Home Affairs Minister Mallia, in his capacity as the lawyer representing John’s Group in 2010, was involved in the dispute that the group had with George Farrugia over the siphoning of over US$8 million, but he knew nothing of the kickbacks to Enemalta officials, according to the former chairman of the Executive Board, Tony Debono.
In an exclusive interview with The Malta Independent on Sunday, Mr Debono insists that in addition to Dr Mallia, none of the other Farrugia brothers, board members, or indeed himself were aware of the kickbacks. He also insists that, because Dr Mallia was unaware of the kickbacks, he could never have threatened George Farrugia with revealing everything to the police, as claimed by George Farrugia during the Public Accounts Committee earlier this week.
In the interview, Tony Debono gives a detailed account of how the company came to know that George Farrugia had siphoned millions into a company they didn’t even know existed, but insists that no one knew what the money was being used for. He recounts how the Board of Directors had suspended Mr Farrugia and had taken away all his powers and privileges.
While serving as consultant to both Labour and PN administrations, Mr Debono cosied up to the PN, particularly during the last legislature when he consulted the Nationalist Party on the setting up of its own mobile platform PING.
He now insists that George Farrugia should have never been given a Presidential Pardon by the Nationalist government because he is the “guiltiest person in this case” and, according to him, the truth would have come out anyway during police investigations.
Mr Debono claims that statements made during the Parliamentary Accounts Committee “are total lies” and persons granted pardons should not be allowed to make wild statements without providing proof.
He hopes he will be called to testify before the same committee so that he can clear his name. Mr Debono also insists that he was never aware of any political donations that might have been made by the group.
Mallia was working on misappropriation, not kickbacks
The George Farrugia case started in May 2010 when Tony Debono, as chairman of the Executive Board and Christopher Farrugia, the current CEO of John’s Group first suspected that something was wrong. At the time, George Farrugia was CEO. “In May we were looking at the accounts and we noticed that a lot of money was missing. There should have been more in the accounts and we wanted to see where the money had gone.”
Mr Debono says that at one point two Aikon invoices came to light. “We did not know what Aikon was. We had never heard of it. The same things that were invoiced for Power Plan were invoiced for Aikon, but the amounts mentioned had not come into Power Plan.”
Tony Debono informed the board of what was happening and insisted on an internal re-organisation. “I convinced everyone on the need of an investigation. They all signed the investigative terms of reference, even George Farrugia. In just three days we concluded prima facie that the money was going somewhere else. This was direct theft on the family, because Power Plan did not belong to George Farrugia, it belonged to John’s Group.”
After further investigations, the board signed a resolution to suspend George Farrugia from his role as chairman, took away all his powers and privileges – including the company credit card – and appointed Christopher Farrugia as CEO and acting director of Power Plan.
Manuel Mallia’s involvement in the case
In the beginning of September 2010, Tony Debono and Christopher Farrugia went to TOTSA’s Headquarters in Geneva and informed the company that George Abela had siphoned funds and had been suspended. Towards the end of September, the board met again and nominated Dr Manuel Mallia and Associates as legal counsels and advisors in the case between the company and George Farrugia. This appointment was specifically related to the misappropriation of funds by George Farrugia.
“We first learned about the kickbacks when the papers broke the news. Before that we were only interested in the money that was supposed to go into our accounts but didn’t. That was the original aim, and that remained the only aim until I left the company.”
Mallia had one meeting with George Farrugia
Mr Debono insists that, as far as he knows, Manuel Mallia and George Farrugia only met once at a meeting. “We met in the auditor’s office when Mr Farrugia came with his lawyer. Christopher Farrugia, Dr Mallia and I were present. We met to tell them that the audit had concluded that around $8 million could have been put into other accounts. Mr Farrugia asked to appoint his own auditor because he did not agree with us on the amounts.”
Dr Mallia did not know about the kickbacks
When asked repeatedly by this paper, Mr Debono insisted that Manuel Mallia, himself and the other Farrugia brothers knew nothing about the kickbacks. “I am sure that Dr Mallia did not know because it was Chris Farrugia and I who told him that what we needed to investigate was the misappropriation.”
Lawyer could not have threatened Farrugia over kickbacks
Earlier this week, during a PAC hearing, George Farrugia claimed that Manuel Mallia knew about the kickbacks and threatened him to reveal everything unless he (Mr Farrugia) reached a settlement with the company. But Mr Debono insists that Dr Mallia could never have done that because he did not know about the kickbacks. He admitted that Manuel Mallia could have pressured George Farrugia to give the stolen money back, “but asking someone to give you your money back is not a threat”.
Debono not aware if John’s Group gave political donations
During the PAC hearings, George Farrugia also claimed that he had given a car to the Labour Party. But the PL promptly rebutted the claim, saying that the car was bought by means of a barter agreement with the party’s media house. Mr Debono, in fact said that George Farrugia had lied about this. When asked if John’s Group gave political donations, he replied that as chairman to the Executive Board he was not involved in the normal administration of the company and was not aware if the group gave any donations to political parties.
Presidential Pardon ‘should never have been granted’
Tony Debono’s opinion is that George Farrugia should have never been given a Presidential Pardon because “he is the most corrupt person in this whole case”. When this newspaper pointed out that the truth would not have come out otherwise, Mr Debono insisted that police investigations would have uncovered the truth. He insisted that “persons given a pardon should not be allowed to say anything without providing proof”.
Mr Debono also insisted that statements Mr Farrugia had made about him during the PAC hearings were “blatant lies” and he is reserving the right to take legal action to safeguard his reputation. He also hopes to be included in the long list of witnesses still to testify before the PAC so that he can say everything under oath.
What George Farrugia told the PAC this week
When testifying before the PAC on Monday, rogue oil trader George Farrugia claimed that Manuel Mallia knew of the kickbacks and also claimed that he had made a €2,000 donation to Austin Gatt’s election campaign. The former minister has insisted that he never knew about the donation.
Mr Farrugia also claimed that he had given the PL a Daewoo car, but the PL has since said that the car was bought by means of a barter agreement. He also claimed that, apart from the one donated to Tonio Fenech, two more clocks had been donated to the PN.
He also revealed a long list of expensive gifts he had given to Enemalta officials, including cufflinks, paintings and watches worth over €1,000.
The board’s resolution
The board resolution suspending George Farrugia read; “It is therefore Mr Debono’s recommendation that in the first instance a strategic audit is commissioned with the least possible delay to identify the shortcomings and weaknesses of all the group’s operations, and more importantly the effectiveness of our operation, the working methods currently being followed and the improvement that should be coming as a result of the audit. The overall administration of the group is executed by a non-family member.
“Mr Debono gave an extensive overview of the recent developments that were taking place in the investigation of particular companies within the group. He stated that in the previous date there had been a major development which prima facie indicated very serious accounting shortcomings.
“Further to the board of directors’ deliberations notably on the filling of the position of the group’s CEO and the unanimous approval to conduct an investigative audit, the board of directors of John’s Group – acting on the alleged serious administrative shortcomings, coupled with the prima facie reservations of fraudulent activities resolved during the board meeting held on 30 August that:
1 – the incumbent CEO George Farrugia is suspended forthwith from his duties until a decision is reached on the outcome of the investigative audit.
2 –As a result of the suspension the CEO is only to report back to work when and if he is asked to do so.
3 – The CEO is no longer authorized to sign cheques and other bank documents on behalf of the group. The group bankers are to be notified accordingly.
4 – The CEO is no longer to deal on behalf of any company within the group or represent any company within the group on any dealings whatsoever.
5 – The CEO is to give back his credit card to the group, which credit card is to be cancelled forthwith.
6 – Until further notice Mr George Farrugia will seek authorization from the Chairman (Mr Tabone) or Mr Chris Farrugia before engaging in any form of correspondence, negotiations, contracting or any form of agreement informing or on behalf of Power Plan or any other company in the group.
7 – Mr Christopher Farrugia is to be assigned as designate CEO and designated director of Power Plan.
8 – Mr Christopher Farrugia is to be delegated to take a full hand-over of all operations, current negotiations, contractual deals, international contacts – most importantly those at TOTAL, TOTSA, Horizon Terminals and Trafigura, that are currently in the charge of CEO George Farrugia.
9 – Mr George Farrugia is to make full disclosure of all companies that he is involved in, both in Malta and overseas, whether appearing as own name or a beneficiary.
“After having signed the board resolution and seeing that there were no objections by the present members, including George Farrugia, it was taken as approved. At this juncture Mr Farrugia requested a copy of the resolution. On being asked to prepare for the handover, Mr Farrugia informed the meeting that he had nothing to say at the stage but to retire from the meeting. He further declared that he would take some days off to recover from the impasse and that he would be contacting the board soonest to effect the handover.”
Tony Debono Bio
Tony Debono joined the Civil Service in 1969. He held a number of different posts within the government until 1997, when he left for the private sector. During his time as a government employee, Mr Debono served for 12 years as private secretary to three Labour Ministers; Albert Hyzler, Danny Cremona and Censu Moran. He was later appointed by Dom Mintoff as Chief Executive of Telemalta – a post he held for 14 years.
After leaving the public sector, Mr Debono established his own private company, Anthony Debono and Associates. In 1998 he was asked by the new PN administration to act as consultant to the chairman of Telemalta and later Maltacom. He was also deputy chairman for MaltaPost, and later on served as chairman. He was also chairman of the European Telecomm Operators in Brussels and president of CEPD. Mr Debono also served as consultant to the Communications Ministry and was later appointed as Malta’s Ambassador for Jordan. He was also an adviser to the Nationalist Party on its mobile telephony service – PING.
Mr Debono started working for John’s Group as a part-time consultant in June 2007. He was permanently employed with the group between 2008 and 2010 when he served as a management consultant as chairman to the Executive Board. In those three years he chaired about 50 board meetings. He stopped working there in January 2011 and is no longer involved with the company.