In yesterday’s sitting of the Public Accounts Committee, it was finally established that the now defunct Voice of the Mediterranean radio station did not fall under the Public Procurement Regulations pertaining to government departments or entities.

This was confirmed by Attorney General Silvio Camilleri who said that it was clear that VOM did not fall under government financial regulations due to the fact that it was not legally set up or created by an Act of Parliament. He said that the fact that government may have held majority shareholding in the station from time to time had nothing to do with it being compliant to the said regulations.

The PAC also heard extensive evidence on the VOM case by former Permanent Secretary at the Foreign Affairs Minister Gaetan Naudi who is currently Ambassador to Spain.

The session began with various exchanges between Committee Chairman Charles Mangion, Opposition member Leo Brincat and Minister Austin Gatt on whether VOM fell under Public Procurement Regulations. Dr Gatt asked the Auditor General whether legal advice had been sought on the question.

In his reply, the Auditor General said that a document had been found which had been prepared by Dr Peter Grech where it was stated that VOM did not fall under such regulations unless there was a specific order for public funds passed to it to be used according to that code. He also confirmed that the office’s legal consultant Prof. Ian Refalo had expressed agreement with such a conclusion.

Next to give evidence was Salvino Gauci from the Ministry of Foreign Affairs who reproduced the original agreement signed between the Maltese and Libyan governments in 1984 establishing the radio station. He explained that it was clear that this was on a 50/50 basis and that the station did not fall under government financial regulations as there was nothing to document this fact

Parliamentary Secretary Tonio Fenech asked if the grants passed to VOM by the government had ever contained a proviso that government financial regulations had to be applied. Mr Gauci said that this was definitely not the case adding that VOM had a certain autonomy in its operations due to its structure of councillors.

Prof. Ian Refalo said that the question revolved around the fact whether there was jurisdiction to investigate the VOM situation according to Article 9 of the law and according to the PAC’s Terms of Reference. He said that although he agreed that the station did not fall under government financial regulations the question whether this was actually the case due to its shareholding structure was rather more difficult to identify.

Minister Gatt said that it was clear that VOM did not fall under the PPR with Dr Mangion saying that this meant that the committee would be effectively sanctioning anything. Dr Gatt countered strongly saying that good governance practices should always be applied.

Mr Brincat said that he was informed that a councillor had resigned from the station’s board as he felt that government financial regulations were not being applied.

Dr Mangion asked the Attorney General if there was a legal lacuna on the proper application of government funds if regulations do not apply. Dr Camilleri said that he did not know of any established practice that was applicable in such cases.

In his statement, Gaetan Naudi explained that VOM was administered by a board of 4 councillors, 2 Maltese and 2 Libyan. He said that an agreement signed between the Libyan and Maltese governments in 2002 had never come into effect as only one party signed the relative documents with the result that the 1984 agreement remained effective.

Asked by Mr Brincat on the financial situation at the station, Mr Naudi said that he was never informed on what financial regulations should be applied at VOM adding that he had never asked for the application of such regulations. He confirmed that the payments of money used to be authorized by a VOM council member, Alfred Zarb who was also an employee of the Foreign Affairs Ministry.

Mr Naudi said that no councillor ever alerted him on any malpractices at the station adding that when employment procedure was not followed in a particular case, the situation was rectified immediately. He said that in June 2003, it was discovered that the Libyan government had not paid its dues for six years and that it had run up a balance of almost a million liri.

Mr Naudi said that after allegations on financial misappropriation appeared in the media, he decided to investigate the matter on orders from the then Foreign Minister Joe Borg. He said that after interviews with several of the station’s management, it was concluded that there was no maladministration or financial impropriety.

Recounting what he termed as the “death throes” of the station, Mr Naudi said that he had received an email from VOM Managing Director Richard Muscat stating that the station was in serious financial difficulties as the Libyans had not paid their dues for six years. He also referred to several meetings he had with Libyan officials who expressed their wish that the station should continue but efforts to retrieve the money due were of no avail.

Mr Naudi said that in November 2003, he had informed the Libyan government that if payment was not forthcoming, the station would have to close down. He said that he passed on the last two payments of Lm 40,000 each specifying that these should only be used to “pay salaries and other unavoidable legal or contractual commitments”.

The PAC will resume hearing Mr Naudi’s evidence at 10.30am this morning. Richard Muscat is expected to give evidence in front of the committee next Monday 22 July.