Former Finance Ministry Permanent Secretary Alfred Camilleri told a parliamentary committee on Tuesday that the €360 million government guarantee to the Electrogas consortium was necessary to get the project off the ground while the government waited for approval from the European Commission for its security of supply agreement – which he said was effectively state aid.

Camilleri was testifying before the Public Accounts Committee on Tuesday, as it continued to hear witness testimony about the National Audit Office’s report into the Electrogas power station.

Camilleri was, up until last June, the longest serving Permanent Secretary in government.  He was appointed Permanent Secretary of the Finance Ministry in 2006 under the Nationalist administration, and was one of very few Permanent Secretaries to retain his position when Labour came to power in 2013.

He resigned in January 2022, having reached retirement age several years prior, days after Malta was removed from the Financial Action Task Force grey list.

Asked by PL Whip Andy Ellul whether his modus operandi from when he worked under the Nationalist administration to when he worked under the Labour administration changed, Camilleri replied in the negative.

During the sitting, Camilleri said that he had attended almost no meetings with regards to the Electrogas project and that his only involvement was in the guarantee which the government gave to the consortium.

The guarantee referred to is the government’s guarantee first on an €88 million bridge loan, and later on a major €360 million loan. A default on the consortium’s part could have left the government with a €430 million hole in its pocket.

No such default ever occurred, but Camilleri told the committee that he did have reservations on the guarantee.

“I think I went a little bit overboard. I’m not sorry and nobody told me not to do it, and we were doing it in the national interest, but my reservations were because we were giving a guarantee to a private company so if something happens and there aren’t the necessary safeguards, we would have been exposed,” he said.

Camilleri said irrespective of this, the government giving out guarantees is not at all unusual, and that Enemalta itself has a big history of receiving such guarantees.  He used the restructuring of Enemalta’s debt in 2012 as one such example.

What made this different, though, was that the guarantee was to a private company rather than a state company. Camilleri pointed out later in the sitting that legal changes have been made so that any similar guarantee now has to be discussed in Parliament before it is granted.

Camilleri explained to the committee that the guarantee was necessary because the security of supply agreement was effectively state aid and required approval from the European Commission.

The decision for the guarantee was taken because of the length of time it would take to get European Commission approval.  In fact it wasn’t before January 2017 that the European Commission gave the green light for the security of supply agreement – over two years after the initial request for approval was tabled.

“The government felt it was necessary,” Camilleri said of the guarantee. “I am not the one to pass political judgement – I am a technical person and I do not make these judgements. But without this, the project would have been stuck,” he said.

He said that Enemalta was not in a position to finance the new power station itself, and would have had to borrow money for it – something which was not prudent since the country was in an excessive deficit procedure at the time.

Instead, therefore, the government offered to be a guarantor, he said.  Asked by PAC chairman Darren Carabott whether any alternatives to the guarantee were discussed, Camilleri said he does not know but that no such alternative was discussed with him personally.

He told the committee that he had explained the potential risks and consequences to the government and had then taken action to ensure that if things come to a point where there was trouble, the government could step in and take over the power station itself.

Camilleri explained that he had also created a contingency fund, the aim of which was to ensure that there was enough money to cover for a default if it were to happen.

Furthermore, Camilleri also obliged the banks to report “even the smallest of things” which could indicate that something was amiss to the government. It was on only one occasion that one of the four banks did report something: which had prompted Camilleri to call a meeting – the email of him calling that meeting was leaked and reported by Matthew Caruana Galizia some years later.

The email in question was sent on 4 September 2017 and was of Camilleri calling a meeting in relation to a “serious and urgent matter.”

Caruana Galizia published the email in August 2020, stating that Bank of Valletta – one of the four banks in question – had told the government that Electrogas was bankrupt.

The email was sent little over a month before Matthew’s mother Daphne Caruana Galizia was assassinated in a car bomb.  Matthew Caruana Galizia said that had his mother published the Electrogas leak that she had been working on and “revealed that 17 Black is owned by the director of Electrogas, and that it had promised a bribe to the minister of energy” then the consortium would have collapsed.

The director of Electrogas mentioned is Yorgen Fenech, who today stands charged with masterminding the murder of Daphne Caruana Galizia.

Asked about this, however, Camilleri said that the context of the bank’s email was because the bank felt that Electrogas was not registering enough progress in reaching agreements for its permanent financing, and that there was no default on the guarantee. The guarantee was subsequently renewed with Cabinet’s approval and Electrogas eventually got the permanent financing it needed, Camilleri said.

Camilleri was also asked about other agreements, but said that none of them were under the Finance Ministry’s remit.

The first was the guarantee which Konrad Mizzi as Energy Minister signed with Azeri gas supplier SOCAR for the State to cover any debts left by Electrogas. 

This guarantee was only revealed by the media in September 2022, and Camilleri said that he got to know about it when it was published in the public domain.

He said that the Finance Ministry is not referred to in the granting of such guarantees as they do not fall under its remit.

Camilleri was also asked about an agreement for Enemalta to pay some €40 million in excise duty instead of Electrogas. 

Camilleri confirmed that while on paper Electrogas paid the excise duty itself, this was then reimbursed by Enemalta – effectively meaning that it was paid for with taxpayer’s money.

He said that the agreement was a commercial one and that what was important for the Finance Minister – then Edward Scicluna – was that the excise duty was paid, which it was.

Camilleri was asked about the work of the Financial Intelligence Analysis Unit (FIAU) – a line of questioning which he took some umbrage at.

He was asked whether Manfred Galdes’ resignation – which was in August 2016 – had anything to do with the power station, to which he replied that he did not know.

Camilleri was further asked whether the ministry had been contacted about a working document on the power station and Konrad Mizzi which concluded that there was suspicion of money laundering and which was passed onto the police by the FIAU.

“I don’t know. Nobody ever contacted me. I don’t know of anyone else.  You are wasting your time asking these questions to me.  You know the law… these things cannot be done.  Had it happened, someone would have incriminated themselves,” an annoyed Camilleri snapped back.

Concluding, Carabott asked whether different steps would have been taken if the Finance Ministry was consulted more in the project, but Camilleri replied that it is not the ministry’s remit to delve into how such projects are administered, “otherwise the Finance Ministry would be leading the whole government.”

“The moment you intervene in a commercial relationship, whether you like it or not, it becomes your responsibility,” he said.

The Public Accounts Committee will meet again on 29 August, where former Prime Minister Joseph Muscat is expected to be summoned back as a witness.