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 next hearing is on Wednesday at 9.30am. AC Mamo will take the stand.
Joe Gasan steps off the stand.
JG: I remember there was concern about the financial situation of Gasol and that's why I asked for a guarantee from SOCAR.
TCC: Had Gasan Group independently verified the financial standing of Gasol?
JG: No. In Bangladesh?!?!
TCC: Were you aware that Yorgen Fenech was using the project design to pitch the project in Bangladesh?
He didn't ask why Musayev resigned during the same period Fenech resigned.
Gasan says that he did not know about Turab Musayev or the connection with Montenegro.
He is not aware that the project had the support of Keith Schembri, Ronald Mizzi and Konrad Mizzi among others.
Joe Gasan says that it was of concern to them.
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?
He says that it started in 2019.
Dr Comodini Cachia asks what they have been doing between 2018 and 2020.
A detailed forensic audit was carried out by UK lawyers in 2020.
He tells the board that they have to be specific on what area.
He says that these were of concern also to him as a shareholder.
Gasan says that he has seen the key areas of concern outlined in the NAO report.
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.
TCC: When did you become aware of GEM owning €2.5M to Yorgen Fenech for services fee?
Gasan says that he was involved in the concept but not in the negotiations of the agreements.
"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.
Gasan is asked about the NAO report. He says that he only read a synopsis and that he did not read the report.
"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.
Gasan goes into the detail on how the quorum issue was resolved.
The Irish Ambassador to Malta has just walked into the courtroom.
"We insisted that he should make a public statement," he says.
"When he returned from London, he stopped attending board meetings and was unavailable for a long time," Gasan says.
Fenech had denied owning 17 Black to Gasan in person.
"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.
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.
Dr Comodini Cachia asks when he had doubted it. Gasan says that it was when the things about 17 Black came out.
"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.
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’.
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?
TCC: Am I correct to say that Mark Gasan and Joseph Muscat were friends?
Gasan says that Keith Schembri attended some of the meetings which he had with the prime minister.
"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.
JG: Fenech had spoken about the project but I did not say yes or no.
TCC: In February 2013 where you asked to attend a meeting on the project?
"The Fenechs and all reactivated the project when the Labour Party made it clear that it was part of their strategy," he says.
Joe Gasan says that the only person he had spoken to about something similar to Electrogas was to Paul Apap Bologna.
"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.”
According to Joe Gasan, similar to Electrogas project, the cable television tender was also complicated.
"It was a big project. We were not alone. A lot of work is involved. The work was done," Gasan says.
He is being asked about the timeline.
There were meetings about the MIDI project more than one, he explains but they never met over Electrogas.
"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.
"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.
"As Prime Minister, I met him [Muscat], always at the OPM," he says.
"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.
He says that he did not know Keith Schembri at the time.
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.
TCC: Have you ever met Joseph Muscat?
"Absolutely no," he replies.
The witness is asked if the project was discussed with Labour Party before the election or immediately after.
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".
"I remember that the biggest problem at the time was to find the right company to build the turbines and boilers," he says.
John Zarb of PwC was very involved in the project.
"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.
"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.
"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.
In February 2013, Gasan says that he was discussing a separate project with George Fenech, Mark and possibly even Yorgen Fenech.
Joe Gasan says that this was dropped.
Paul Apap Bologna and Joe Gasan had gone to Enemalta as part of a delegation to present the LNG project.
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.
Joe Gasan returns to the stand.
Comodini Cachia: It seems that there were too many holes.
Gasan: Yes, definitely.
Comodini Cachia continues to read from another email asking what was the financial hole that the company was in.
"I can't recall what issue this is," he says.
Witness says he does not know what hole she is referring to.
He flips through the papers and smiles.
"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.
Dr Comodini Cachia asks about another email over emergency funding and capital requirements.
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."
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.
The witness says that it is the first time he is being made aware of Keith Schembri's involvement in the project.
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.
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?
TCC: We apologize for calling you back. There two emails.
He's asked to step down and Mark Gasan is called in again.
Joe Gasan takes the stand, Mark Gasan has arrived again.
The deputy registrar calls him back.
Dr Azzopardi informs the board that they need to ask Mark Gasan another question on another email.
We've been given a break.
The stand is being sanitized.
Mark Gasan steps off the stand.
TCC: What are you [GEM] charging Electrogas?
TCC: What is the interest rate charged by Enemalta?
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.
Madam Justice Lofaro presses the witness.
MG: This was mentioned last time. I don't remember this dinner at Portomaso. I don't know this Costantino guy.
TCC: Ever met Yorgen Fenech, Karmenu Vella and Muscat for a dinner or a lunch in Portomaso before 2013?
TCC: Does the name Costantine Obermeyer ring a bell?
MG: What I know from the media…
TCC: Would you be surprised that Electrogas shared CVs of applicants with Konrad Mizzi and Ronald Mizzi?
TCC: Would you be surprised that Electrogas chose its merchandise based on government's liking?
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.
Gasan asks to see the email.
MG: Those emails are what they are…
Madam Justice: You're young, you should be able to remember.
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: I wasn't copied in the email. I wasn't aware.
Madam Justice Lofaro; With all those millions involved, you were not aware?
TCC: Were you aware that the government was actually instructing Electrogas on how to address journalists?
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.
Dr Comodini Cachia reads through emails from 12 July 2017 with the subject LNG Financing. Gasan is not copied in.
Chief Justice Emeritus remarks not only he was aware but he knew he could go directly to the minister to have the issue resolved.
"I was aware that the minister got involved in certain issues," Gasan says.
Chief Justice Emeritus makes it clear that the board is not investigating Electrogas.
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.
TCC: I can continue reading, it will not look any better….
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.
TCC: Were you aware of the reliance on the minister?
He got more involved in 2018 and 2019, but also in 2017 in Electrogas.
MG: I was not involved in the negotiations.
TCC: The project was a complex one, you said. Was the project relying on Konrad Mizzi's support?
Gasan says that the first time he met Konrad Mizzi was at the inauguration.
Madam Justice Lofaro does not appear convinced, "he has not answered you" the judge tells the lawyer.
He was not made aware of the issue, Gasan protests.
“I based my email on what I heard from the CFO, which said ElectroGas’ position was that Enemalta should shoulder these costs,” Gasan says.
MG: Your honour the CFO is telling me that it is not payable by Electrogas.
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?
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.
Dr Comodini Cachia now asks about the excise tax.
Gasan explains that the shareholders put up all their equity – €100 million – and the rest was provided by the lenders.
MG: In reality, yes.
TCC: What you are telling me is that you accepted waive your success fees and this was simply an accounting exercise?
TCC: Are they interest free loans?
MG: No, but the interest has not been paid yet.
TCC: Are there shareholders loan provided by GEM to Electrogas?
On the 2014 agreement, Gasan says that it was drafted by a law firm, GZVH.
TCC: Is there an agreement on how GEM will be refunded?
MG: No… it's a cost.
TCC: GEM paid charges which were due by Electrogas….
He is not aware that the issue of development fees was not explained to Oxera or the government.
"In reality the situation of state aid due to cost overrun the shareholders are not overcompensated."
Today the issue of overcompensation of shareholders is not there, he says.
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?
An email from 12 April 2016 from Siemens official is read out by the lawyer:
He is asked about his involvement when eCubed consultants were brought in.
Gasan finally says that he would be copied when he got more involved.
MG: What do you mean?
TCC: You said that you were shadowing….
MG: Am I copied?
TCC: In 2016, if an email is sent to the board would you have received a copy of the email?
TCC: So the forensic audit has shown that GEM paid €1M and Gasol paid €1.5M to NES, correct?
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.
TCC: Do you know if NES charged Gasol separately?
He explains that Gasol was to receive €2M from Electrogas from which it was going to pay €1.5 million to GEM.
TCC: The €1.5M that Gasol was to pay GEM was it part of the amount charged as a development fee?
Gasan: My understanding it was having financial difficulties.
TCC: Why was GEM not paid the €1.5M by Gasol?
Gasan: Out of €3.5million. However GEM only €2M from Electrogas.
TCC: In this agreement you are agreeing to pay €2.5million to Yorgen Fenech…
Gasan: NES would look after it all.
TCC: GEM was to perform services for Electrogas. (Technical, financial and legal). But GEM agreed to pay NES to perform these same tasks.
Gasan: He negotiated the agreement.
Comodini Cachia: Did Gasol know that Yorgen Fenech would carry out the tasks?
Gasan: Gasol: €1.5million. Electrogas: €2 million
Comodini Cachia: Back to June 2014. I understand that GEM was due money by Gasol and Electrogas.
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.
Madam Justice Lofaro: Did Oxera and the Commission know?
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?!
Mr Justice Mallia: Was the government aware that you are being paid these success fees?
€11m was physically paid to the government to pay the government guarantee.
He adds that when they got the interim bridge loan, each shareholder had to pay €3.6 million plus bank charges.
He explains that the €12 million was to cover the government guarantee and bank charges.
Gasan says that the lenders were not going to to lend money until the issue of state aid was cleared.
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.
Mr Justice Mallia: Who drafted the application?
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.
Judge Mallia: the banks were aware. Which banks are you referring to?
"John Zarb from PwC," he says.
Mr Justice Mallia asks who computed the sum.
He insists that the success fees were for the shareholders following an observation by Madam Justice.
These were not for money for the shareholders.
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.
When asked for a list of these tasks he always points to the agreement saying that there were too many.
Madam Justice says this account has differed greatly from what the board had been told before.
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.
"There are two different agreements. One was a success agreement payable to all shareholders upon the successful completion of the project."
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.
Comodini Cachia: What was Gasol paying GEM for?
He says he was not party to the negotiate between GEM and Gasol.
"€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."
She asks about the development fees in the 2014 agreement.
Gasan says it is. He finds the clause.
Dr Comodini Cachia says that the fee clause in the agreement does not refer to what he is saying.
Gasan was a signatory to the 2014 agreement.
"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.
Dr Comodini Cachia says that the agreement indicates that GEM would pay €2.5 to NES.
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.
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.
He replies: I believe it was from 2017, 18 to 19.
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.
Mark Gasan son of Joe Gasan takes the witness stand first.
Dr Therese Comodini Cachia and Dr Jason Azzopardi are already in the courtroom.
Good morning and welcome. We're live from Hall 20.
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 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.