The public inquiry into the murder of journalist Daphne Caruana Galizia continued on Friday with the testimony of businessmen Joe and Mark Gasan.
The Gasans are partners in the Maltese company that forms part of the Electrogas consortium that operates a gas power station at Delimara.
In the previous sitting on Monday, Electrogas shareholder Paul Apap Bologna continued his testimony.
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.
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12:58 That's it for today. Thank you for following.
12:58 The next sitting on Monday will be held behind closed doors and then on Wednesday Assistant Commissioner Alexandra Mamo is expected to testify at 9:30am.
12:57 There are no further questions and Joe Gasan leaves the courtroom.
12:57 Joe Gasan: "I remember there was concern about the financial situation of Gasol and that's why I asked for a guarantee from SOCAR."
12:56 He is asked whether the Gasan Group independently verified the financial standing of Gasol.
12:55 Joe Gasan: "Bangladesh?"
12:54 Comodini Cachia asks if he knew that Fenech was using Electrogas's projections to carry out an identical project in Bangladesh.
12:54 Joe Gasan says he hadn't enquired why Musayev had resigned from Electrogas.
12:53 He says that he was not aware of Keith Schembri's involvement and did not know about Turab Musayev and the connection with Yorgen Fenech in the Montenegro windfarm project.
12:52 Gasan replies it was a concern to them.
12:51 Comodini Cachia asks if the board was not concerned about the NAO report because it had government's word that the project would come to fruition.
12:50 Joe Gasan: "No."
12:50 Comodini Cachia: "A detailed forensic audit was carried out by UK lawyers in 2020. What had you done in the intervening years? For example, the Auditor highlights the role of Nexia BT in the tendering process? But isn't Nexia the auditor of GEM? Didn't you ask them to remove Nexia and replace them? Didn't you feel the need to do that?"
12:49 Gasan: "We have said that we have not."
12:48 "One example: it is very unclear as to whether you had spoken to the government before the 2013 election," he is told.
12:46 Gasan: "You have to be specific on what area..."
12:46 He is asked what action was taken to address the areas of concern highlighted by the Auditor General's report.
12:45 Joe Gasan: "I'm not sure of the amount but on behalf of GEM, there will be a success fee and he would get half of it."
12:44 He is asked when he became aware of GEM owing €2.5 million to Yorgen Fenech as service fees.
12:41 Joe Gasan says he hadn't read it but had seen a synopsis.
12:41 He is asked for his reaction to the NAO report.
12:40 Joe Gasan says that the board then agreed to appoint another director from each class of shares - three more. The board meetings had a quorum then. "There have been so many attacks... we had done so many good things, employed so many people and now we are being accused of being involved in the horrible murder of Daphne Caruana Galizia. We don't believe it is the case. Then we read in the compilation of evidence that Inspector Zahra said that the main reason for the murder was Electrogas. Then there were the personal attacks. We don't know if there was an involvement but if there was we don't want a part of it so we are looking to exit the consortium and have been doing so for some time. We will not profit from this deal."
12:31 The Irish ambassador has just walked into the courtroom.
12:30 Joe Gasan says this led to a problem on the GEM board. "We insisted that he should make a public statement. I remember him saying that he was not too sure if it was worth pursuing the legal action," he says.
12:24 Joe Gasan: "Fenech had denied it to me in person. When he returned from London he stopped attending board meetings and was unavailable for a long time."
12:24 Judge Lofaro: "Paul Apap Bologna gave us a different version. Before going to England, the board had asked Yorgen Fenech whether he owned 17 Black and Fenech hadn't replied."
12:23 Joe Gasan: "When the things about 17 Black came out. We then checked Electrogas for payments. Yorgen Fenech denied that 17 Black was his. When it came out that Yorgen Fenech had owned 17 Black, his uncle, Ray Fenech was very upset. Yorgen Fenech wrote an email to all Electrogas directors denying it all. When we met as GEM, he denied it to the extent that he went to England with Ray to speak to a very expensive legal firm to talk about suing."
12:21 Comodini Cachia asks when he had started doubting it.
12:20 Joe Gasan: "We jointly had purchased a substantial piece of land in Marsaskala, and also with George, we had just bought the 10,000sq.m of land near the Gasan Centre in Mrieħel. I knew Yorgen Fenech as a bright young boy, business savvy. My children were at school with him and they said he was good at business. I had no reason to doubt it."
12:19 He is asked about the relationship with George Fenech of the Tumas Group.
12:18 Gasan adds that both Konrad Mizzi and Joseph Muscat attended the wedding, asking the relevance of the question.
12:16 Joe Gasan: "I think so."
12:16 Comodini Cachia: "Was Muscat invited to Mark Gasan's wedding in 2011?"
12:16 Joe Gasan: "No. I don't think so."
12:15 Comodini Cachia: "Am I right in saying that Joseph Muscat and [your son] Mark Gasan were friends? Did they socialise together?"
12:14 Joe Gasan says the original gas power project was reactivated when the Labour Party made it clear that gas was part of its strategy if elected to government. "After the election... George [Fenech] asked if we were interested and we took it to a board meeting to agree in principle if our investment is restricted to €5 million and we will not have an executive role."
12:12 Gasan says that the problem was that there weren't sufficient suppliers of gas turbine providers in the market. "I know they met three companies - Siemens and two others - and only Siemens could do it on time," he says.
12:07 Joe Gasan: "It was a big project and involved a lot of work. We didn't do it alone... we had to put together the consortium and explain why the companies could do the project. We had six weeks to ask Siemens whether they were interested... then another four months for the technical details to be concluded."
12:04 He is being asked about the timeline of the project.
12:04 Joe Gasan: "Yes, there were meetings about the MIDI project, more than one, but never for Electrogas... Absolutely not."
12:03 Comodini Cachia asks whether they would discuss projects or proposals.
12:02 Joe Gasan: "No... I deny that I met Joseph Muscat with Karmenu Vella at Portomaso. As PM, I always met him at the OPM. The only time I met him on my own was in 2018 when I went to the 90th anniversary of when my father took the Ford Franchise. I had invited him to attend and he had attended."
12:00 Comodini Cachia: "Was there a meeting with the then Opposition at all? Karmenu Vella? The spokesperson for energy?"
12:00 Joe Gasan: "Yes... I met him on the plane once when I was going to London. He had just become leader of the Opposition. We did not discuss politics or business."
11:59 Comodini Cachia asks Joe Gasan whether he met Joseph Muscat.
11:58 Joe Gasan: "We never discussed the project with officials of the Labour Party before the election. Absolutely not."
11:58 He says that they had spoken to General Electric, who were interested and said they could deliver in five years. "At the last minute, Siemens came in and said 'yes we can do it'," he says.
11:56 He says they discussed the idea with Paul Apap Bologna and Yorgen Fenech. Joe Gasan adds: "It was very interesting to me and Yorgen Fenech, I knew as an intelligent guy. John Zarb of PWC was very involved in the project, carrying out the feasibility study. Yorgen Fenech had suggested him and I had accepted since I knew him. I remember the biggest problem at the time was to find the right company to build the turbines and boilers."
11:54 In February 2013, Joe Gasan says that he was discussing a separate project with George Fenech, Mark Gasan and possibly even Yorgen Fenech. A month earlier, at the start of the electoral campaign the Labour Party unveiled its plans for an LNG terminal and gas power station. Joe Gasan says that when the Labour government won the election, and issued the request for proposals for an LNG terminal and power station, George Fenech spoke to him again.
11:50 Paul Apap Bologna and Joe Gasan had gone to Enemalta as part of a delegation which included foreign investors. However, the bid was unsuccessful.
11:49 Joe Gasan: "As Gasan Group, going back to 1968 we were always interested in big tenders, especially power stations. In 2008, Paul Apap Bologna, who is married to my niece, spoke to me as he knew I was interested in the work and said that he had contacts on LNG through some school friend."
11:47 Comodini Cachia asks how his involvement in the Electrogas deal started.
11:46 Joe Gasan is next. He is administered the oath.
11:46 He steps off the witness stand.
11:45 Mark Gasan: "Yes. Definitely."
11:45 Comodini Cachia jibes: "It seems like there were a lot of holes."
11:44 Mark Gasan: "I need to check. But if there was a hole, the shareholders would need to provide the equity."
11:43 Comodini Cachia asks what was the financial hole the company needed to be dug out from and the emergency funding for.
11:43 Mark Gasan says that the shareholders' loan was added over time. "Whenever it was required the shareholders put money in," he says.
11:41 The witness says he doesn't know what hole she was referring to. "I can't recall what issue this is. I recall there was a garnishee order in 2017 but not the year before."
11:38 Comodini Cachia says that on the same day but 90 minutes before that email, another email from Yorgen Fenech to Durfler and others read: 'Frans please send to the following individuals: Frederick Azzopardi, Keith Schembri [and others]...'
11:37 Mark Gasan: "Yes."
11:36 Comodini Cachia: "Is it the first time you're hearing that Keith Schembri was involved in Electrogas?"
11:36 She asks Mark Gasan whether he was aware that Keith Schembri was participating in meetings on Electrogas and where directors were present. "No," he replies.
11:35 Mark Gasan is back on the witness stand. Therese Comodini Cachia asks him about two emails. She shows them to him. One is dated 28 October 2017 and was sent at 7:12pm from Frans Durfler COO of Electrogas to Frederick Azzopardi, Keith Schembri and other Electrogas officials. It reads: 'Following your meeting with one of our directors (Yorgen Fenech)... lenders have made it clear that the project is not bankable on a project finance basis.'
11:31 Mark Gasan has arrived. The inquiry board will take Joe Gasan's particulars and then Mark Gasan will continue testifying.
11:29 They have changed plans. Now Joe Gasan will take the stand.
11:27 The board want to recall Mark Gasan back to the stand for another question.
11:21 The judges return
11:16 An intelligible conversation ensues. Mark Gasan steps off the stand and this is being sanitised. A short break is announced.
11:14 Comodini Cachia now asks about the agreement on the rate of interest charged to Electrogas. She points out that Enemalta charged the company interest at 2% and GEM was charging 6%. She asks the witness whether he is aware that in reply to his proposal of 6%, the reply was that this amount was 'still high'.
11:12 Judge Lofaro interjects: "Then you're not excluding it because that's what I don't recall means in the English language."
11:12 Gasan: "I don't recall it."
11:11 Comodini Cachia: "Could it have been a lunch or a coffee morning or another venue instead?"
11:11 Gasan: "I don't remember this dinner at Portomaso."
11:11 Comodini Cachia: "Did you ever meet Yorgan Fenech and Joseph Muscat for a dinner in Portomaso before 2013?"
11:10 Gasan: "No."
11:09 Comodini Cachia: "Do you know Constantine Obermayer?"
11:09 Mark Gasan: "Yes."
11:09 Comodini Cachia: "Would you be surprised that Electorgas chose a particular security service because government proposed it?"
11:08 Mark Gasan says he is surprised by this.
11:08 Comodini Cachia names staffers who worked with Konrad Mizzi - Ronald Mizzi, Lindsay Gambin and Alex Cutajar as advising Electrogas on whether or not to give interviews and how to respond to the media. She says that CVs of Electrogas job applicants were shared with Konrad Mizzi and Ronald Mizzi.
11:06 Lofaro: "You're not in your dotage, you're young. You should remember."
11:06 Mark Gasan: "Those emails are what they are..."
11:06 Comodini Cachia says her question is about how intrusive the government was in the operations of Electrogas and whether there was collusion between the Office of the Prime Minister and Konrad Mizzi's office in instructing the shareholders how to deal with the media
11:03 He doesn't recall the email.
11:03 Judge Lofaro: "Didn't you take an interest in these things? You invested all these millions... How could you not remember questions from The Guardian?"
11:03 Mark Gasan: “I wasn't copied in the email.”
11:02 Comodini Cachia: “Were you aware that the government was actually instructing Electrogas on how to address journalists?”
11:02 Comodini Cachia asks the witness about questions sent by British newspaper The Guardian in April 2018. But Gasan says he cannot recall the incident.
11:01 Gasan: “No.”
11:00 Comodini Cachia reads more emails mentioning the minister: ‘Frederick has to be instructed by KM first.’ She asks him whether he was aware of this relationship with the minister.
10:59 Mark Gasan: “Yes.”
10:59 Chief justice emeritus Joseph Said Pullicino: “In your mind at that moment you had the perception that going to the minister would resolve the matter more quickly.”
10:58 Gasan says he is aware of the email. “I was made aware that there were these issues... [in the email] I'm suggesting that these issues need to be escalated. It's a suggestion.”
10:57 Comodini Cachia asks him whether he is aware of an email he had sent on 25 January 2017, in which he referred to pending issues with Enemalta. She reads from the email: ‘Do we skip Enemalta and go straight to the minister. I suggest this should be the first topic on Monday.’
10:56 Mark Gasan says the first time he met Konrad Mizzi was when the power station was actually inaugurated.
10:55 Mark Gasan: “My understanding is that the project was a complicated one. After Electrogas was awarded the bid, it wasn’t like a normal contract when you sign it and get on with it. A lot of points needed to be negotiated and agreed upon in the process, and my understanding is that the minister would get involved. Personally, I never attended those meetings but that’s what I understand.”
10:54 Comodini Cachia: “Were you aware of how Electrogas dealt with different government agencies? For example, what was its relationship with Konrad Mizzi?”
10:54 Asked about Konrad Mizzi’s involvement, Gasan replies: “The project was a complex one.” Asked whether it was reliant on Konrad Mizzi, Gasan reiterates that he was not involved in the negotiations.
10:53 Mark Gasan then launches into another lengthy explanation to a simple yes or no question.
10:52 Lofaro does not appear convinced, saying “yes, of course,” sarcastically. “He has not answered you,” says Lofaro to Comodini Cachia.
10:51 Mark Gasan: “Your honour the CFO was telling me that it is not payable by Electrogas. I based my email on what I heard from the CFO, which said Electrogas’s position was that Enemalta should shoulder these costs. I was not made aware of the issue [raised by Comodini Cachia].”
10:49 Comodini Cachia: “Are you aware that you were initially advised that your financial model as given to the government included the payment of excise duty by yourselves and not by the government?”
10:49 Mark Gasan: “If it was payable to Enemalta, then obviously yes.”
10:48 Comodini Cachia: “You're telling me that if you had paid the excise duty it would have turned negative.”
10:48 He is asked about an email he sent when Electrogas shareholders were discussing the excise tax issue. “My email concerned what I was hearing from the CFO that Electorgas shouldn't pay the excise tax. All I was saying was that it needs to be resolved.”
10:47 Mark Gasan says that in the end, the shareholders put up all their equity €100 million, as a shareholders’ loan to Electrogas and that carries interest. He objects to it being called an ‘accounting exercise’.
10:44 Mark Gasan: “No, but the interest has not been paid yet.”
10:44 Comodini Cachia: “Are they interest free loans?”
10:43 Mark Gasan: “Yes.”
10:43 Comodini Cachia: “Are there shareholders loans provided by GEM to Electrogas?”
10:42 Mark Gasan: “In reality yes.”
10:41 Comodini Cachia: “What you're telling me is that you accepted to waive your success fees and this was simply an accounting exercise?”
10:40 Mark Gasan: “No... it’s a cost. The 2014 agreement was drafted by GVZH.”
10:39 Comodini Cachia: “Is there an agreement on how GEM will be refunded?”
10:39 Mark Gasan: “Yes.”
10:38 It is pointed out that the question is about 2016 not today. Comodini Cachia: “Are you saying that GEM paid the charges instead of Electrogas?”
10:37 “Today the issue of overcompensation of shareholders is not there,” Mark Gasan says. “In reality, the situation of State aid, due to cost overruns, the shareholders are not overcompensated. The IAR today is much less.”
10:35 He is asked about his involvement when e-Cubed Consultants were brought in. An email asking about an agreement is read out. The development and success fees had gone up to €18 million. Was he aware that it could jeopardise the agreement under State aid rules?
10:34 He finally says he would be copied when he started getting more involved.
10:34 Mark Gasan: “Am I copied?”
10:33 Lofaro: “Were you copied or not?”
10:33 Mark Gasan: “What do you mean? I started to get involved in late 2015.”
10:31 Comodini Cachia: “In 2016, if an email is sent to the board would you have received a copy of the email?”
10:26 Mark Gasan says that a year and a half later when Electrogas could not get to financial close... the issue was how to get the project off the ground. “My understanding is that the government guarantee came into it and this amounted to €12 million,” he says.
10:25 Mark Gasan: “I was informed recently, there was a review done by external consultants and they had a high-level presentation to the shareholders. They advised that in their opinion the €1.5 million was to be paid directly to New Energy Supply. The forensic audit showed that GEM paid €1 million and Gasol paid €1.5 million to NES.”
10:24 Comodini Cachia: “Do you know if New Energy Supply (NES) charged Gasol separately?”
10:22 Mark Gasan: “Gasol never paid €1.5 million, despite receiving the €2 million from Electrogas. My understanding is that it was encountering financial difficulties.”
10:21 Comodini Cachia: “The €1.5 million Gasol-GEM transaction, was it part of the amount charged as a development fee?”
10:21 Mark Gasan says that in reality GEM only received €2 million from Electrogas.
10:20 Comodini Cachia: “So, in this agreement you’re undertaking to pay €2.5 million to Yorgen Fenech for taking the lead and performing the services you were meant to perform for Electrogas.”
10:19 Mark Gasan: “The agreement among GEM shareholders from day one was that Yorgen would look after these tasks.”
10:18 Comodini Cachia tries to tease out the structure of the agreement from the witness who is bombarding the board with figures.
10:17 Mark Gasan: “Gasol owed €1.5 million and Electrogas €2million.”
10:13 Comodini Cachia: “Back in June 2014, I understand that GEM was due money by Gasol and Electrogas.”
10:12 Mark Gasan protests that it is a complicated agreement.
10:12 Lofaro: “Was the European Commission made aware of the success fees? Am I right in saying that Oxera and the government were not made aware of the success fees? You can go around in circles all you like but in the end you have to answer.”
10:11 Mark Gasan: “No...”
10:10 Mark Gasan proceeds to give a breakdown of the payments instead of answering. The board insists he answers the question.
10:09 Mallia: “Was the government aware that you were being paid success fees?”
10:08 Mark Gasan: “€6.5 million were reinvested. One year later these were increased to €12 million. The lenders of Electrogas weren't going to loan the money until the State aid was cleared. The €12 million was to cover the bank charges and other costs. There was a formula and each shareholder had to pay €3.6 million plus bank charges. €11 million was physically paid to government for the guarantee.”
10:05 Mallia: “Was Oxera aware of the success fees?”
10:03 Retired judge Michael Mallia, who heads the inquiry board, asks who computed the sum. “John Zarb from PWC,” replies the witness. He adds that government appointed Oxera to help consult about State aid issues.
10:02 Madam Justice Abigail Lofaro says this account differs greatly from what the board had been told before. When asked for a list of the tasks, Gasan points to the agreement, saying there were many. He says the two agreements were also part of the financial package agreed upon... in 2014. He adds that leading up to the bridge loan, all these tasks were completed.
10:00 Mark Gasan says he was not party to the negotiations of the agreement, which had an “exhaustive list of tasks”. He specifies that there are two different agreements. One was a success agreement payable to all shareholders upon the successful completion of the project and another one for €6.5 million.
09:52 Comodini Cachia says that the fee clause in the Electrogas agreement does not refer to what he is saying. Mark Gasan says it does. He finds the clause.
09:50 Comodini Cachia points out that when she had asked how much money GEM was expecting from Electrogas the inquiry was told €2 million. She asks why GEM had then agreed to pay €2.5 million to Yorgen Fenech’s New Energy.
09:49 Mark Gasan: “No, the agreement is that GEM would pay €2.5 million.”
09:49 She points out that the agreement indicates that the amount is €2.5 million.
09:48 Comodini Cachia asks how much GEM was going to get from the Electrogas deal.
09:47 He is asked about the agreement the Maltese partners had with Yorgen Fenech’s New Energy Supply Ltd and the fees that were paid out. Mark Gasan says the agreement was with GEM Ltd (the name of the company formed by all the Maltese partners – the Gasans, Tumas Fenech and Paul Apap Bologna.
09:44 Mark Gasan: “I believe it was from 2017… 2018 or 2019, probably.”
09:43 Lawyer Therese Comodini Cachia asks him about the time he had talked about when Yorgen Fenech was not particularly present at Electorgas. Could he indicate the time frame?
09:42 The judges have entered the courtroom and the sitting begins. Mark Gasan is called in and takes the stand. He is administered the oath by the judges.
09:41 Good morning.