I would have not bothered to hold a media conference if I had no smoking gun evidence that a leading private auditing firm had written to WasteServ, the Minister of Finance, MGI – the Malta Government Investments Limited – and MIMCOL – the Malta Investments Management Co Ltd – to complain in the strongest of terms against Minister Fenech’s sidekick, former Head of Private Secretariat and top consultant Alan Caruana’s behaviour

in their regard

In a signed letter dated 4 January 2012 written in connection with the annual audit for the year ended 2010 not only did they complain about the manner in which they were invited by the said Mr Caruana to attend a meeting on WasteServ despite lack of proper information on the issues to be discussed, but much to their surprise to use their own words:

“He opted (during the meeting) to focus mainly on putting in doubt and questioning the integrity of the expressed opinion of the auditors involved. Coming from a top executive of the major shareholder of the company, to whom our auditors’ report is addressed, we must express our total disagreement to this highly unethical approach to the issue at hand and to which we have constantly referred to in our three years that we have held office, both in our management letters as well as our auditors’ report.

“We feel at this stage that we have to restate our disagreement to certain arguments put forward during the meeting…” which they then went on to list item by item.

According to the same letter, the pressure was of such a nature that:

“During the meeting, we were requested, to inform management in writing up to what level of comfort we were prepared to accept in order to re-assess our opinion.”

The auditors were apparently so unimpressed by the weak arguments brought forward by Mr Caruana and his sidekicks that they stated in writing that:

“The argument put forward during the meeting that all expenditure had been audited by previous company appointed auditors as well as by the EU-appointed auditors through the Planning & Priorities Co-ordination Division within the OPM is irrelevant to the issue at hand. The main basis of the qualified opinion is the lack of proper asset inventory controls identifying each facility unit by asset category and the cost in order to be able to verify the global valuation taken on as well as perform physical inspection tests to establish existence…”

As I predicted during the media conference, I would have not been surprised if at a later stage the government and possibly the auditors themselves might have claimed that since then matters have been ironed out, but it still remains a matter of concern that the situation had to drag on so long for years on end, with insult being added to injury through the unethical behaviour of Mr Caruana himself.

But there is no doubt that the most damning part of the auditors’ letter is their concluding paragraph wherein they stated that:

“We consider this behaviour as a threat to our independence as auditors by irresponsibly pressuring our firm to change our opinion. By putting in question our professional advice in the implementation of the reclassification carried out and threatening legal advice on the issue, the representative of the majority shareholder is trying to influence our position with respect to the qualified basis of opinion…”

All this not only seemed to be perceived as a storm in a teacup by our Minister of Finance but he also found nothing wrong in having a government employee in a position of trust – the CEO of MGI/MIMCOL using critical words and accusations of lack of ethics in my regard, in the face of such a damning letter.

Most likely Mr Mifsud, the CEO in question who should have known better rather than to erode the confidence and trust that his position at the helm of a government entity should enjoy across the political spectrum, should have realised that if anybody owed the public and me an explanation it was not him, the auditors or WasteServ but the Minister of Finance and Mr Caruana himself. Who I believe is his Chairman at MGI.

As things stand neither have the auditors denied the authenticity of the letter in question, nor has Minister Fenech chosen to shed any light on any action that he could or should have taken against his former Chief of Staff given that this strongly-worded letter had been written as way back as seven months ago.

But then this is the political stuff that our ministers happen to be made of.

Only days ago when there were strong indications that the Malita public offer might not generate the expected response, government sources and government-friendly media were already implying that if things would not work out successfully it would be due to the PL – so much so that we were even accused of having broken the national consensus on financial services. In spite of the fact that we have gone down on record stating that we had only questioned the government’s priorities rather than the special purpose vehicle as a financial instrument.

Now given that the initial public offer of Malita Investments plc seems to have worked out well, as was to be expected the same Finance Minister, who saw nothing wrong in the BDO auditing firm’s protest letter against Alan Caruana’s totally unacceptable behaviour, had the cheek to claim that the initial public offer’s success was a vote of confidence in the government and its policies.

Some mothers do ‘Av ‘Em!

[email protected]

www.leobrincat.com

Leo Brincat is the Shadow Minister for the Environment, Sustainable Development & Climate Change