The day after the government published the PricewaterhouseCoopers (PWC) report on the Malta Shipyards’ Fairmount contract, the man who at the time was chairman of the shipyards admitted there were failings at all levels. He also says that with hindsight perhaps the dockyards should not have tried to take on this heavy contract at the same time that it was trying to restructure.

John Cassar White was speaking in a telephone interview with this paper.

The 183-page report on the two Fairmount contracts showed that Malta Shipyards lost around e26 million on the Fjord and the Fjell.

The report said that the original quote for the two vessels, which were to be converted to semi-submersible vessels, was e33.2 million – e19.8 million for the Fjord and e13.4 million for the Fjell. It soon became clear that the Fjell contract was considerably under-valued.

“Management may have misled the Board of Directors and its shareholder by focusing excessively on the revenue to be generated from the two contracts, while providing unrealistic expectations of profit-contribution when it is very unlikely there could ever have been any, at the negotiated contracted price,” PWC said.

“The FHT projects were a loss-making venture before they even started. Subsequent events in its execution contributed to further increase the scale of the loss.”

It said the Malta Shipyards management was planning to secure e10-20 million in conversion projects in 2006 – which would have meant that it was working at capacity. This was set against a productivity level of 61 per cent, down on the 71 per cent reported for 2004, but which was creeping up again. However, the manpower, in particular management, were spread too thin, PWC said.

Mr Cassar White, who resigned as chairman at the beginning of 2008, said further investigations may turn up other aspects of what went wrong, but broadly speaking some findings are quite clear from the report.

Yet, there were other big contracts that the shipyard undertook which resulted in profits for the shipyard. Among the examples mentioned by Mr Cassar White were the La Salle, and the Ikdam jobs and there was also the conversion job done on a cruise liner.

The shipyard’s problems, such as that regarding productivity, in the end proved to be overwhelming despite the good intentions of many. Mainly, it was a combination of factors, which produced the end result that is highlighted in the report, Mr Cassar White said.

But his basic impression, after having read the report, is that with hindsight the shipyard should not have attempted such a big job at the same time it was trying to restructure. Considering the general atmosphere at the dockyard at that time, ensuring that the planned timeframes and productivity levels were kept proved to be too big a strain on a management worried about the impact of restructuring.

The report highlights fault lines at all levels, Mr Cassar White added, and even people, including himself, who were closely involved at the time did not understand all that was going on. In fact, he added, it was only through the report that he found out some things.

One other consideration he made is that the Fairmount jobs were too big for the shipyard to handle with the resources it had at the time.

A copy of the report can be found on http://www.di-ve.com/Default. aspx?ID=72&Action=1&NewsId=64323&newscategory=36

Gatt should resign if questions remain unanswered – Labour Party

The Labour Party yesterday called for a public inquiry into the Fairmount case and said Infrastructure Minister Austin Gatt should resign if the questions raised over the contract losses remain unanswered.

But in a counter-statement, the Infrastructure Ministry said that if Labour had to apply such reasoning to its own party, it would be left without anyone to lead it.

On the one hand, deputy Labour leader Anglu Farrugia referred to the Price WaterHouseCoopers (PWC) report on the Fairmount contract, from which Malta Shipyards lost e37 million, saying the people had fallen victim to the PN government’s inefficiency.

But the Infrastructure Ministry said Malta Shipyards lost about e35 million when the Labour Party was in government between 1996 and 1998.

“Who carried political responsibility for these losses?” asked the ministry, adding that the Labour Party itself had said Malta Shipyards would need to diversify commercial activity to stop making losses.

The deputy Labour leader insisted however that the Fairmount report reflects the Nationalist government’s chaotic and inefficient leadership.

Helena Dalli, Labour’s spokesman for public investment, said the report raises new questions.

She said that following pressure made by the PL and the General Workers’ Union (GWU) in May 2008, Minister Gatt had said the PWC report on the Fairmount contract was at an advanced stage.

In reply to Dr Dalli’s question why the report was only published 16 months later, the Infrastructure Ministry said this was because the shipyards’ board of directors felt that both contracts had to be studied to have a clear picture of what happened.

Dr Dalli also asked why Graham Crouser, whom Malta Shipyards contracted for three years, excluded Maltese managers from the negotiations on the Fairmount contract.

She also asked if Minister Gatt had approved the Fairmount contract as negotiated by Mr Crouser, and if not, who approved it instead of investigating and taking action.

Also, why was Mr Crouser allowed to leave Malta, just six months after he was contracted? she asked.

Apart from the Infrastructure Ministry, the PN also reacted to the Labour Party’s criticism, saying the PL and the GWU should apologise for their political interference, as a result of which Malta Shipyards never recovered and millions of euros in subsidies were lost.

The PN said the Fairmount contract losses confirm the government’s wise decision to stop subsidising and privatise Malta Shipyards, as the subsidies were proving fruitless.

In its statement, the Nationalist Party said the majority of the shipyards’ former employees benefited from the early retirement schemes and found another job.

Even the Infrastructure Ministry criticised the GWU and the PL, saying that the Fairmount report confirms that despite the government’s efforts to diversify the commercial activity at the shipyards, the company could not make up for the lack of productivity, the GWU’s intransigence and the PL’s interference.

The ministry said the PL had long been telling the shipyards’ employees that they did not need to work hard, because the subsidies would make good for losses.

The ministry said that the inquiry the government had ordered the shipyard’s Board of Directors to commission was independent and complete.

“The PL and the GWU always used the shipyards as a political football, and this is one of the reasons why the shipyards ended up in the state they are in today.

“But the PL is angry that the political ball game it has been playing for 50 years has been thrashed and has been changed into another success of the PN government’s programme of difficult but positive economic reforms.”