Conflict of interest issues raised by consultancy job
The former chairman of the committee that awarded the Delimara power station extension contract did nothing illegal by taking up consultancy work with a subcontractor of the winning company, Finance Minister Tonio Fenech said.
Mr Fenech did not commit himself over whether he thought David Spiteri Gingell’s decision, to work as a consultant for Vassallo Group five months after the power station contract was awarded, amounted to a conflict of interest.
Mr Spiteri Gingell joined the consultancy firm Loqus, which formed part of Datatrak Holdings, in September 2008 when still sitting on the power station contract adjudication board that eventually chose the bid presented by Danish company BWSC.
The tender was awarded in April 2009 and, five months later, Loqus Consulting was approached by the Vassallo Group, a subcontractor of BWSC, to submit a quotation to carry out a strategic review of the organisation.
Speaking in general terms, Mr Fenech said Mr Spiteri Gingell would be acting in conflict of interest if the work he was doing for company owner Żaren Vassallo was also on energy provision.
“I cannot judge because I don’t know what he’s doing for Żaren Vassallo and... I’m not informed,” Mr Fenech said.
Mr Spiteri Gingell is not an employee of the government, he added, and there were no laws that prevented him from choosing any job he wanted.
“On the project itself he wasn’t an employee, he was a consultant, so he has every right to choose his work,” Mr Fenech said.
The €210 million Delimara contract has been a source of never-ending controversy and Mr Spiteri Gingell’s consultancy job with Vassallo Group has continued to stoke the flames.
“Unfortunately, in this country speculation is rife. We are a very small country, so people work with many different people. He is a consultant and he works with different people,” the minister said.
The choice of BWSC, which will supply eight diesel engines, was criticised severely on the basis that its technology is untested and uses polluting heavy fuel oil.
A report by the Auditor General had flagged a number of shortcomings in the way the contract was awarded. This included the choice of German company Lahmeyer International as an independent consultant to the contract adjudication committee, chaired by Mr Spiteri Gingell, because it was blacklisted by the World Bank for corruption.
The issue came to the fore again recently when the European Commission said that changing the environmental laws increasing the threshold of emissions that could be emitted by a power station just before the tender was adjudicated favoured diesel bidders BWSC.
Last week, the Labour Party criticised Mr Spiteri Gingell’s “shocking” decision to offer his consultancy services to Vassallo Group.
Apart from this, Mr Spiteri Gingell chaired the government-appointed climate change committee, which, according to Labour spokesman Leo Brincat, abandoned a decision that the country should opt for natural gas at the same time that the BWSC contract was signed.
Mr Spiteri Gingell had also been chairman of the government IT agency Mitts (now called Mita) up to July 2008. Loqus also provides IT-related solutions, also bidding for tenders issued by Mita.
Former Nationalist minister and Water Services Corporation chairman Michael Falzon agreed that, although Mr Spiteri Gingell had done nothing illegal, his consultancy link with Vassallo Group was “too soon”.
Similar concerns were expressed by independent analyst Martin Scicluna who said it was vital to ensure that senior public officials did not lay themselves open to “a charge of actual, or even perceived, conflicts of interest”.
Without entering into the merits of this case, he suggested the introduction of a cooling off period of two years between public employment and private practice to avoid accusations of conflict of interest.
Attempts to contact Mr Spiteri Gingell proved futile. An e-mail sent on Sunday and subsequent phone calls and text messages remained unanswered.
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Dr Joe Brincat
Sep 2nd 2010, 09:04
@ CCamilleri. To continue further on what the Corporate Europe Observatory is promising :
"Hoedeman said the Commission should make more use of cooling-off periods before former commissioners took up new posts. He said that was the most effective way to ensure that former commissioners were not able to influence former staff. He said that commissioners should also be banned from directly lobbying EU institutions."
Indeed this is only the opinion of a group which wants more transparency in Europe. But what is more important is at least what the EU Commission has in place as rules before a former Commissioner, who becomes a private individual, can "accept such jobs."
Dr Joe Brincat
Sep 2nd 2010, 08:48
@CCamilleri "Such things are normal in other countries" and "Even European Commissioners .accept similar offers" These are gratuitious assertions.
The Code of Ethics of EU Commissioners :"The general interest requires that in their official and private lives Commissioners should behave in a manner that is in keeping with the dignity of their office. Ruling out all risks of a conflict of interests helps to guarantee their independence."
Do you remember Verheugen ? Well, he became an embarrassment to the EU when he promoted Petra Erler, with whom he had been photographed on holiday in Lithuania. He retired from the Commission in February and offered jobs.
"A Commission spokesman said that the decision, made on 6 July, to allow Verheugen, was taken following a positive opinion from the Commission's ad hoc ethical committee that assesses if there is a possible conflict of interest between a former commissioner's new activities and previous work. (EuropeanVoice.com)"
"Corporate Europe Observatory, a group campaigning for more lobbying transparency, said it was no surprise that the Commission had approved Verheugen's new jobs because the Commission had a “narrow definition of conflict of interest”.
See ?
Dr Joe Brincat
Sep 2nd 2010, 07:58
@MSciberras "We would have objected if we suspected any undue favouritism by any specific committee member, but this was all a question of using one's judgement. We used ours."
This reminds me of a case in court. Experts are appointed also by the courts. In one particular case, the expert happened to be from the same firm of the lawyer appearing for one of the parties. Thank heavens that the judicial system makes it imperative that the presiding judge or magistrate uses his own judgment. You can guess the outcome of the case.
But when judgment is delegated to others, and especially where public funds are involved, the rules must be stricter. In Maltese we have some excellent free consultants - proverbs. Min jafda jhallel ! (When you trust too much, you are liable to be robbed).
I am substantially in agreement with you. If anything, what is the way forward ?
RENO CALLEJA
Sep 2nd 2010, 00:32
i beg to differ with the reasoning of Minister Tonio Fenech, for whom I have a lot of respect.
I think his statements, in the case of Mr.Spiteri Gingell, is an additional nail in the coffin of our moral sense.
When people exploit public positions for their private benefit it is justified to accuse them of having a a conflict of interest. The Minister did not even consider the moral temptation in this case.
In my view the cases of Mr Spiteri Gingell and of Mr. Tranter the former chairman of Ene Malta who both ended working as consulants (and business partners) of Zaren Vassallo proves that in these days integrity is dead.
The four million commission made by Mr.Joseph Mizzi, a former employee of Ene Malta who ended up as the sole agent of BWSC that won the contract, partly because Mr Mizzi alegedely used to give BWSC sensitive and important information is scandalous and the police should have investigated the matter. That in my view destroyed our moral baramoter.
Dr Joe Brincat
Sep 1st 2010, 21:43
The European Court of Human Rights has censured our accepted former practice that a lawyer could appear before a judge who is his relative. A suspected conflict of interests.
I had no one in the family on the bench, so it does not refer to me.
If there is a potential conflict of interest in open court, where everyone is like an eagle on the other side, what is the impression when the meetings and considerations are held in private ?
Adrian Wirth
Sep 1st 2010, 19:55
Given it's not practical to read through the entire spectrum of writings, of those that I have read the majority clearly appear to believe that to take a consultancy from a client company of a public enterprise in which one previously served as an executive officer within a very short time scale is as a minimum unethical. In short it stinks. Even at a relatvely junior level in an international corporation I was not permitted by contract from working for a competitor or any corporation with whom I had ongoing dealings during my employment, for a period ranging from two to three years. It seems strange to me that a similar standard practice process is not and apparantly cannot be applied to executive contracts in Maltese public service. But if that's how the system works and the old pals manage to get away with it, what can we mere mortals do - except perhaps be equally selective in our voting next time round. But then that's difficult seeing as the same old boys have manipulated the electoral process to ensure the preservation of their 'good life'. Well that's democracy at work for you.
Dr Joe Brincat
Sep 1st 2010, 19:02
@ MSciberras. Thanks for your comment. If you look down, you will find that I referred to Mr X . Very often we concentrate on the "sinner" and not the "sin". It is true that we do not find enough expertise. It is true that foreign expertise is expensive. In such situations, we have to make do with what we have, but we have to raise standards in other respects. The Germans immediately said that they had to draft rules about politicians.
Charles J. Buttigieg
Sep 1st 2010, 18:57
A fictitious Judge in a fictitious State sends a man to the electric chair. The Judge then marries the multimillionaire’s wife of the executed criminal. Did the judge commit a crime? Of course not, he just married the woman because he’s got a legal right to marry whoever he likes. So why was the Judge asked to resign? The answer is a simple one- the fictitious state was not Malta.
MSciberras
Sep 1st 2010, 18:36
Lets keep debate polite, not personal, I am interested in what Dr Brincat has to say, he speaks his own mind. How would you react to the practical example I posed below which crops up in practically every big or specialised project undertaken in a small place like Malta? The examples you quoted below simply do not crop up in industry. For ex, I was involved in a complex IT tender where the committee included some consultants. No one had their expertise locally. Foreigners would have cost money, and as we knew from bitter experience, their lack of knowldge of the local market posed problems. We knew that one or more of them would probably be working with whoever won the call of proposals eventually. Yet if we contractually obliged them not to, they would not have sat on the committee as they were going to get the consultancy work regardless of who won the call for proposals. We would have objected if we suspected any undue favouritism by any specific committee member, but this was all a question of using one's judgement. We used ours. Once again, I reiterate the need for proper analysis before accusations are fired.
Dr Patrick zahra
Sep 1st 2010, 18:28
Ok Hon. Mr T. Fenech I am sure everything was done according to normal procedure and it is definately in our interest that we will end up with a power station emitting 60 to 70% more Particulate matter ( respiratory irritant and carcinogen) than available alternatives! It is also in our interest to let Enemalta handle 15 container of hazardous waste a week, the same Enemalta that a few months ago switched off for months the Marsa precipitators! Everything was done according to procedure and I don't understand why the EU is on the verge of investigating the tender process!! I am also sure that it would be in our best interest to get rid of You lot as soon as possible!!!
Dr Joe Brincat
Sep 1st 2010, 18:10
@ c Camilelri. It did not take me long to find out more about Gerard Schoeder, even though I have other important things to do. Time Magazine 17/12/2005 "Schröder appears not to have broken any rules — there are none governing the conduct of former Chancellors — but his close relationship with Putin triggered charges of cronyism from German politicians, as well as claims that he's sold his country out. "Gazprom is Putin and Putin is Gazprom. By taking this job, Schröder has made himself a salesman for Putin's politics," alleges Reinhard Bütikofer, a leader of Germany's Greens. Now there are calls for a code of conduct governing former politicians' access to the private sector. " Read more: http://www.time.com/time/magazine/article/0,9171,1142152,00.html#ixzz0yIKO3Ivf By the way, when I was not elected and was no longer a Minister, no one offered any consultancy. I had to start my profession from scratch.
Dr Joe Brincat
Sep 1st 2010, 17:57
I am not in opposition. I am not a member of parliament. I write and speak my own mind. I do not have access to German newspapers. Since it has hit the headlines, I really suspect that there were unfavourable comments about the German ex-Chancellor. Certainly they were not happy that miskin he found a job.
c. camilleri
Sep 1st 2010, 17:39
Such things are normal in other countries. Former Chancellor Gerhard Shroeder was offered the job of Board Chairman of the Russian/German gas pipe by Gazgrom only a few months after his resignation from politics following his defeat. He championed the project while in office and signed the agreement together with Putin. No one accused him of corruption. Even former European Commissioners accepts similar offers. So why all this fuss here. But of course the opposition as always will try to clutch at every straw.
Paul Caruana
Sep 1st 2010, 17:02
B'min tahseb li se tghaddi z-zmien Tonio?
Dr Joe Brincat
Sep 1st 2010, 16:57
What is worrying is the philosophy of Minister Fenech behind the whole story. He contends that if there is a private consultant, then it means that he can take "clients" because it is his private business. There is no problem with the medical profession, who can treat and save the lives of two persons who injured each other to death. A lawyer is debarred. An architect cannot file an objection on behalf of client against a development, and submit within a few months an amended application of the opposing party. Now in this case, Mr X was a "judge" in the process of adjudication. Imagine a judge giving a favourable judgment for the Chairman of a big company just two months before he retires, and after reaching the 65th birthday, he immediately becomes part of the legal department of that company ? Certainly on other cases and other problems. Is such a situation satisfactory. In years gone by we had people at MDC dealing on behalf of government and then joining the new company after a short while. Fine ???
c. camilleri
Sep 1st 2010, 15:47
@ DR. Joe Brincat. You are part of the past. You write from experience u ghalhekk taf xi tghid.
Pochi paroli e basta.
Adrian Darmanin
Sep 1st 2010, 14:25
Dear Minister Fenech.
It doesn't have to be illegal for it to stink. To high heaven.
Dr Joe Brincat
Sep 1st 2010, 14:19
@ MSciberras. I do not know enough details about the ex-German Chancellor. But if so it is appalling. Later I mentioned the case of the head of the privatisation team of the Farmacie Comunali in Italy.
I did not mention any pope. But you remind of the current investigation into a corruption case where a consultant of the Vatican on immovable property was consulting not only the Vatican but also prospective buyers. Forgot his name.
MSciberras
Sep 1st 2010, 17:19
Fully empathise with your views but having worked in industry I know too well how easy it is to criticise on points of principle, and how difficult it is to adopt those principles in practice, especially in a small island like Malta. Taking this case as an example, this man was likely the best suited person to be chairman of the committee that awarded the tender. The members of the committee are all likely to have been chosen on their specialist expertise. If such persons, who are likely to be consultants or specialists in a very technical field, and not very common to find, had to sign a contract that prevented them from accepting any work related to a one-off project such as this one (including subcontractors and the like) they would not have accepted to be on the committee in the first place because this is their bread and butter, their line of work that they are prevented from doing, which is very specialised. Who would choose to sit on the committee. How would you have solved this practical problem, which crops up frequently in Malta???? Hence the need for a proper analysis here before accusations are fired.
Dr Joe Brincat
Sep 1st 2010, 13:53
Se nikteb bil-Malti halli ghall-inqas il-barranin ma jaqrawhx u jitkazaw bina.
Il-Maltin jew jitolbu lil qaddis halli jaqlghalhom grazzja u jixghelulu xemgha, jew tigi zewg u jixghelulu xemgha wara. Ma tridx tkun gharef wisq biex tinduna li x-xemgha nxteghlet qael jew wara mhux biex il-qaddis jara jaqra !!!
U l-kelma dahlet fl-ilsien Malti. "Rajtu qaddis", "sibna qaddis", "kien hemm qaddis ghenna".
U ma jkunux qed jitkellmu fuq il-qaddisin li hemm fil-kalendarju liturgiku.
Haqqu xemgha hux ???
Dr Joe Brincat
Sep 1st 2010, 13:15
May I bring to the attention of readers the definition of corruption. "requests, receives or accepts for himself or for any other person, any reward or promise or offer of any reward
in money or other valuable consideration or of any other advantage
to which he is not entitled, ............" The words "any other advantage" encompass many possibilities. (From Article 115 of the Criminal Code)
The old concept that corruption applies only to public officers has been extended "
121. (1) The provisions of this sub-title shall apply to and in
relation to any person who is entrusted with or has functions
relating to the administration of a statutory or other corporate body
having a distinct legal personality, or who is employed with such a
body, as they apply to or in relation to an officer or person referred
to in article 112 or a public officer or servant referred to in article
115."
Italy privatised the communal pharmacies. The man in charge of the privatisation took up employment with those who took them over !!!!
It is rather rash that the Minister should issue such a declaration.
A. Zahra
Sep 1st 2010, 14:43
What would you propose for situations such as this not to arise? What would you also be proposing to meet the unavailability of qualified persons to sit on boards because of the restrictions you will be proposing? Why should a consultant agree to sit on a board when he is being limited in his future job prospects?
George Azzopardi
Sep 1st 2010, 12:54
how can someone try to justify such behaviors .. do you think us naive Mr.Minister!
g. scerri
Sep 1st 2010, 12:42
Does the minister know the meaning of the word "ethical" as opposed to just "legal/illegal"? Or has all that baggage been ditched in this paradise of ours?
Vincent Borg
Sep 1st 2010, 12:13
L-imzazen fil-bahar qeghdin
I believed everything you said Mr. Minister.
Hsibt li ahna C bit tikka.
Dr Joe Brincat
Sep 1st 2010, 11:16
Sorry, but I cannot understand. The first paragraph recites that the Minister said that X (whoever he might be) did nothing illegal. Then para 6 above :“I cannot judge because I don’t know what he’s doing for Żaren Vassallo and... I’m not informed."
We have a distorted interpretation of corruption. Corruption does not refer merely to taking cash bribes. It may be any other useful reward, a contract or even a night in bed ! Corruption is not only for public officials. Does the Honourable Minister consider that there is no corruption if Y, a free-lance consultant, is bribed when he is consulting a public corporation ?
MSciberras
Sep 1st 2010, 13:26
Arent you trying to be holier than the pope? Anybody who won the tender would have wanted to hire him as a consultant. By the definition of corruption prevalent in this forum, many people in top positions would be unemployable when they change jobs given their very specific expertise. For perspective, look at the consultancy jobs and directorships that Gerhard Shroeder, the former German chancellor, has taken on - these include Russian energy companies that benefitted from policies he promulgated as Chancellor. Seems like corruption is the new hallelujah now!!!!!!!!!
A Cardona
Sep 1st 2010, 11:10
Ok! Everyone said his. Now what?
s.sAmmut
Sep 1st 2010, 11:09
Ha ha ha Mr Fenech. Keep on pulling at our legs.
Joseph Fenech
Sep 1st 2010, 11:08
Imbaghad lili li jiena impjegat (huta zghira hafna) ma kumpanija parastatali, l-gvern jigi jghidli li rrid nitlob permess qabel naghmel part time job li ma jmurx il part time ikollu kunflitt ta interess mal full time. U mhux hekk nibqghu sur gvern (int min int); il-hut il kbir dejjem jithanzer u l hut iz zghir dejjem ejjet bil guh!
Ma nippretendix li huta zghira tiekol ohra kbira imma almenu naqra buon sens (jekk jezisti hemm fuq)
Tony Gatt
Sep 1st 2010, 10:55
Nothing illegal??!!
The lack of legal or administrative provisions that could have prevented such a case from happening are the crux of the matter. Thank you Mr. Minister for pointing this out.
However, Mr. Minister, may I remind you, that not only, as Minister in government, are you part of the executive, but more importantly you are a core member of Malta's legislature.
Therefore failure to legislate is not an excuse and the blame falls back squarly on your plate!!
joseph cachia
Sep 1st 2010, 10:46
Mr Minister
Just have a look at Datatrac announcment 14 August 2008.
There you find the info you need to assess conflict of interest
M. Camilleri
Sep 1st 2010, 10:45
Gvern tal-KUMBINAZZJONIJIET!
Jason Attard
Sep 1st 2010, 10:15
"The former chairman of the committee that awarded the Delimara power station extension contract did nothing illegal by taking up consultancy work with a subcontractor of the winning company, Finance Minister Tonio Fenech said."
Typical politician’s rhetoric! He did nothing illegal because unfortunately Malta has no laws to prevent this from happening. However it is highly immoral and it sure represents a huge conflict of interest. Very illegal in other developed countries.
A. Zahra
Sep 1st 2010, 14:38
Mention countries which have the legislation you are demanding.
Victor Laiviera
Sep 1st 2010, 10:14
“The former chairman of the committee that awarded the Delimara power station extension contract did nothing illegal by taking up consultancy work with a subcontractor of the winning company, Finance Minister Tonio Fenech said.”
No, there is nothing “illegal” in what Mr Spiteri Gingell did.
Just as there was nothing “illegal” when the Minister accepted a free plane-trip and football tickets from a major contractor.
But there is another word besides “illegal” which the Minister should take on board. It is “unethical”.
Perhaps somebody should buy him a good dictionary.
Lewis Balzan
Sep 1st 2010, 10:05
There's just no stopping the "hokkli darhi" brigade. Their tentacles seem to reach far and wide - reminds one of the camaraderie and solidarity of the Freemasons.
J Farrugia
Sep 1st 2010, 09:55
Not answering the media's questions by this 'consultant', reeks that the interested party has something to hide. He should never have accepted this consultancy job with Vassallo. That is ethics for me. Corruption must be stamped out bl-gheruq u x-xniexel. Anke mill-irwejjah.
Franco DEbono (Xghara, Gozo)
Sep 1st 2010, 09:47
his is what the Minister reportedly said:
"Speaking in general terms, Mr Fenech said Mr Spiteri Gingell would be acting in conflict of interest if the work he was doing for company owner Żaren Vassallo was also on energy provision."
It appears that the Minsiter is to say the elsat confused or at worst cannot control the confusion GonziPN has created to the detriment of all of us. I will explain.
Mr. Vassallo employs Mr. Alex Tranter. Ex Chairman of Enemalta and now working for some other company reportedly American with interests in teh provision of Electrical Power from remote locations.
Mr. Vassallo and Mr. Tranter are also partners in a company which is bidding to take over Government property roofs to provide Electrical Power using Voltovoltaic Cells.
So it seems tat while Mr. Vassallo does not supply electrical power many companies with which he is involved, and also involving Mr. Tranter and Mr. Spiteri Gingell do.
So Please Minister at least be careful when you open your mouth as you may be putting your foot in it.
joe felice pace
Sep 1st 2010, 09:39
Martin Scicluna suggests that a government employee wishing to join a private firm should wait two years before taking up his new job. And what will he do in those two years; twiddle his fingers ?
Jason Attard
Sep 1st 2010, 10:22
The only thing you have to do is work for a private company unrelated to your official posting. Otherwise you could have ruled in favour of a particular private company using public funds just to ensure a future job and this is not right.
Adrian Borg
Sep 1st 2010, 09:35
May I offer some advice to the Minister?
When you fall in a bog it is better to be still because the more you move the faster you sink. I will not charge you for the consultancy.
Darren J. Galea
Sep 1st 2010, 09:32
This whole issue and everythong connected to it stinks to high heaven, and is only compounded further by statements such as this from Tonio Fenech.
Let me be clear; "Nothing Illegal" means that there is currently no legislation to protect the taxpayer from this sort of corrupt behaviour. It does not mean that nothing wrong has been done.
P.Cassar
Sep 1st 2010, 09:28
ELEMENTARY:
IF YOU DO SOMETHING WRONG AND YOU DON'T GET CAUGHT, LEGALLY YOU DID NOT WRONG, BUT .................................
M Grima
Sep 1st 2010, 09:15
with regard to the last paragraph,it seems that this chap is also a practised politician!
l fenech
Sep 1st 2010, 09:03
Mintix ser tikkonvinci lill-hadd b'ebda argument. "Platt wiehed", jew you scratch my back and i scratch yours.