The Malta Independent 24 October 2020, Saturday

Yorgen Fenech received €2.5 million fee from power station investors for work on Electrogas - report

Friday, 16 October 2020, 10:46 Last update: about 7 days ago

Electrogas power station investors Mark Gasan and Paul Apap Bologna signed off on a side deal to pay Yorgen Fenech €2.5 million in fees for “sourcing and organising contractors” and “interfacing with authorities” on the Electrogas project, the Times of Malta and the Daphne Project reported on Friday.

In an article released on the three-year anniversary of the assassination of Daphne Caruana Galizia, who was the first to lift the lid on alleged corruption within the Electrogas power station.  Yorgen Fenech currently stands accused of masterminding the murder.

ADVERTISEMENT

They reported that other documents leaked to journalist Daphne Caruana Galizia before her assassination reveal how the Electrogas shareholders were paid over €16 million in such success and development fees using funds from a government-guaranteed loan given to Electrogas. 

A total of €12.5 million in success fees was paid out to Electrogas shareholders GEM Holdings, Socar Trading and Siemens by Electrogas, in 2015, before construction on the power station had started, the report continues.

GEM Holdings and former shareholder Gasol reportedly received another €4 million in “development fees” in 2014 paid out from the Electrogas loan.

A projects services agreement contract signed between Mark Gasan, Paul Apap Bologna and Yorgen Fenech in June 2014 states that GEM would pay Fenech’s company New Energy Supply (which also holds shares in GEM) a total of €2.5 million in "development fees".

According to the agreement, GEM and New Energy Supply first started working on developing the power station project in 2007, but the PN government “did not proceed with the project at that time”.

The Malta Business Registry shows, however, that New Energy Supply was incorporated seven years later, in May 2014.

According to the project services agreement, GEM restarted the project in January 2013 and formed a consortium with Socar Trading, Gasol and Siemens.

The report continues that Electrogas records show that invoices for the success fees were sent to Electrogas by GEM, Socar Trading and Siemens in June and July 2015. Each of the consortium members was paid €4.17 million in such fees.

In one e-mail dated July 2015, Fenech told the other Electrogas directors and a senior Electrogas employee that the €12.5 in success fees should be referred to as a “development fee”.

“[Name withheld] it is important to refer to it that way even in electrogas records,” Fenech wrote.

The timing of the success fee payments coincides with former OPM chief of staff Keith Schembri and former Energy Minister Konrad Mizzi’s attempts to open accounts for their once-secret Panama companies. 

A December 2015 e-mail authored by Nexia BT indicated that the company 17 Black, owned by Fenech, would pay up to $2 million into Schembri’s and Mizzi’s offshore structures.

Schembri and Mizzi deny ever planning to receive any kickbacks from the project.

Contacted by Times of Malta, a spokesman for GEM said Fenech's New Energy Supply had only invoiced for €1 million of the €2.5 million in fees due to it.

The spokesman denied that the fees payable to Fenech were destined for Schembri and Mizzi when questioned by Times of Malta.

Fenech's legal team denied any allegations of wrongdoing when contacted by Times of Malta.

An Electrogas spokesman meanwhile told Times of Malta that the consortium members agreed between them prior to submitting the bid in 2013 that Electrogas would pay development and success fees for services relating to the formation and organisation of the consortium, preparation of the bid and in consideration for their efforts during the development phase.

“This is standard practice under large-scale power projects such as the Electrogas project and the agreements specified that such fees would only become payable if the consortium was successful in being awarded the project,” the spokesman said.

The Electrogas spokesman said the fees, totalling €16 million, were approved by the banks that lent Electrogas the money.

The spokesman declined to comment on the “internal agreement” between GEM and NES that promised Fenech €2.5million for the project development.

The spokesman reiterated that it had engaged a reputable international law firm to conduct extensive legal and forensic audit reviews, and no evidence of any wrongdoing was found during the bidding stage, construction of the power plant and the operation activities of Electrogas.

  • don't miss