Irregularities but no fraud found in Sliema council probe

An internal investigation carried out last year has revealed “substantial irregularities and shortcomings” in financial procedures at the Sliema local council but makes no accusations of fraud.

Martin Bugelli, who heads the Department of Local Government, which had called for the investigation, said he would not publish the final report because it was intended for “internal” consumption.

However, The Times has acquired a copy of the letter Mr Bugelli sent to Sliema councillors and the executive secretary on January 6, in which he briefly explains the investigation’s findings.

Although the report confirms a series of administrative shortcomings, when contacted the director general of the Internal Audit and Investigations Directorate, Rita Schembri, stressed they did not involve fraud.

The investigation, launched last June, began over a fairy lights contract but was eventually widened into other tenders, as claims were made that the issue of fund mismanagement was so “big” it needed to be looked into by the Internal Audit and Investigations Directorate.

A separate police investigation into bribery allegations against former mayor Nikki Dimech later overshadowed the internal audit but prompted speculation that the audit would reveal a more serious web of financial misconduct.

Mr Dimech is currently in court facing charges of bribery over a council contract. His accuser was yesterday charged in court with attacking another councillor. (See separate story on page 2).

In his letter to Sliema councillors, Mr Bugelli says that although the report was carried out to facilitate the work of his department, he felt the need to inform the council of the various “shortcomings” identified.

“The investigations resulted in a number of substantial irregularities and breaching of financial regulations and procedures,” Mr Bugelli says. He explains that among the council’s failings were preparations of budgets and business plans and serious shortcomings in the system of procurement of works and purchase orders, since some were being issued with direct orders and without council approval. Some purchase orders were even issued after contractors were appointed.

He adds that a number of irregularities and shortcomings were also found in the granting of tenders and consultancy services.

“These irregularities and shortcomings were attributed to various council members and employees, past and present,” Mr Bugelli writes, indicating that the problems began before Mr Dimech was elected.

The report accused these same council members and employees of lacking the necessary awareness about financial, administrative and purchasing regulations and procedures.

“I remind you that it is the duty of each and every one of you to be conscious and conversant with the regulations which apply to your responsibilities,” Mr Bugelli warns the council and its executive secretary. He adds that the unpublished report identifies a number of aspects which merit further investigation.

Therefore, Mr Bugelli asked the council to list its pending payments, which, despite irregularities, have to be paid.

Mr Bugelli writes that the council could seek legal advice about this and when such information was determined, it should contact his department to decide upon the next step.

“I do not exclude a reduction in allocated funds to the council which has to pay for work that was done without the correct procedures being followed.”

When contacted, the head of the IAID said she could not comment on the findings of the report. But when asked if the probe revealed any evidence of fraud, Ms Schembri stressed that this was not the case.

In fact, there is no indication, from Mr Bugelli’s letter, that the IAID has passed on the letter to the police or the Attorney General for further investigation, as it is empowered to do by law.