Gasan unaware that Yorgen Fenech pitched similar project in Bangladesh

Mark and Joe Gasan entering court public inquiry
Miguela Xuereb

Tista' taqra bil- Malti.

Gasan Enterprises chairman Joe Gasan was unaware that murder suspect Yorgen Fenech has pitched a project similar to Electrogas using the same project design in Bangladesh.

Gasan and his son CEO Mark Gasan testified before the board of public inquiry on Friday morning.

Asked by Dr Therese Comodini Cachia if he knew that Fenech was using Electrogas’ projections to carry out an identical project in Bangladesh, and Joe Gasan denied it, asking incredulously “Bangladesh?!”

The Gasan family announced that it is looking to exit the Electrogas consortium, saying it does not want to be linked to the controversy surrounding the power station project. The family-owned company has an 11.72% shareholding.

12:44 The next hearing is on Wednesday at 9.30am. AC Mamo will take the stand.
Monique Agius
12:44 Joe Gasan steps off the stand.
Monique Agius
12:41 TCC: Had Gasan Group independently verified the financial standing of Gasol?

JG: I remember there was concern about the financial situation of Gasol and that's why I asked for a guarantee from SOCAR.
Monique Agius
12:40 TCC: Were you aware that Yorgen Fenech was using the project design to pitch the project in Bangladesh?

JG: No. In Bangladesh?!?!
Monique Agius
12:40 He didn't ask why Musayev resigned during the same period Fenech resigned.
Monique Agius
12:38 Gasan says that he did not know about Turab Musayev or the connection with Montenegro.
Monique Agius
12:37 He is not aware that the project had the support of Keith Schembri, Ronald Mizzi and Konrad Mizzi among others.
Monique Agius
12:36 Joe Gasan says that it was of concern to them.
Monique Agius
12:35 TCC: The Auditor General raises concern on how the project was selected, etc. For example the Auditor General highlights the role of Nexia BT in the selection process? But isn't Nexia auditor of GEM? Dind't you ask them to remove Nexia? You didn't feel the need to do this?

JG: No.
Monique Agius
12:34 Dr Comodini Cachia asks what they have been doing between 2018 and 2020.

He says that it started in 2019.
Monique Agius
12:32 A detailed forensic audit was carried out by UK lawyers in 2020.
Monique Agius
12:32 He tells the board that they have to be specific on what area.
Monique Agius
12:31 He says that these were of concern also to him as a shareholder.
Monique Agius
12:30 Gasan says that he has seen the key areas of concern outlined in the NAO report.
Monique Agius
12:29 TCC: When did you become aware of GEM owning €2.5M to Yorgen Fenech for services fee?

JG: Not sure but it's been from the beginning. Fenech had to take care of the services. There will be a success fee and he would get half of it.
Monique Agius
12:27 Gasan says that he was involved in the concept but not in the negotiations of the agreements.
Monique Agius
12:25 Gasan is asked about the NAO report. He says that he only read a synopsis and that he did not read the report.

"This is surprising. You haven't read it, Paul Apap Bologna neither," Chief Justice Emeritus remarks.

"I was never a director," he adds.

"There is your reputation at stake," Madam Justice Lofaro remarks.
Monique Agius
12:22 "There have been so many so attack… We've been established for years… We did good things… We employed a lot of people… and because of the alleged involvement of the murder… the horrible murder of Daphne Caurana Galizia… We don't believe it is the case. When we read in the compilation of evidence that Inspector Zahra said that this is the main reason for the murder was Electrogas. Then there were the personal attacks. We don't know if there was involvement but if there was we don't want to be part of it. We are looking to exiting the consortium and have been doing so for some time. We will not profit from this deed," Gasan says.
Monique Agius
12:20 Gasan goes into the detail on how the quorum issue was resolved.
Monique Agius
12:20 The Irish Ambassador to Malta has just walked into the courtroom.
Monique Agius
12:19 "We insisted that he should make a public statement," he says.
Monique Agius
12:18 "When he returned from London, he stopped attending board meetings and was unavailable for a long time," Gasan says.
Monique Agius
12:17 Fenech had denied owning 17 Black to Gasan in person.
Monique Agius
12:16 "When we met as GEM, he denied it to the extent that he went to England with Ray to speak to a very expensive legal firm to talk about suing," he continues.
Monique Agius
12:14 Dr Comodini Cachia asks when he had doubted it. Gasan says that it was when the things about 17 Black came out.

He explains that they checked Electrogas for payments. Yorgen Fenech had denied that 17 Black was his.

"When it came out that Yorgen Fenech had owned 17 Black, Ray Fenech was very upset. Yorgen Fenech wrote an email to all Electrogas directors denying it all," he says.
Monique Agius
12:12 "We had purchased a substantial piece of land in Marsaskala and also with George we had just bought the 10,000 sqm of land near the Gasan centre. I knew Yorgen Fenech as a bright young boy, business savvy. Children at school with him said he was good at business," Gasan explains, adding that he had no reason to doubt it.
Monique Agius
12:11 Gasan answered that both the then Prime Minister Dr Lawrence Gonzi and then leader of the opposition Dr Joseph Muscat were on the invite list and both in fact attended the wedding. Mr Gasan made an erroneous reference mentioned ‘Mizzi’ instead of ‘Muscat’.
Monique Agius
12:09 TCC: Am I correct to say that Mark Gasan and Joseph Muscat were friends?

JG: My son Mark? No, I don't think so. No they were not friends.

TCC: Did they socialise together?

JG: No. I don't think so.

TCC: Was Muscat invited to Mark Gasan's wedding?

JG: heh?
Monique Agius
12:08 Gasan says that Keith Schembri attended some of the meetings which he had with the prime minister.
Monique Agius
12:07 "After the election, George asked if were interested and we took it to a board to agree in principle if investment restricted to €5M and we will not have an executive role," he says.
Monique Agius
12:06 TCC: In February 2013 where you asked to attend a meeting on the project?

JG: Fenech had spoken about the project but I did not say yes or no.
Monique Agius
12:04 Joe Gasan says that the only person he had spoken to about something similar to Electrogas was to Paul Apap Bologna.

"The Fenechs and all reactivated the project when the Labour Party made it clear that it was part of their strategy," he says.
Monique Agius
12:03 "We had six weeks to persuade Siemens to come in for an expression of interest, and they came in. Then we had another four months to do the detailed workings of the technical side of things… it didn’t only involve the construction of a power station but also the conversion of Delimara Phase 2 to LNG.”
Monique Agius
12:00 According to Joe Gasan, similar to Electrogas project, the cable television tender was also complicated.
Monique Agius
11:58 He is being asked about the timeline.

"It was a big project. We were not alone. A lot of work is involved. The work was done," Gasan says.
Monique Agius
11:57 There were meetings about the MIDI project more than one, he explains but they never met over Electrogas.
Monique Agius
11:55 "The only time I met him on my own was in 2008 when I went to the 90th anniversary of when my father took the Ford franchise. I had invited him to attend and he had attended," Gasan says.

"2008?" the lawyer asks.

"Wasn't he already Prime Minister?" Gasan says.

"2008?" Comodini Cachia repeats.

"2018" he says correcting himself.

"You raised eyebrows," she remarks.
Monique Agius
11:55 "As Prime Minister, I met him [Muscat], always at the OPM," he says.
Monique Agius
11:53 He says that he did not know Keith Schembri at the time.

"It has already been asked," Gasan says.

The lawyer says it has been asked to others who were there including himself.

"I deny that I met Muscat with Karmenu Vella at Portomaso," Gasan says.
Monique Agius
11:52 He says he met him on the plane once when he was going to London. He had just become Leader of the Opposition. They had not discussed politics or business.
Monique Agius
11:52 TCC: Have you ever met Joseph Muscat?

JG: Yes
Monique Agius
11:51 The witness is asked if the project was discussed with Labour Party before the election or immediately after.

"Absolutely no," he replies.
Monique Agius
11:50 They had spoken to General Electric who were interested but said that they could deliver in five years time. At the last minute, Siemens came in and said "yes we can do it".
Monique Agius
11:50 "I remember that the biggest problem at the time was to find the right company to build the turbines and boilers," he says.
Monique Agius
11:48 John Zarb of PwC was very involved in the project.
Monique Agius
11:47 "It was very interesing to me as Yorgen Fenech who I knew as an intelligent guy. We were only going to be minority shareholders. And also because John Zarb would go into the feasibility study, etc." Gasan says.
Monique Agius
11:46 "When Labour won the election and came out with this idea of LNG, and at that point we were discussing with George Fenech, Paul Apap Bologna and Yorgen," he tells the board.
Monique Agius
11:45 "George had told me that PL had announced a new gas-fired power station as part of its manifesto. He had told me it was interesting. He had told me that he spoke with Paul Apap Bologna," Gasan recalls.
Monique Agius
11:44 In February 2013, Gasan says that he was discussing a separate project with George Fenech, Mark and possibly even Yorgen Fenech.
Monique Agius
11:43 Paul Apap Bologna and Joe Gasan had gone to Enemalta as part of a delegation to present the LNG project.

Joe Gasan says that this was dropped.
Monique Agius
11:41 Joe Gasan is asked about his involvement in Electrogas. He says that as a group going back to 1968 they were always interested in big tenders especially power stations. He says that in 2008, Paul Apap Bologna who is married to niece, had spoken to him as Apap Bologna knew Gasan was interested in the work.
Monique Agius
11:40 Joe Gasan returns to the stand.
Monique Agius
11:40 He steps off the stand.
Monique Agius
11:35 Comodini Cachia continues to read from another email asking what was the financial hole that the company was in.

Comodini Cachia: It seems that there were too many holes.

Gasan: Yes, definitely.
Monique Agius
11:35 Witness says he does not know what hole she is referring to.

"I can't recall what issue this is," he says.
Monique Agius
11:34 He flips through the papers and smiles.
Monique Agius
11:32 Dr Comodini Cachia asks about another email over emergency funding and capital requirements.

"I wasn't messing with the interest rate. I know it is low. But this is to take the company out of a hole not a normal investment"

What hole was the company in, Dr Comodini Cachia asks.

He is shown the email.
Monique Agius
11:32 He is shown the email.
Monique Agius
11:30 TCC: Prior to this there is another email. On the same day, 30 minutes before. Another email which was sent by Yorgen Fenech to Electrogas mailing list.

"Dear Franz,
Please send the email to the following David Galea, Frederick Azzopardi, Keith Schembri and others.." What follows is an exact copy of the previous email."
Monique Agius
11:30 The witness says that it is the first time he is being made aware of Keith Schembri's involvement in the project.
Monique Agius
11:26 TCC: We apologize for calling you back. There two emails.

Email 28 October 2017 sent 7.12pm. It is an email of Frans Durfler (Electrogas COO) addressed to Federick Azzopardi, Keith Schembri and someone from Beat with Catherine Halpin in copy.

Dear all,

Following your meeting with one of our directors (Yorgen Fenech)… Our lenders have made it clear that our project is not bankable on a project finance basis.

In October 2017, were you aware that Fenech was meeting Schembri to discuss Electrogas?

MG: No.
Monique Agius
11:25 He's asked to step down and Mark Gasan is called in again.
Monique Agius
11:24 Joe Gasan takes the stand, Mark Gasan has arrived again.
Monique Agius
11:18 The deputy registrar calls him back.
Monique Agius
11:16 Dr Azzopardi informs the board that they need to ask Mark Gasan another question on another email.
Monique Agius
11:16 We're back in session.
Monique Agius
11:09 We've been given a break.
Monique Agius
11:08 The stand is being sanitized.
Monique Agius
11:05 Mark Gasan steps off the stand.
Monique Agius
11:02 TCC: What is the interest rate charged by Enemalta?

MG: 2%

TCC: What are you [GEM] charging Electrogas?

MG: 6%
Monique Agius
11:01 Madam Justice Lofaro presses the witness.

Gasan says that he does not recall it.

"Then you are not excluding it because that is what 'I don't recall it' does not exclude it," she says.
Monique Agius
11:00 TCC: Ever met Yorgen Fenech, Karmenu Vella and Muscat for a dinner or a lunch in Portomaso before 2013?

MG: This was mentioned last time. I don't remember this dinner at Portomaso. I don't know this Costantino guy.
Monique Agius
10:59 TCC: Does the name Costantine Obermeyer ring a bell?

MG: No.
Monique Agius
10:56 TCC: What I'd like to focus on… is that the government… people like Lindsey Gambin, Alexander Cutajar, Konrad Mizzi and Ronald Mizzi… were instructing Catherine Halpin on how to reply to media questions, which interviews to accept, etc.

MG: What I know from the media…

TCC: Would you be surprised that Electrogas shared CVs of applicants with Konrad Mizzi and Ronald Mizzi?

MG: Yes

TCC: Would you be surprised that Electrogas chose its merchandise based on government's liking?

MG: Yes.
Monique Agius
10:55 Gasan asks to see the email.
Monique Agius
10:53 TCC: My question is more into how intrusive was the government in the operation of Electrogas and whether there was collusion between the OPM and the office of Konrad Mizzi instructing you on how to deal with the media?

MG: Those emails are what they are…

Madam Justice: You're young, you should be able to remember.
Monique Agius
10:51 TCC: Were you aware that the government was actually instructing Electrogas on how to address journalists?

MG: I wasn't copied in the email. I wasn't aware.

Madam Justice Lofaro; With all those millions involved, you were not aware?
Monique Agius
10:48 Dr Comodini Cachia reads through emails from 12 July 2017 with the subject LNG Financing. Gasan is not copied in.

Email: I am abroad trying to work on it with the ministry

Reply: Ronald thinks we should speak with Enemalta.

Another reply: Frederick is not willing to give us his signature.

Reply: Frederick has to be instructed by Konrad Mizzi first.
Monique Agius
10:46 "I was aware that the minister got involved in certain issues," Gasan says.

Chief Justice Emeritus remarks not only he was aware but he knew he could go directly to the minister to have the issue resolved.
Monique Agius
10:46 Chief Justice Emeritus makes it clear that the board is not investigating Electrogas.
Monique Agius
10:43 TCC: Were you aware of the reliance on the minister?
Tactically we need to be aware of all the issues and devise a plan how to handle all and not handle each one as they come.

Do we skip Enemalta and go straight to the Minister?" she reads out.

MG: Dottoressa…

TCC: I can continue reading, it will not look any better….

MG: heh

TCC: From the email: I suggest this should be the first topic on Monday

MG: I was made aware that there were these issues… I'm suggesting a way in how to solve the issues.
Monique Agius
10:42 He got more involved in 2018 and 2019, but also in 2017 in Electrogas.
Monique Agius
10:41 TCC: The project was a complex one, you said. Was the project relying on Konrad Mizzi's support?

MG: I was not involved in the negotiations.
Monique Agius
10:40 Gasan says that the first time he met Konrad Mizzi was at the inauguration.
Monique Agius
10:39 He was not made aware of the issue, Gasan protests.

Madam Justice Lofaro does not appear convinced, "he has not answered you" the judge tells the lawyer.
Monique Agius
10:38 “I based my email on what I heard from the CFO, which said ElectroGas’ position was that Enemalta should shoulder these costs,” Gasan says.
Monique Agius
10:34 TCC: Are you aware that you were initially advised that your financial model as given to the government included the payment of excise duty yourselves and not by the government?

MG: Your honour the CFO is telling me that it is not payable by Electrogas.
Monique Agius
10:30 Dr Comodini Cachia now asks about the excise tax.

Gasan replies that he based his email on what Electrogas CFO had told him, that Enemalta should pay the excise tax. "All I was saying that it needs to be resolved."

"My question actually was whether the excise tax would have made a difference on your return," she says.
Monique Agius
10:29 Gasan explains that the shareholders put up all their equity – €100 million – and the rest was provided by the lenders.
Monique Agius
10:28 TCC: What you are telling me is that you accepted waive your success fees and this was simply an accounting exercise?

MG: In reality, yes.
Monique Agius
10:26 TCC: Are there shareholders loan provided by GEM to Electrogas?

MG: Yes.

TCC: Are they interest free loans?

MG: No, but the interest has not been paid yet.
Monique Agius
10:25 On the 2014 agreement, Gasan says that it was drafted by a law firm, GZVH.
Monique Agius
10:24 TCC: GEM paid charges which were due by Electrogas….
MG: YES
TCC: Is there an agreement on how GEM will be refunded?
MG: No… it's a cost.
Monique Agius
10:22 He is not aware that the issue of development fees was not explained to Oxera or the government.
Monique Agius
10:21 Today the issue of overcompensation of shareholders is not there, he says.

"In reality the situation of state aid due to cost overrun the shareholders are not overcompensated."
Monique Agius
10:18 An email from 12 April 2016 from Siemens official is read out by the lawyer:

The email reads:

I'm planning to send out this email to Oxera and Government… Pre-construction / development cost €20.20M… In €20.20M we have €16.0M fee for the sponsors. What should we say about this to Oxera as this might be "overcompensation".

TCC: Were you aware that development that it might jeopardise the agreement under State Aid?
Monique Agius
10:18 He is asked about his involvement when eCubed consultants were brought in.
Monique Agius
10:17 Gasan finally says that he would be copied when he got more involved.
Monique Agius
10:13 TCC: In 2016, if an email is sent to the board would you have received a copy of the email?

MG: What do you mean?

TCC: You said that you were shadowing….

MG: Am I copied?
Monique Agius
10:12 TCC: So the forensic audit has shown that GEM paid €1M and Gasol paid €1.5M to NES, correct?

Gasan: Yes.
Monique Agius
10:10 TCC: Do you know if NES charged Gasol separately?

Gasan: I was informed recently, there was review done by external consultant and they had high level presentation to the shareholders. They advised that in their opinion that €1.5 million was paid directly to New Energy Supply.
Monique Agius
10:09 TCC: The €1.5M that Gasol was to pay GEM was it part of the amount charged as a development fee?

He explains that Gasol was to receive €2M from Electrogas from which it was going to pay €1.5 million to GEM.
Monique Agius
10:08 TCC: Why was GEM not paid the €1.5M by Gasol?

Gasan: My understanding it was having financial difficulties.
Monique Agius
10:07 TCC: In this agreement you are agreeing to pay €2.5million to Yorgen Fenech…

Gasan: Out of €3.5million. However GEM only €2M from Electrogas.
Monique Agius
10:06 TCC: GEM was to perform services for Electrogas. (Technical, financial and legal). But GEM agreed to pay NES to perform these same tasks.

Gasan: NES would look after it all.
Monique Agius
10:05 Comodini Cachia: Did Gasol know that Yorgen Fenech would carry out the tasks?

Gasan: He negotiated the agreement.
Monique Agius
10:04 Comodini Cachia: Back to June 2014. I understand that GEM was due money by Gasol and Electrogas.

Gasan: Gasol: €1.5million. Electrogas: €2 million
Monique Agius
10:02 Madam Justice Lofaro: Did Oxera and the Commission know?

Gasan: Success fees were put down as costs.

Madam Justice Lofaro: Am I right in saying that the government and the Commission did not know that the shareholders were paid success fees? You can go around in circles all you like but in the end you have to answer.
Monique Agius
10:00 Mr Justice Mallia: Was the government aware that you are being paid these success fees?

Gasan: I mean on the interim bridge it was …

Madam Justice: That's not what you were asked.

Gasan: The €11m were paid…

Mallia: Did the government know?!

Gasan: No.
Monique Agius
09:59 He adds that when they got the interim bridge loan, each shareholder had to pay €3.6 million plus bank charges.

€11m was physically paid to the government to pay the government guarantee.
Monique Agius
09:57 Gasan says that the lenders were not going to to lend money until the issue of state aid was cleared.

He explains that the €12 million was to cover the government guarantee and bank charges.
Monique Agius
09:56 Mr Justice Mallia: Who drafted the application?

Gasan: My understanding is that the government had appointed Oxera.

Mr Justice Mallia: Was Oxera aware that you were receiving these success fees?

Gasan: €6.5 million were reinvested. One year later were increased €12 million.
Monique Agius
09:54 Judge Mallia: the banks were aware. Which banks are you referring to?

Gasan: At that point the issue of the government guarantee was not contemplated at that stage. What happened then, after Electrogas was successful in its bid, this issue of state aid came about. At first government did not think there would be need for an application. It thought it could get clearance quickly.
Monique Agius
09:53 Mr Justice Mallia asks who computed the sum.

"John Zarb from PwC," he says.
Monique Agius
09:53 These were not for money for the shareholders.

He insists that the success fees were for the shareholders following an observation by Madam Justice.
Monique Agius
09:52 He explains that these two agreements were also part of the financial package agreed upon. Up to the interim bridge loan, these tasks were completed.
Monique Agius
09:51 When asked for a list of these tasks he always points to the agreement saying that there were too many.
Monique Agius
09:49 An agreement for €6.5 million and there was a second agreement for €4 million for development fees. The latter where for a whole list of tasks.

Madam Justice says this account has differed greatly from what the board had been told before.
Monique Agius
09:48 "There are two different agreements. One was a success agreement payable to all shareholders upon the successful completion of the project."
Monique Agius
09:47 Comodini Cachia: What was Gasol paying GEM for?

Gasan: Amount or tasks?

Comodini Cachia: both.

Gasan: €2.5 million. The agreement had an exhaustive list of tasks. GEM was going to handle those tasks.
Monique Agius
09:46 He says he was not party to the negotiate between GEM and Gasol.
Monique Agius
09:45 She asks about the development fees in the 2014 agreement.

"€2 million was to come in from Electrogas. Then there was an agreement that Gasol would pay GEM €1.5 million – this money never came into GEM."
Monique Agius
09:43 Dr Comodini Cachia says that the fee clause in the agreement does not refer to what he is saying.

Gasan says it is. He finds the clause.
Monique Agius
09:42 Gasan was a signatory to the 2014 agreement.
Monique Agius
09:40 Dr Comodini Cachia says that the agreement indicates that GEM would pay €2.5 to NES.

"No the agreement is that GEM would pay €2.5 million on GEM getting funds from Electrogas," he says.

Dr Comodini Cachia points out that when she asked how much money GEM was expecting from Electrogas he told the court €2 million. She asks why GEM had then agreed to pay €2.5 million to New Energy.
Monique Agius
09:37 Dr Comodini Cachia asks about an agreement signed on 21 June 2014, with New Supply Energy (Yorgen Fenech) for which they agreed to pay a fee.

Gasan says that the agreement was signed before the submission of the bid and had a list of tasks concerning financial, legal and technical aspects of the project which Gasan and GEM would be performing on behalf of the consortium.

"It was agreed from day 1 that Fenech and NES would handle those tasks. There was an agreement that he would get remunerated for that as he wasn't drawing a salary for it," he says.
Monique Agius
09:36 Dr Comodini Cachia asks about a time he had said when Yorgen Fenech was not particularly present at Electrogas. She asks about the time frame.

He replies: I believe it was from 2017, 18 to 19.
Monique Agius
09:34 Mark Gasan son of Joe Gasan takes the witness stand first.
Monique Agius
09:34 We're in session.
Monique Agius
09:28 Dr Therese Comodini Cachia and Dr Jason Azzopardi are already in the courtroom.
Monique Agius
09:25 Good morning and welcome. We're live from Hall 20.
Monique Agius

In a previous court sitting, Mark Gasan took the witness stand and denied being present for a dinner which took place at Portomaso and for which now murder suspect Yorgen Fenech and then Opposition Leader Joseph Muscat were present for among others.

He was questioned specifically by Jason Azzopardi on a dinner which took place three Fridays before the 2013 general election.

Gasan denied being present as Dr Azzopardi warned that there were eye witnesses.

The public inquiry into the murder of journalist Daphne Caruana Galizia is tasked with, amongst other things, determining whether the state did all it could to prevent the murder from happening.

The Board of Inquiry is composed Judge Emeritus Michael Mallia, who is chairing the inquiry board, and two other board members, Chief Justice Emeritus Joseph Said Pullicino and Judge Abigail Lofaro.

Lawyers Jason Azzopardi, Therese Comodini Cachia and Andrew Borg Cardona are appearing for the family.

GEM Holdings

GEM holdings which is made up of the Gasan family along with the Fenech family of Tumas Group and Apap Bologna family own 33% shareholding in the project.

Siemens and Azerbaijan’s state energy SOCAR each own 33% shareholding.

Last year, Yorgen Fenech was arrested and charged with being an accomplice in the murder of Caruana Galizia.