cachia asks whether he made use of an objection procedure available for permanent secretaries.

He says that for the 2012 concerning the curtains at the Palace was registered with the Prime Minister (who appointed him).

He registered an objection on the state guarantee given to Electrogas with the Cabinet, the minister concerned, and the principal permanent secretary.
Monique Agius
11:22 Chief Justice Said Pullicino asks about Cafe Premier.

The permanent secretary at the finance minister says that he had advised them to document everything and minute every negotiating meeting.

Camilleri says that he did not communicate with Joseph Muscat but with the Principal Permanent Secretary.
Monique Agius
11:17 Camilleri is protesting about how he never withheld funding from any investigations. He says that some €6 million were given to MFSA, the FIAU budget is now over €10 million. He says that he tell the entities within the ministry to keep direct orders to a minimum. However he understands that the FIAU would issue direct orders for investigations.
Monique Agius
11:15 Camilleri says that there was never a case where resources were denied to anyone.
Monique Agius
11:09 The witness says that had he wanted to avoid trouble, he would have abdicated, like many did.

"In 2012 someone asked me to make a statement whereby the issue was not against the law. I had offered my resignation to the Prime Minister at that time. The PM had replied a second later and told me not to dream of doing this."

This was connected to the curtains at the President's Palace and the Office of the President, Camilleri confirms.

At the time, George Abela was president.
Monique Agius
11:05 Camilleri says that when the investigative authorities were given all the resources they asked for.

Judge Mallia notes that Malta has been EU Member State since 2004. Why the spotlight on Malta now?

Camilleri replies that the spotlight on tax evasion has been ongoing. He says that Malta has been in the spotlight due to the tax imputation system. The system was approved in the accession negotiations. Some remain critical of it.

Chief Justice Said Pullicino asks about sanctioning.

Camilleri says that he was always against tax amnesties. He explains the approach.

"If I am going to make a tax amnesty will be a declaration of assets and the tax should have been paid. But with a tax amnesty, if I have evaded tax you are blessing my actions," he says.
Monique Agius
11:04 Chief Justice Said Pullicino notes that it was all positive, but happened after the assassination and was possibly a consequence of the assassination.
Monique Agius
11:00 Dr Comodini Cachia: What led to Malta being possibly grey-listed?

Camilleri: Various issues. I'll explain. There was a need for more coordination and cooperation between the different agencies. There are 'huge' constraints between the agencies. There are more MoUs in place to have more coordination and information sharing between the agencies. There were issues of capacity building – not only human resources, but also know how and systems – we've invested heavily. We've strengthened the regulatory framework wherever it was needed. 43 MoUs between the different institutions were signed to facilitate investigation. Another important pillar was effectiveness, investigations and prosecutions, and if it is the case, convictions.
Monique Agius
10:59 Dr Comodini Cachia asks whether once Konrad Mizzi's name was revealed in the Panama Papers did he act differently with the then minister being involved with him in various projects.

"I was more cautious around him. I would double check everything. They were allegations. No one was convicted to date," he replies.
Monique Agius
10:57 Judge Mallia points out that if any action was taken after the Panama Papers it happened a year later since the news broke out. Is there something you could have done as a ministry and that you did not do? he asks.

"We couldn't investigate it ourselves. We had no powers, the investigating powers are autonomous. Ask the politicians, I am an administrative person," he highlights.
Monique Agius
10:53 So for Swiss Leaks and Panama Papers, the finance ministry did not set a policy to investigate the individuals involves for money laundering? And to take criminal action rather than treat it as administrative issue? Dr Comodini Cachia asks the witness.

Judge Mallia rephrases saying in your opinion could something have been differently? Actively perhaps?

Comodini Cachia asks: Policy setting perhaps?

Camilleri says that the finance ministry gave them the necessary resources and it was up to the departments involved. He replies that policy setting is from the law and the law is not up to us.
Monique Agius
10:52 Said Pullicino asks about tax evasion. Has the minister brought this before the cabinet? he asks.

Camilleri says that he would not know.
Monique Agius
10:50 She asks again and refers to the a witness from the Inland Revenue who had said that they were instructed to deal with the issue administratively.

The law gives two avenues: administrative or criminal, he explains.

"This was a tax issue and we don't involve ourselves in these issues."
Monique Agius
10:49 Dr Comodini Cachia asks about the Panama Papers and what action was taken by the finance ministry.

He says that everyone needs to do their job and everyone knows what their job is.

"I was always available to assist."
Monique Agius
10:48 The Chief Justice Emeritus asks where did we go wrong? Why is a shadow cast on each project?

Camilleri says that there are ongoing investigations.

"This is a very difficult question for me."
Monique Agius
10:47 Chief Justice Said Pullicino asks about the relationship between the businesses and the government.

The witness says that the government's revenue comes from businesses.
Monique Agius
10:45 Camilleri goes back to the 2008 financial crisis. He explains that the government at the time, like the government today, supported the industry.

"Since WWII, the government had just one obsession, due to our history, the economy and employment," he says.
Monique Agius
10:42 Chief Justice Said Pullicino starts questioning about his experience.

In 2013, the government had declared that it would like to be business friendly. What was the effect of the business friendly? the Chief Justice asks.

Camilleri replies that in his opinion, it does not appear that other governments were not business friendly. The generation of wealth does not come from the government. The government's revenue is based on various sources – income tax, social security contributions, and a number of excise duties, etc., he explains.

"Despite its size, Malta has a diversified economy," he adds.

He says that through its diversification of the economy, the impact of the financial crisis was minimal on Malta.
Monique Agius
10:40 Chief Justice Said Pullicino asks whether the allegations about kickbacks were around the same time.

Camilleri says that he would not know. He adds that in Malta there has not been a single project which was spared from controversy. They have all been referred to the NAO, he says.
Monique Agius
10:37 The email exchange being read out is from the email leak Daphne Caruana Galizia had received.

Dr Comodini Cachia reads out another email in which Electrogas and Mizzi's ministry were informed about a PR from Socar to be sent out.

She reads a reply by Ronald Mizzi who was permanent secretary to Mizzi's ministry, "some amendments from my end". She asks the witness where you ever asked to see PRs sent out by SOCAR and Electrogas?

"No," he replies.
Monique Agius
10:32 Fiona Brinkworth [BOV] informed the ministry about the default on the bridge loan and was notifying the government.

He replied that he acted immediately, replying to those people which were in copy on Brinkworth's email, adding that he informed Minister Scicluna immediately.
Monique Agius
10:29 "Minister is working on solving on excise tax issue" Comodini Cachia reads from Musayev's email. Which minister? Which excise tax issue? [The email dates to September 2017.

Camilleri replies that the finance minister only got to know in January 2018. The negotiations were done by Minister Konrad Mizzi and the excise tax amounted to an average of €5 million and were paid by Enemalta.
Monique Agius
10:26 Another email exchange on 1 September 10.30am from Socar Trading. Fahmi proposed a timeline of a signing by end of September and a closing by November. He noted that the bridge lenders were extremely nervous.

The company never informed me about this, Camilleri says. He adds that he only spoke to the company

Another email from Turab Musayev is read out:

"Dear all,

Yorgen and I spoke to Konrad Mizzi and David… We clearly emphasized that current deadline is not attainable. They agreed. An extension of the bridge loan is not on the table."
Monique Agius
10:25 Asked if he knew about the exchange, Camilleri says no.
Monique Agius
10:22 Dr Comodini Cachia reads out an email exchange between Catherine Halpin and Yorgen Fenech.

Catherine Halpin : I will let jim that his company is in the media…It's all just pre election talk.

Yorgen Fenech: Welcome to Maltese elections 🙂

Catherine Halpin: Peter (from Electrogas) very worried that the banks are getting nervous. Lots of questions by the new potential ones.

Yorgen Fenech: He's right, and today Simon Busuttil said that he would remove the tanker from Delimara and buy from the interconnector. Hogwash I say. We have to hold on tight for a week.
Monique Agius
10:21 Dr Comodini Cachia asks about the extension and state guarantee.
Monique Agius
10:18 Dr Comodini Cachia remarks that during the last sitting, he had said that in the SVDP extension the ministry sought the finance ministry after "messing it up".

Camilleri notes that projects were undertaken by individual ministries.

He adds that the state guarantee was decided by Cabinet and all the ministers collectively decided on it.
Monique Agius
10:18 Camilleri says that most of the time, the finance ministry is not involved in projects undertaken by other ministries.
Monique Agius
10:16 Isn't the government still exposed with a security of supply agreement? He asks, adding that no as long as Enemalta was restructuring and could pay.
Monique Agius
10:15 The security of supply agreement was offered to everyone during the RfP.
Monique Agius
10:14 Camilleri says that in December 2012, parliament with a bipartisan agreement did debt restructuring of Enemalta, he explains.
Monique Agius
10:10 On 30 November 2017, there was a financial close. The number of banks increased to eight plus a financial company. The bridge loan was paid off and a new loan was agreed. The finance ministry was completely out of the equation by then.
Monique Agius
10:08 Camilleri notes that every time they sensed that something was not correct, they would act immediately.

"Sometimes I might have over did it. Maybe I was over-cautious. Did I did it for me? No. If things went wrong, there were €72 million in breakage fees, and the government would have to take control of the power station at €522 million," he explains.

"We greatly reduced the risks," he remarks.
Monique Agius
10:07 Camilleri says that he wanted to reduce the risk for the government.

"I wanted to have a safety net in case things went south," he says.
Monique Agius
10:05 The government was exposed under the guarantee, if things went wrong, Camilleri notes.

"We managed it and it was not easy," he says.
Monique Agius
10:04 The guarantee was of €450 million. The government was covering €360 million of it at that stage. Then the remaining €90 million were covered by company shareholders providing letters of credit.
Monique Agius
10:02 On 30 November 2017 the four banks came to a financial close with the company and the lenders increased, Camilleri explains.

These were BOV, KfW, HSBC London,Société Générale, BNP Paribas London, DZ Bank, Crédit Industriel et Commercial, and Rivage ( a finance company).
Monique Agius
10:01 Camilleri says BOV, HSBC London, Société Générale, and KFW were involved.
Monique Agius
10:00 Dr Comodini Cachia asks how many banks were involved in state guarantee given to Electrogas.
Monique Agius
09:59 The board takes the copy and keeps the original to compare the two documents.
Monique Agius
09:59 The witness says that he has a copy of the contract in a sealed envelope.
Monique Agius
09:57 Camilleri confirms it.
Monique Agius
09:57 The witness is shown the document that the board received and is asked to confirm whether it is the original.
Monique Agius
09:55 Judge Mallia informs the witness that the board of inquiry received a copy of the contract of the state guarantee granted to Electrogas.
Monique Agius
09:53 Camilleri takes the witness stand.
Monique Agius
09:51 The board has received an original document of the government's contract in which the Electrogas was given the guarantee, Judge Mallia says.
Monique Agius
09:49 Following the prime minister's letter which extended the term of the inquiry till 15 December, the board orders that a copy of this note and a copy of the verbal arguments made by Dr Comodini Cachia be communicated to the prime minister, so that if he feels the need, he can make opportune submissions, Judge Mallia says.
Monique Agius
09:47 Madam Justice Lofaro highlights that one cannot forget that the pandemic caused havoc and due to the closure the board of inquiry lost three months of work.
Monique Agius
09:47 Judge Mallia says that he will order a formal notification to the Prime Minister of Comodini Cachia's arguments.
Monique Agius
09:46 Dr Comodini Cachia notes that when one sees the witnesses and the waste of time, the board of inquiry does not have the opportunity to say that these are the witnesses and conclude the list because they are creating the avenues of the inquiry.
Monique Agius
09:45 "My only worry is that when we drafted the extension we asked for an extension until the end of year," Judge Mallia says.
Monique Agius
09:44 Dr Comodini Cachia says that this board needs resources however minimal they might be. She mentions that transcribers are not being paid in full.
Monique Agius
09:43 The terms of reference say it should work with the aim of concluding within nine months, but that does not bind it not to extend if more time is needed, Dr Comodini Cachia says.
Monique Agius
09:42 She explains that when one sees the terms of reference of the board and the Inquiries Act, you would see that the terms of references are what bind the Board of Inquiry.
Monique Agius
09:41 Dr Comodini Cachia says that after having read Prime Minister Robert Abela's letter in the last sitting, the lawyers felt the need to file a note of submissions.
Monique Agius
09:40 The judges have just entered the courtroom. We're in session.
Monique Agius
09:39 Good morning and welcome to this live blog. We're live from Hall 20.
Monique Agius

The public inquiry into the assassination of journalist Daphne Caruana Galizia is tasked with determining whether the state did all it could to prevent the assassination.

The board of inquiry is chaired by Judge Emeritus Michael Mallia, and composed of Chief Justice Emeritus Joseph Said Pullicino and Madame Justice Abigail Lofaro.

Lawyers Therese Comodini Cachia, Jason Azzopardi, and Peter Caruana Galizia, assisted the family.