Questions over applicability of government financial regulations

The parliamentary Public Accounts Committee (PAC) is today due to question the Attorney General and the legal adviser to the Auditor-General over whether the Voice of the Mediterranean radio station fell under government financial regulations.

The committee yesterday started a discussion on a report by the Auditor-General who following an inquiry found that financial regulations had been violated by the management of the radio station. The findings were published on July 5.

Parliamentary Secretary Tonio Fenech said when the committee meeting started that two fundamental issues needed to be addressed.

One was whether VoM fell under the Maltese government's financial regulations. This was important because there were a series of conclusions in the report which were completely based on this premise.

If it was concluded that VoM had to follow the government's financial regulations, the auditor's report should be considered in that light, but if it did not, the committee should still see whether there had been good governance of public funds.

He pointed out that the radio station was a joint venture between the Maltese and the Libyan governments, each holding half the shares, and the committee should therefore call the Attorney General to explain the legal position.

Mr Fenech said that he was not trying to cover for anyone. The government wanted the truth but one should be clear as to which rules applied.

Labour MP Leo Brincat said that when he had initially brought up the case, an internal inquiry was held and a report was prepared by Gaetan Naudi and Charles Mifsud (from the Foreign Ministry) and tabled in December 2003.

The findings in that report contrasted sharply with what the Auditor-General had concluded.

The Attorney General's Office had concluded that VoM was not bound by the government's financial regulations.

Mr Brincat said it was true and common knowledge that a commercial company that was not wholly owned by the government was not subject to the government's financial regulations but in practice, VoM had not been receiving funds due from the Libyan government in the period under investigation and therefore, effectively, it was not operating as a joint venture and was only using Maltese government funds.

The auditor should offer guidance to the committee because all along in his report he said that there was constant breach of the financial regulations.

PAC chairman Charles Mangion said that when the committee had asked the auditor to investigate, one of the terms of reference was to establish whether the financial regulations were adhered to.

The Auditor-General, Joseph Galea, gave an overview of VoM's history and the way the inquiry was conducted. He said the Maltese government had had to make good for all expenses incurred in the radio station's last six years.

Mr Fenech asked the auditor if VoM had a duty to follow the government's financial regulations. Nationalist MP Jason Azzopardi asked whether the advice of the Attorney General had been sought.

Mr Galea said his office was advised by its own legal adviser, Ian Refalo, who was of the view that VoM did fall within the parameters of the financial regulations and he could proceed with his investigation.

This opinion had been based on the fact that the entity was operating using only Maltese government funds which had been approved in the national budget.

Dr Azzopardi asked if the Libyan government had confirmed that it would be paying the funds that were due.

Paul Borg, assistant to the Auditor-General, said that three years had passed since the radio station closed down and the funds had still not been received.

Cecilia Attard-Pirotta, permanent secretary at the Foreign Ministry, said that from what she had heard, the Libyan government and the two Libyan representatives on the VoM board had always insisted that the funds would be transferred. There was no reason not to believe them since the Libyan government was always late in its payments. There had been no declaration from the Libyan government that the money would not be given. However, she pointed out, she did not have anything in writing.

Labour MP Helena Dalli asked if the permanent secretary at the Foreign Ministry at the time had monitored the spending by the radio station's management.

Mr Galea said that the board included representatives from the ministry.

Mr Brincat asked Ms Attard Pirotta to indicate, at the next committee meeting, if the Libyan Foreign Minister had ever indicated that Libya had lost all interest in the station and if the then Minister of Foreign Affairs, Joe Borg, had tried to persuade him otherwise.

He also asked her to check when the Libyan directors last had participated in a meeting of the board of directors or the board of councillors.

He observed that the last payment made by Libya was for 1997, meaning that the Libyan government owed Malta more than Lm1 million.

Dr Azzopardi asked Ms Attard Pirotta to check who the Libyan directors were and if they had a particular position in Malta apart from that of councillors on the radio station. He also asked who had given verbal assurances that the payment would be made.

The committee also set a provisional list of the people it would be interviewing.

These are Prof. Refalo and the Attorney General, Messrs Mifsud and Naudi, Richard Muscat, who was managing director of the radio station, deputy managing director Said Shain, councillors Alfred Zarb, Mannie Spiteri, Joe Izzo and Ali Nageem and the radio's auditor.