Former Prime Minister Joseph Muscat told Parliament’s Public Accounts Committee on Tuesday that the public inquiry board which had looked into the death of Daphne Caruana Galizia was “factually incorrect” in how it portrayed the involvement of the Finance Ministry in the Electrogas power station deal.

The inquiry board, which was made up of three former or sitting members of the judiciary, had criticised what it described as the total lack of involvement of the Finance Minister Edward Scicluna and his ministry in agreements struck relating to the Electrogas project.

“The public inquiry did not understand the remit of the ministry and the extent of its involvement. Numerous Cabinet documents will attest to its involvement, sometimes with other lead ministries. Here the judges are saying it was never involved. Many Cabinet documents will disprove this claim. If the witness statements the inquiry heard gave them this impression, it is a wrong conclusion,” Muscat said, when asked by PAC chair and PN MP Darren Carabott about the inquiry’s conclusions.

Muscat said that Scicluna was involved “at all stages where the Finance Minister had to be involved in” and that his public inquiry testimony had been “to frame it gently, strongly extrapolated.”

Muscat testified that the Finance Ministry’s Permanent Secretary Alfred Camilleri was involved in matters related to payments or exemptions on payments, but that in certain situations dealing with contracts the ministry was not necessarily involved except for where its expertise is required – something which he said happened under previous administrations as well.

Carabott also asked Muscat about the infamous meeting in Azerbaijan soon after the 2013 general election.

Muscat said it was a meeting to discuss far wider issues than the power station, and admitted that it was a mistake that the media and public service officials were not invited to accompany them.  He said that he struggles to understand why that decision was taken.

The SOCAR guarantee was not one of the matters discussed at the meeting, he said.

Facing questions on why that guarantee was only published recently after a prolonged Freedom of Information battle which culminated with a decision from the Data Protection Commissioner, Muscat said this was likely due to commercial sensitivity reasons, and points out that the guarantee was more for Malta’s sake than SOCAR’s sake. 

If something happened to Electrogas, Muscat said on the agreement itself, the government wanted a guarantee that SOCAR would supply Malta not anyone else.

Meanwhile, asked about the decision for Enemalta to pay some €40 million in excise duty instead of Electrogas, Muscat said that this was part of a wider agreement which saw Electrogas taking on certain conditions which tipped the balance of the agreement in Enemalta’s favour.

He says that this was a ministerial question and he was not involved in negotiations, but he was satisfied that "on the balance of things" it was something which favoured the government.

Carabott pointed out that the tender document had stipulated that one of the conditions was for the project bidder to cover the excise duty themselves, and questions why this change, noting that the Auditor General described this as “shifting of goalposts.”

Muscat however said that there have been changes to tenders like this, and there are a number of points in the process for a contract negotiation where changes can be made before a final agreement is struck.  Something like that is not exceptional, he noted.

“The Maltese people were left better off than the business,” Muscat said on the excise tax figure.

Carabott also asked whether the power station project was agreed prior to the 2013 general election, to which Muscat says it wasn’t and that “there is nowhere written that this plant was decided as a pre-electoral deal.”

An argument ensued, culminating in PL MP Glenn Bedingfield summoning Auditor General Charles Deguara to the table to testify to clarify this point, taking Muscat’s place.

“When our office is analysing a process like this – this was a complicated and long one – there are good and bad aspects.  You cannot say that the process was all good or all bad, it is human after all,” Deguara said.

“We did not find clear evidence to strengthen the argument that there was an agreement prior to the election.  We live and die with evidence.  There wasn’t clear evidence of a pre-agreement,” he added.

Deguara confirmed though that there were documents not provided to his office, and that his greatest sorrow is that in almost every assignment he has done in the last 15 years, nobody ever sends all the documentation required.

Deguara also confirmed that the tendering process was such that even if what was irregular had been done regularly, the outcome would have been the same.

Deguara’s NAO colleague, meanwhile, said that the NAO has no mandate to request documents from a political party about negotiations with third parties.

Muscat was asked about a statement he made in a previous sitting about Gasol – one of the original shareholders of the Electrogas consortium which had ultimately gone bankrupt – wherein he had said that the company had a positive net asset value in 2013 and 2014.

Bencini quoted from Gasol’s financial statements which he said he had just received.  Those statements showed that Gasol had a net asset value of -€2.2 million in 2013, -€12.79 million in 2014 and -€43.8 million in 2015.

“So what you said is not true,” Bencini said.

Muscat replied that he needs time to see the documents properly but he has no problem in admitting if he had made a mistake if he did.

Questions briefly centred around Muscat’s former chief of staff Keith Schembri as well.

Carabott asked whether Muscat felt it was right that some of Schembri’s private companies did business with Electrogas, to which Muscat replied that the question is not in the PAC’s remit and that the country “does not have clear rules on whoever is in private business and working in the public sector, to have clear reporting guidelines on this kind of business.”

Carabott also asked Muscat about a blog post claiming that Keith Schembri received $430,000 in “unexplained funds” in January 2015.

The claim made by Manuel Delia was that he had seen documents showing Schembri receiving the six-figure sum from “unexplained sources” five weeks after that trip he made to Azerbaijan capital Baku. Joseph Muscat had back then said that his chief of staff had “categorically” denied the allegations.

Muscat said that from the number of investigations that there were, Schembri is currently only charged over an issues “related to the Times” over the procurement of the Progress Press machinery.

Had there been real suspicions in the allegations, then Schembri would have been charged, Muscat said.

 

The sitting was adjourned to 26 September, which would be Muscat’s fifth – and possibly final – testimony before the board.

Follow the live commentary of the sitting below.

15:50: That concludes Muscat’s testimony for today – it is expected that he will return one more time, towards the end of September.

 

Thank you for following.

15:49: Carabott now asks about the private business interests that Schembri had which were in business with Electrogas, but Muscat says that this is not in the PAC’s remit.

“This country does not have clear rules on whoever is in private business and working in the public sector, to have clear reporting guidelines on this kind of business,” Muscat says.

15:45: Carabott asks Muscat about a blog post claiming that Keith Schembri received $430,000 in “unexplained funds” in January 2015.

The claim made by Manuel Delia was that he had seen documents showing Schembri receiving the six-figure sum from “unexplained sources” five weeks after that trip he made to Azerbaijan capital Baku. Joseph Muscat had back then said that his chief of staff had “categorically” denied the allegations.

Muscat says that from the number of investigations that there were, Schembri is currently only charged over an issues “related to the Times” over the procurement of the Progress Press machinery.  Had there been real suspicions in the allegations, then Schembri would have been charged, Muscat says.

15:42: Carabott asks about a meeting in Azerbaijan between Muscat and Aliyev and whether this had anything to do with Electrogas.

Muscat says it was a meeting to discuss far wider issues, and admits that it was a mistake that the media and public service officials were not invited to accompany them.  He says that he struggles to understand why that decision was taken.

He concedes that it was a mistake and that much of the speculation on the trip could have been avoided had the media been invited.

The SOCAR guarantee was not one of the matters discussed at the meeting, he says.

15:35: Bencini asks about the SOCAR guarantee, and questions why there was resistance for this to be published.

The agreement in question was only published recently after a prolonged Freedom of Information battle which culminated with a decision from the Data Protection Commissioner.

Muscat says it was likely due to commercial sensitivity reasons, and points out that the guarantee was more for Malta’s sake than SOCAR’s sake.  If something happened to Electrogas, Muscat says, the government wanted a guarantee that SOCAR would supply Malta not anyone else.

15:30: Bencini quotes a report from Times of Malta and Daphne Caruana Galizia, who had written about the same article, saying that Schembri was heading a working group committee within the Labour Party on energy.

Muscat sees the report in question and says there was likely a mis-translation and that working group mentioned was a small information one which focused on negotiations with Libya on how Malta can procure diesel, petrol and other oil at a subsidised price from Libya.

The group was established back when the PL was in Opposition.

15:26: Muscat takes his seat again.

Carabott summarises Deguara’s testimony to Muscat and moves on.  He asks whether Muscat was sorry about the influence that he had given to OPM Chief of Staff Keith Schembri.

Muscat says that he had taken responsibility for his decisions, but Schembri was not involved in the power station deal.

Carabott quotes former minister Evarist Bartolo, who had commented on the extensive influence that Schembri had in Cabinet matters.

Muscat says that discussions between him and a minister do not fall under the remit of the committee and there was no influence on the contract or the process detailed in the report, and added that he was choosing to keep discussions between him and Bartolo private.

15:20: “When our office is analysing a process like this – this was a complicated and long one – there are good and bad aspects.  You cannot say that the process was all good or all bad, it is human after all,” Deguara begins.

“We did not find clear evidence to strengthen the argument that there was an agreement prior to the election.  We live and die with evidence.  There wasn’t clear evidence of a pre-agreement,” he says.

Were there reports which did not come to you after being requested, Cutajar asks.

Deguara confirms this and says that his greatest sorrow is that in almost every assignment he has done in the last 15 years, nobody ever sends all the documentation required.

Deguara confirms that the tendering process was such that even if what was irregular had been done regularly, the outcome would have been the same.

His colleague, meanwhile, says that the NAO has no mandate to request documents from a political party about negotiations with third parties.

A few more little arguments ensue, until Deguara is thanked for his testimony and returns to his seat.

15:18: Carabott asks whether the power station project was agreed prior to the 2013 general election, to which Muscat says it wasn’t.

Carabott now asks another question, to which Muscat replies that “there is nowhere written that this plant was decided as a pre-electoral deal.”

An argument begins, but there is a twist as PL MP Glenn Bedingfield asks for clarification from the Auditor General Charles Deguara himself.

So, Muscat is asked to leave the room and Deguara takes his place.

15:10: Alex Muscat now goes back to the testimony of Alfred Camilleri and says that the wrong impression about his testimony had been given.

Alex Muscat is reading from the minutes of the last meeting. Carabott insists that he was reading from the transcript of Camilleri’s testimony.

PL MP Muscat says that Carabott was factually incorrect if he gives the impression that the Finance Ministry was not involved in the process.

15:06: Back on track: Muscat tells Bencini that he should not be quoting a news report from The Shift but by seeing the previous accounts and audits of Enemalta, and not just a particular year – Bencini is quoting from the most recent accounts.

“Telling me just about one particular year - when problems related to COVID and other energy industry issues cropped up - you are extrapolating one issue only. God forbid the government does not subsidise the energy rates… are you saying Enemalta should not subsidise electricity rates?”

Ellul chides Bencini and asks whether the PN MP agrees with the energy subsidy.  They go round in circles, achieving very little.

Muscat continues, saying that one needs to see Enemalta’s situation from 2008 to today and that there are points where it made profits, but there were situations where it did make a loss due to the things out of its control but today its situation and credit rating has improved significantly compared to back in 2013.

15:03: PN MP Bencini refers to losses incurred by Enemalta in 2022 when compared to profits registered by Shanghai Electric Power.

Enemalta was a bankrupt company and was never in a situation where it could build its own power station, Muscat says.

He says that today nobody is disputing the fact that the new power station is necessary due to the increase in economy and demand.

His testimony is derailed by a remark from Bencini and Carabott, who both say that the increase in demand was due to population.

Muscat argues that an increase in population is needed when there are jobs.  The PN MPs suggest that his government didn’t manage to eradicate poverty as promised.

“I’m never going to say that things are perfect, but it is certain that the situation is better than it was in 2013,” he says

14:55: Cutajar says that it is dangerous for Muscat and others to be disputing the conclusions of the three judges, adding that the Opposition had accepted that report and that “it always accepts these reports.”

That prompts sarcastic calls from Labour MPs to minute that “legendary” remark, and Muscat to say that this means that the Opposition also accepts the Egrant inquiry report.

14:53: Carabott now reads from a transcript of what Scicluna and Finance Ministry Permanent Secretary Alfred Camilleri said on the government guarantee - Scicluna had told the PAC that he could not remember being involved in the guarantee or it being discussed in Cabinet, but Camilleri said from the media.

Muscat says that one needs to see how both of them understood the questions which were put to them.  He then says that Carabott is mixing things up.

Muscat explains that Cabinet – which Scicluna was part of – was abreast of the details, and that the debate is whether the Finance Ministry was involved before or after an agreement had been struck.

The former PM says that on this point, the three judges behind the Caruana Galizia pubic inquiry were mistaken.

14:48: Carabott reads out the judges’ conclusions on the involvement – or lack thereof – of Scicluna and the ministry in power station negotiations.

“With all due respect, this is the interpretation of those who wrote the report.  An interpretation which is mistaken,” Muscat replies.

“I don’t believe that any of them have experience in running a government,” he adds, saying that Scicluna’s testimony before the PAC was clear enough.  He suggests that there may have been some “manipulation” of his testimony, but evades elaborating on who might be behind that.

Muscat says Scicluna was an integral part of the government at the time.

14:44: Carabott quotes from the public inquiry report into the assassination of Daphne Caruana Galizia, who remarked at the “utter lack of involvement” of then finance minister Edward Scicluna in negotiations on the Delimara power station.

“It is totally incorrect,” Muscat says.

“The public inquiry did not understand the remit of the ministry and the extent of its involvement. Numerous Cabinet documents will attest to its involvement, sometimes with other lead ministries. Here the judges are saying it was never involved. Many Cabinet documents will disprove this claim. If the witness statements the inquiry heard gave them this impression, it is a wrong conclusion,” he continues.

Board member and PL MP Andy Ellul points out that the committee should be working from the words of the Auditor General on his report into the Electrogas not from the report of the public inquiry.

Robert Cutajar attempts to suggest that the Labour side of the table did not agree with the conclusions of the public inquiry board, but Ellul waves the criticism away.

Muscat says that Scicluna was involved “at all stages where the Finance Minister had to be involved in” and that his public inquiry testimony had been “to frame it gently, strongly extrapolated.”

Carabott goes back to quoting from the public inquiry, leaving Labour MPs again to point out that the public inquiry report is not within the committee’s remit or scope.

14:39: Carabott queries as to why Finance Ministry officials, such as the permanent secretary, were excluded from particular discussions.

Muscat replies that the office of the permanent secretary was involved in matters related to payments or exemptions on payments, but that in certain situations dealing with contracts the ministry was not necessarily involved except for where its expertise is required – something which he says happened under previous administrations as well.

14:37: Board member and PN MP Graham Bencini now asks Muscat about a previous  statement he had made that Gasol – one of the original shareholders of the Electrogas consortium which had ultimately gone bankrupt – that the company had a positive net asset value in 2013 and 2014.

Bencini quotes from Gasol’s financial statements which he says he had just received.  Those statements showed that Gasol had a net asset value of -€2.2 million in 2013, -€12.79 million in 2014 and -€43.8 million in 2015.

“So what you said is not true,” Bencini says.

Muscat says that he needs time to see the documents properly but he has no problem in admitting if he had made a mistake if he did.

14:28: Labour MPs Andy Ellul and Alex Muscat ask a couple of questions, with Muscat asking about an idea for a pipeline to be set up between Malta and Algeria.  The former Prime Minister answers that it had been analysed but it was deemed to be too expensive.

14:26: Carabott now asks about correspondence on what would happen if a gas pipeline is set up to Malta and talks between Electrogas shareholders that a €30 million compensation for this would be VAT-free.

Muscat says that the government’s thinking was always for such a pipeline to be built, and that the requirement for compensation is a natural one.  He says though that he was not involved in any talks of such a compensation being VAT-free.

14:22: Board member and PN MP Robert Cutajar asks whether the decision to back this agreement was taken by the Cabinet, to which Muscat says that he is reasonably sure that it was mentioned at the very least as a point of information in Cabinet.

Muscat says: “At no point in the process was I interfering in the negotiations, but I was satisfied with the outcome.”

Carabott points out that the tender document had stipulated that one of the conditions was for the project bidder to cover the excise duty themselves, and questions why this change, noting that the Auditor General described this as “shifting of goalposts.”

Muscat however says that there have been changes to tenders like this, and there are a number of points in the process for a contract negotiation where changes can be made before a final agreement is struck.  Something like that is not exceptional, he says.

“The Maltese people were better off than the business,” Muscat says on the excise tax figure.

14:17: The first question comes on the excise tax matter – where Enemalta agreed to pay some €40 million in excise duty instead of Electrogas.

Muscat confirmed the number and says that it was part of a far wider discussion with Enemalta which resulted in a final settlement with Electrogas which also saw Electrogas take on certain conditions which actually tipped the scale to favour Enemalta.

He says that this was a ministerial question and he was not involved in negotiations, but he was satisified that "on the balance of things" it was something which favoured the government.

14:14: The sitting is underway and Muscat is in the witness chair.  PAC chairman and PN MP Darren Carabott leads the questioning as always.

14:00:  Good afternoon and thank you for joining us for this live commentary.