A copy of the financial statement of the party and comments by the audit company have been passed on to this paper.

Notwithstanding a significant increase in donations received, the cost, both of a recurrent nature and those associated with the two campaigns, exceeded income and a deficit of Lm196,000 before exceptional provisions was registered. The party’s liabilities have increased by Lm242,000.

An analysis of the expenditure, as presented in a Maltese language paper by the party’s central administration, sheds a fascinating light on the kind of expenses a main political party makes in election year.

The party had already expended Lm62,000 in 2002 on the campaign office. It spent Lm116,000 in 2003. The next big item on the bill is Lm87,000 disbursed in relation to the EU referendum. The party spent just Lm3,000 on mass meetings in 2002 but Lm35,000 in 2003. So much expenditures affected the party’s spending on the local council election: in fact, while it forked out Lm37,000 in 2002, it spent just Lm12,000 in 2003. One other considerable item of expenditure involved billboards, on which no less than Lm27,000 were spent last year.

All this excess expenditure over revenue has led the party to see its consolidated fund being halved from Lm1 million at the end of 2002 to Lm539,000 at the end of June 2003.

For the party to repay its liabilities, the auditors noted, it will need to generate additional revenue, either by increasing its current levels of donations and activities (without increasing annual expenditure) or from sale of property.

Cash generation, they added, is also important since it has to be seen in conjunction with One Productions Ltd’s severe liquidity problems.

One Productions operates Super One radio and TV station.

A note in the auditors’ comments shows the deterioration of the situation at One Productions from 2002 to 2003. The station’s revenue decreased from 2002 to 2003 by around Lm100,000 but its expenses increased by Lm170,000. This more than trebled the loss for the year to Lm373,000.

The auditors had stern warnings to make: “In addition to the poor operating performance, One Productions Ltd has a net current liability position of Lm649,000 and a net liability position of Lm670,000. Among One Production Ltd’s outstanding dues there are Lm280,000 owed as social security contributions and Lm58,000 owed to the VAT department. Failure of One Productions to settle dues in respect of social security contributions and other taxes would mean that the directors may be personally liable for their settlement,” the auditors warn.

With regard to the party’s finances, the report by the auditors revealed that weaknesses highlighted in previous management letters regarding cash contributions had not been addressed till the time the report was drawn up.

Among these weaknesses, the auditors included:

“Lack of segregation of duties. The person in charge of the Ufficcju Gbir ta’ Fondi is basically responsible for the whole cash cycle.

“Due to frequent printing errors in the receipt books, we had to recommend that someone checks the receipt books for any duplicate or missing receipts before utilisation.

“Cash collected is not being deposited intact on a daily basis.

“A number of collectors who are in possession of receipt books have not returned these books (plus funds) to the party. Some have not even returned the first receipt book given to them in October 1999.”

The auditors had one final warning to give to the party: “The party employs both full-timers and part-timers. As noted last year, not all remuneration paid to full timers/part-timers is being declared for tax purposes.”