The Prime Minister yesterday announced the appointment of former Finance and Foreign Minister John Dalli as his main consultant in matters of economy and competitiveness, after declaring that an as yet unpublished auditor general report has not found anything against Mr Dalli in spite of the allegations made against him three years ago.

Mr Dalli resigned as Foreign Minister in June, 2004, just three months after his appointment the previous March, in a murky situation of claims and allegations. He has always protested his innocence and the Prime Minister yesterday said that he wanted to make it clear that all insinuations against Mr Dalli were “unfounded and false”.

In a joint news conference yesterday, Dr Gonzi explained that in June 2004, soon after he was made Prime Minister, a number of allegations were made to him about Mr Dalli, who had been Dr Gonzi’s main rival for the leadership of the Nationalist Party.

Dr Gonzi said that he received a report about a contract with an Iranian shipping company.

“I passed this report to Mr Dalli. He replied to each allegation listed in the report and it was very clear that these were unfounded and false,” said Dr Gonzi.

The Prime Minister said that the facts as laid out by Mr Dalli were corroborated by records in the Foreign Ministry, and Dr Gonzi added that “when I saw these facts, I said that there was no form of abuse”.

Soon after, however, there were allegations of abuse about airline tickets bought by Mr Dalli’s ministry, he said.

“On Mr Dalli’s suggestion, on 7 July, 2004, I passed the case on to the auditor general to carry out a comparative analysis of airline tickets bought – this case was to be given the utmost priority,” said the prime minister.

Dr Gonzi pointed out that although this report was ready, the office of the auditor general has not yet published it.

In the meantime, said Dr Gonzi, another case cropped up with a report commissioned by SIMED over the awarding of a contract for medical equipment for the Mater Dei Hospital.

“I was under great, and constant, pressure from the officials and lawyers of SIMED, who had lost the contract, to go back on my decision awarding the contract to another company,” he said.

Dr Gonzi accused the Labour Party of trying to make political mileage over these allegations, and said that he was very careful about what he said in public.

The Prime Minister said that he passed the SIMED-commissioned report on to the police commissioner and asked him to investigate.

“In fact, following these investigations, a person was arrested, charged in court and found guilty,” he said.

“The court judgement made it very clear that this report (on John Dalli) had been false,” he said.

The Prime Minister explained that he kept on waiting for the final report by the auditor general, which would remove all doubts about Mr Dalli.

“On 20 July, 2007, three years after my request, I wrote again to the auditor general so that his office would, without delay, conclude the report,” he said.

The process was complicated – the term of office of the auditor general had expired and the auditor general could not sign the completed report, said the prime minister.

He went on to say that almost five months ago, on 19 June, he wrote to the Opposition Leader proposing two possible candidates for the post of auditor general and deputy auditor general.

“I took the initiative to send Dr Sant names in writing so that this issue would be resolved as soon as possible, but it is the end of November and we still don’t have a reply,” he said.

Dr Gonzi said that various reports in the media stated that the report was ready and he once again approached the auditor general.

“Due to a technicality he could not sign and publish this report, even though it was ready, because his term of office was up,” he said.

As a result, the Prime Minister said that morally, and ethically, he could not leave the situation pending as it had been for the past three years, and he called yesterday’s news conference.

“I will not wait until another auditor general is appointed and after speaking to John, I decided to speak out,” said Dr Gonzi. “I want to make it clear that any insinuation against John Dalli which could have led to his resignation, was unfounded and false.”

The Prime Minister said he appointed Mr Dalli as his main consultant in matters of economy, competitiveness, energy and negotiations with foreign governments.

Replying to questions, Mr Dalli said he was politically blackmailed when companies that had lost contracts made certain accusations to the Labour Party, who then took them to be true without investigating.

“I was politically blackmailed again just a few days ago in the media of the opposition,” he said.

Dr Gonzi expressed his regret at letting three years pass before speaking out, but added that there were many factors that were out of his control.

Mr Dalli said he was going to initiate legal proceedings against SIMED following the false report.