Pardoned oil trader George Farrugia today started giving evidence against his five brothers, insisting that they knew about and approved of the commissions he paid to former Enemalta officials to win tenders for TOTAL and Trafigura.

The Farrugia brothers, namely Antonio 68, a mechanic from Marsa, Gaetano, 65, retired, from Marsa, Raymond, 62, retired from Marsa, Emmanuel, 59 of Hamrun, and Salvatore, 60, of Marsa were placed under bill of indictment. They are being charged with complicity in bribing Enemalta officials and breaching the Companies Act. The second charge could carry a fine sentence of up to €500,000.

Taking the witness stand, George Farrugia said he is no longer in business with his brothers after 2010. The brothers were directors in a number of companies including John’s Garage and PowerPlan. Today he has another company which imports lubricant and supplies petrol stations.

PowerPlan was focused on petrol stations but then turned to lubricant importation and started doing business with TOTAL. Mr Farrugia said he was the most involved in Power Plan. He did most of the work but his brothers knew what he was doing. Mr Farrugia said he had a good relationship with his brothers. “We had arguments like everyone else but these things pass when they are between brothers.”

The pardoned oil trader said he was seeking to expand Power Plan’s operation and looked into oil, bunkering and aviation. He began negotiations with TOTAL on oil storage and spoke to Alfred Mallia who was head of the Enemalta Petroleum division. The latter asked for the profits to be split between him and Farrugia. He told his brothers about the request for kickbacks and they gave him the go-ahead.

Mr Farrugia said he wanted to find new clients interested in buying diesel from TOTAL. One of the potential clients was MOBC but he was finding it difficult to speak to Frank Sammut. When he managed to speak to him, Frank Sammut said he was ready to work with TOTAL but asked what would be in it for him. George Farrugia said he would return half the fee paid by MOBC to Frank Sammut. Power Plan would invoice MOBC $1 per metric tonne and Frank Sammut would be given 50cents for every metric tonne.

He said one time Frank Sammut was given a car instead of money. “He wanted a car for his son so we paid him in kind. I could not give someone a car for free without my brothers’ approval.

The car was registered through JF Motors – a subsidiary of John’s Group - and paid through Power Plan.

MOBC bought 5,000 tonnes of diesel a month. TOTAL only imported diesel at the time but Farrugia started looking for a company that would import fuel oil. Trafigura agreed to store fuel in Malta and had an agreement with Oil Tanking. “Power Plan was more of a service provider to Trafigura, rather than an agent.”

Frank Sammut told him to get Trafigura to speak to him. Tim Waters, a representative of Trafigura, met Frank Sammut in his MOBC office. At one point Sammut asked to speak to Waters alone. He did not know what was said in his absence. Later on during the same day, Waters revealed that Sammut had requested commissions in exchange for awarding Enemalta fuel contracts to Trafigura. In fact, the controversial Dutch company won the next tender. “Logistically they could have been more competitive by transporting larger quantities to Malta and selling to Enemalta. They wanted to store their product closer to Enemalta.”

In 1999 there was a port strike and since Enemalta could not get fuel in Mallia asked me to ask TOTAL if they were interested in selling their stock at Has-Saptan. TOTAL said they would consider it and call Mallia. “Mallia told me we would split the fees half and half.”

Mr Farrugia said he had told a number of his brothers what Mallia had told him, although he was not sure whom exactly he had spoken to. “Because this was a SPOT contract we established that Power Plan’s fee would be $1.50 per tonne.”Later on there was a tender, towards the end of 1999, also won by Total, and Mallia again wanted his share.

Mallia was later involved in an accident. George Farrugia went to visit him in hospital and Mallia told him to visit Tarcisio Mifsud, then Head of Finance at Enemalta. “When I saw Mifsud he said that I had to give him what I used to give Mallia.”

Mr Farrugia said some payments were issued by cheque from Power Plan accounts. There were two signatories on the cheques, his and one of his brothers.When he worked in Hamrun, most cheques were signed by Raymond and when he moved to the Qormi office the other signatory was either Saviour or Antoine.

At one point, an auditor told them that Power Plan could not keep making payments without an invoice. He asked his brothers if they should keep this up and they agreed that the solution was for George Farrugia to receive 20% of income from oil procurement deals. George Farrugia set up his own company, Aikon, and a Swiss bank account. "I admit I was not transparent enough with my brothers but thanks to this arrangement my brothers were getting paid," he said. One day, he said, he went to Geneva and paid $20,000 in cash to Tancred Tabone. “My brothers knew that commissions were being paid and they knew who was being paid. I admit I was not very transparent but they knew everything.”

Tarcisio Mifsud was nearing the end of his term. Tancred Tabone warned him not to give any money to Mifsud. On one occasion he went to pay Tarcisio Mifsud and two of his brothers, Salvu and Twanny, were in the same building.

Power Plan was a profitable company that used to cover for the losses of some of the other companies in the group. The brothers all held an equal number of shares. The accounts would be done every year and thecommissions would show up as “expenses.”

Later, Enemalta’s former Chief Projects Officer, Ray Ferris, asked him for cash and some silver items in exchange for awarding Enemalta’s Petroleum Division to Power Plan in a privatisation process. “I spoke to my brothers about this and we bought the silverware.” Mr Farrugia said the gifts were bought by Power Plan. Asked by Prosecuting Inspector Jonathan Ferris, Mr Farrugia said there were times when his brothers affected payments by Power Plan without his absence but these were not related to commissions. His brothers had never questioned the commission amounts.

Mr Farrugia said Tony Debono joined the group as a consultant later on. “Whenever we used to close a deal Mr Debono used to ask me for money on the pretext that he was experienced and had a lot of contacts and was helping the company.” Mr Farrugia said he used to tell his brother Salvu about Tony Debono’s requests for money. “A mutual friend told me later that Tony Debono wanted to destroy me for not giving him money behind my brothers’ backs.”He also claimed that Mr Debono repeated the threats to his lawyer, Siegfried Borg Cole.

Later on, with the help of Chris Farrugia, Twanny’s son, his computer’s hard disk was accessed while he (George Farrugia) was abroad in South Africa. The contents ended up being published in the media. He said Debono and Chris Farrugia spoke to him when he returned. They did not let him meet his brothers and he had to meet them secretly.

Asked by Magistrate Miriam Hayman, George Farrugia said he estimated that Aikon paid some $500,000 to Frank Sammut and Tancred Tabone, around LM40,000 from Power Plan to Alfred Mallia and Tarcisio Mifsud. There were also the amounts paid by MOBC, half of which were paid back. His brothers, he said, were not involved at all in Aikon Ltd. They did not know it existed.

Aikon was created so that the invoice problem, flagged by the auditor, could be bypassed. The payments that used to be made by Power Plan now started being made through Aikon but the brothers never questioned why no money was coming out of the former company. George Farrugia said he resigned from Power Plan in September 2010. He does not know if the company still operates.

Magistrate Miriam Hayman placed the brothers under bill of indictment.

Inspector Jonathan Ferris is prosecuting while Dr David Farrugia Sacco is defending the Farrugia brothers. The case continues 26 March.