The Malta Independent 6 October 2022, Thursday
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Panama Papers 'a great setback', Louis Grech tells Caruana Galizia public inquiry

Friday, 11 September 2020, 09:38 Last update: about 3 years ago

The Panama Papers were 'a great setback' for the government when they came out, former Deputy Prime Minister Louis Grech testified on Wednesday as the public inquiry into the murder of journalist Daphne Caruana Galizia continued.

"Panama was definitely a setback. We had implemented so much of our manifesto and achieved civil rights. There was a lot of good. One should not be defined only by the bad aspects, but also by the good. Yes, it was a great setback. Konrad Mizzi and Keith Schembri created an enormous setback. I had spoken to Mizzi, who had told him that he had done something ethically wrong but not legally wrong", he said.

In the previous sitting former police commissioner, Lawrence Cutajar defended the police’s decision not to question the main suspects in 17 Black, citing that the police were still gathering evidence.

The public inquiry into the murder of journalist Daphne Caruana Galizia is tasked with, amongst other things, determining whether the State did all it could to prevent the murder from happening.

Caruana Galizia was murdered in a car bomb just outside her Bidnija home on 16 October 2017. Three men, George Degiorgio, Alfred Degiorgio and Vince Muscat, have been charged with carrying out the assassination, while Yorgen Fenech is charged with masterminding the murder.

Melvin Theuma, who acted as a middleman between Fenech and the three killers, was granted a presidential pardon last year to tell all.

The inquiry is led by retired judge Michael Mallia, and includes former chief justice Joseph Said Pullicino and Judge Abigail Lofaro.

Please refresh for updates from our live commentary below:

12:09 The next sitting is on Wednesday 16 September at 9:30am and Chris Fearne is expected to testify.

12:09 Grech steps off the stand and shakes hands with Azzopardi.

12:08 CCCC had drawn up a feasibility report on the construction of a bridge connecting Malta and Gozo. The study was financed by the Chinese. Eventually, government dropped the plan and stuck to the previous administration's idea of a tunnel link between both islands.

12:07 Grech: "Il-ħmar iwaħħal f'denbu. It was not possible to find out."

12:07 Azzopardi asks another question about CCCC. "A simple google search would have shown it is blacklisted at the time. Who was responsible for this check in the public service?"

12:06 Grech says there were sometimes reports in the papers and he raised the issues in Cabinet. "But if reports which aren't true about me are published it is not easy to keep that thread. Still there were things you could question in cabinet. Checks and balances between the institutions require true discipline. If there are deficiencies in the system they must be properly addressed, not given lip service or have money thrown at them," he says.

12:02 Grech: "My ministry never gave out tenders or direct orders to the company."

12:01 Azzopardi asks him how the government he formed part of kept on giving direct orders to Nexia BT that remained chummy with government entities, despite reports of bribery.

11:58 He is asked about an MOU with Chinese company CCCC (China Communications Construction Company) on a bridge project. Grech says a due diligence found the company was blacklisted and the project stopped.

11:56 Grech: "I had asked about it."

11:55 Azzopardi continues. "Sai Mizzi was later appointed Consul in Shanghai. In this same period, we had Brian Tonna set up a secret company for Cheng Chen in BVI. Whilst you were deputy PM, what did you do on these facts?"

11:54 Azzopardi says that the forensic accountant in the Egrant inquiry had found correspondence that Machin was to promote investment between Malta and China. This involved Sai Mizzi, Konrad Mizzi's wife, and should have been incorporated in the British Virgin Islands. Azzopardi asks if Grech was involved or informed of this. "No," he replies.

11:50 Grech: "No, aside from media reports."

11:50 Azzopardi points out that Konrad Mizzi's father was Grech's PA when he was CEO of Air Malta. He then asks about a One News report from July 2014 that reported how Grech had negotiated a deal between Malta and China. Had he ever heard of MacFinn or MacBridge?

11:48 Grech: "No."

11:48 Azzopardi: "Did you ever face Joseph Muscat and tell him 'why are you holding on to Keith Schembri and Konrad Mizzi for which we are facing so much flak'? He removed Anglu Farrugia over a Xarabank appearance and these people who caused a cataclysm in Malta were retained."

11:43 Grech: "I was indisposed."

11:43 Azzopardi asks about the parliamentary no confidence vote in Konrad Mizzi in 2016. "You had not attended the 2016 vote of no confidence in Mizzi, was there a reason?"

11:42 When asked what the reason did Muscat give on the decision to call a general election in June 2017, Grech says that the prime minister told him that the reason was economic because of the protests that were taking place and increasing economic instability.

11:40 Questioning moves onto the day Caruana Galizia was murdered. "It was something like a darkness fell over the country. There was sadness... there were so many emotions, not just shock. The murder of Daphne was something unacceptable. Aside from its obscenity, it made no political sense," Grech says.

11:38 Grech: "With me, definitely not. If I had an idea, I would have acted differently. I assumed that there were so many professionals involved in scrutinising the deal - lawyers, civil servants etc..."

11:32 Azzopardi quotes from a Daphne Caruana Galizia blog post quoting a Times of Malta article about a specialised storage ship and Yorgen Fenech's connection. "Did you notice that Yorgen Fenech had a done deal with at least some people in the administration?"

11:25 Azzopardi asks about an agreement signed by Muscat in China. Muscat was accompanied by a delegation. Grech says was not involved, but Azzopardi asks whether this agreement with a state had overtures into the energy market. He replies in the negative.

11:23 Grech says that Muscat had called him while he was in Brussels to inform him that he wanted him to be involved in the electoral campaign.

11:23 Azzopardi asks if Joseph Muscat, at the time when he was Opposition leader, had informed Grech why he had asked Anglu Farrugia to resign. Farrugia was deputy leader of the Labour Party. Grech eventually took his place when Farrugia resigned.

11:19 Lawyer Jason Azzopardi, appearing for the Caruana Galizia family, begins his cross-examination.

11:18 Grech is asked about Vitals and the hospitals concession. He says that he was not involved in its process. Grech says it went up to Cabinet but the details were handled by the ministry.

11:18 Welcome back. We are back in session.

11:03 The board takes a five-minute break.

11:02 Grech: "It could be that there were many opinions on this but finally the decision is that of the PM... I was in Brussels at the time."

11:02 Judge Lofaro asks Grech about Konard Mizzi being retained as a minister without portfolio in the OPM but still having projects under his wing. "Was this not a concern to you?"

11:00 Grech repeats that his ministry was not involved in this issue.

11:00 Grech says that the Montenegro wind farm deal that Enemalta entered into was not discussed at Cabinet level as it was a matter that concerned the company.

10:59 Asked whether he had ever met Cheng Chen from Shanghai Electric Power, Grech says that he had made the memorandum of understanding with the Chinese government during a visit to China. The MOU covered sports, business and other things in general. Grech says he might have met him at this juncture.

10:43 Grech says he doesn't know Brian Tonna from Nexia BT, never met him and didn't know what he did for government. He adds that Tonna had been a director of one of his children's catering company, but he had never asked him about the Panama allegations.

10:42 Grech says Panama was discussed in the parliamentary group. At the time, there were no references to 17 Black and Macbridge, he explains. "I don't think even Egrant had emerged at the time. There were some who gave their position during this meeting," he says.

10:39 Grech: "Panama was definitely a setback. We had implemented so much of our manifesto and achieved civil rights. There was a lot of good. One should not be defined only by the bad aspects, but also by the good. Yes, it was a great setback. Konrad Mizzi and Keith Schembri created an enormous setback. I had spoken to Mizzi, who had told him that he had done something ethically wrong but not legally wrong."

10:37 Said Pullicino says that Panama Papers was an earthquake around the world. Had decisions been taken at the time things would not have gone so bad, he adds.

10:30 Grech: "The situation was unacceptable. My position was clear at the time. I spoke in Parliament... saying that action had to be taken."

10:30 Mallia says that the witness was deputy PM at the time of Panama Papers. What was his reaction?

10:30 Grech repeats that if a businessperson or persons could have influenced the government, there must be accountability.

10:26 Grech says he is presently still an advisor, on the electoral manifesto, a special envoy to the EU, coordinator for social funds and forms part of the budget task force. He helps with macro-economic policies on housing and minimum wage.

10:25 Grech: "I wasn't a minister at the time. I was an advisor and not on that subject. Had cabinet asked my opinion I would say that you must be careful with these things."

10:25 Judge Abigail Lofaro asks him whether it rang alarm bells that the company needed this guarantee. Michael Mallia adds that the company was bankrupt in 2017.

10:24 Grech is asked whether he knew Yorgen Fenech. "If I recall correctly I met him once, with a UK investor on a Valletta project... it was after the whole process that I found out that he was an Electrogas shareholder," Grech replies.

10:24 Grech says that in and of itself, "the guarantee, if everything is above board, is nothing bad". "If it emerged that there was an abuse in the guarantee, one must answer for his actions, but I don't wish to comment on this," he adds.

10:21 Grech is asked on the government guarantee for the Electrogas project. He says that he had personally voiced concerns. "Whilst it may be more common abroad... nobody drew a red line. The guarantee was to stand until the EU approved the scheme. There were concerns, but no red lines," he insists.

10:20 Grech says he had gone to the fourth floor of the PL HQ twice. His office was on the third floor. "I never met businessmen before or after the campaign," he says. The fourth floor is a reference to alleged meetings the PL leadership used to have with business people before the 2013 election. It was former deputy leader Anglu Farrugia who spoke about the fourth floor when he was asked to step down from deputy leader.

10:18 Grech says it was Konrad Mizzi who had given the presentation about the project and its advantages.

10:11 Grech: "Aside from what was mentioned in cabinet, absolutely nothing. I wasn't involved in the choice, nor the evaluation, discussions with the consortium or representatives. My role was only to discuss it in cabinet. I had no involvement in anything to do with Electrogas."

10:11 Retired judge Michael Mallia, who is heading the inquiry board, asks about the gas power station project and what was Grech's input in the affair.

10:10 Grech: "The devil is in the detail. The ministry should have an inbuilt oversight. This is something that needs work. When something is implemented by a ministry, then the minister is responsible."

10:06 Judge Abigail Lofaro interjects: "Too much power concentrated in one person."

10:06 Grech: "There are many grey areas. If you ask me whether he [Keith Schembri] was powerful because he was a businessman, no, but he was powerful because he was chief of staff... Every businessman would push his own agenda, but there must be a red line as in everything."

10:05 Said Pullicino asks about the effect of business-friendly policies which could have gotten out of hand.

10:01 Grech describes Keith Schembri as a "powerful personality" but not to an extent that troubled him. "I didn't go through him to get to the prime minister. I had my remit as minister and there was a time when I didn't get along with Keith Schembri," he says.

Louis Grech addressing a mass meeting in 2017

09:59 Grech: "If you noticed the kitchen cabinet and did nothing, you must answer for it... There might have been operations by individuals who were using government, I think for specific things and exceeding the limits."

09:58 On business influence he says there is a line that must not be crossed and if it is, there must be consequences.

09:57 Grech: "At the time there didn't appear to be officially two forces. In my case, there was nothing of the sort. But if Minister Scicluna is correct, whoever did wrong must pay."

09:57 The term kitchen cabinet was used by senior ministers Evarist Bartolo and Edward Scicluna while testifying in the inquiry earlier this summer.

09:56 Grech: "It does not appear at any time that there was a kitchen cabinet. There was a cabinet of ministers. Now, if it has emerged that there was... it could be the person is judging the past by today's standards. In terms of remit, a kitchen cabinet would be expected to dominate cabinet meetings, but I never saw this."

09:51 Said Pullicino asks him about the now infamous kitchen cabinet and the conflict with ministers.

09:50 Grech says he knew Keith Schembri after the 2013 election, in reply to a specific question.

09:49 Grech: “In general... principal decisions of certain importance were taken by Cabinet. Then we would go to the ministers. Once Cabinet had decided it becomes a collective responsibility.”

09:48 Said Pullicino asks him about the administration. “From what we've heard to date, we haven't heard of a particular system,” he says, asking the witness for more information. “It is normal that no one knows everything, but that nobody knows anything is not normal,” Said Pullicino adds.

09:47 Grech tells the board that after the 2013 election he was in charge of implementing the electoral manifesto, the EU presidency and was leader of the House. He had Ian Borg as parliamentary secretary under his wing.

09:46 Grech had entered politics after leaving Air Malta in 2004 when he contested the European Parliament election and got elected for the Labour Party. He joined domestic politics in 2013, when he became Labour deputy leader instead of Anġlu Farrugia. In the 2013 general election, he was elected to parliament and was appointed deputy prime minister.

09:42 The board asks him for an overview of his political life.

09:41 Louis Grech enters the courtroom and takes the witness stand. Grech was deputy prime minister during the Labour Party’s first legislature between 2013 and 2017.

09:40 The board, after seeing a note by the Caruana Galizia family from 21 August, orders that Tax Commissioner Marvin Gaerty to request an exemption from the Prime Minister to allow him to testify about a number of individuals.

09:39 The judges have entered and the sitting begins. 

09:31 Former deputy prime minister Louis Grech is expected to testify today. 

09:30 The public inquiry is slated to start at 9:30am. 



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