Finance Minister Tonio Fenech yesterday said it was the head of the Malta Security Services who had asked the Tax Compliance Unit to investigate businessman George Farrugia’s oil trading company, Aikon, and he knew nothing about it at the time.
In August 2011 the head of the Security Services, Godfrey Scicluna, called his ministry’s head of secretariat, Alan Caruana, and gave him a set of documents to pass on to the Tax Compliance Unit (TCU) so that alleged tax evasion could be investigated, Mr Fenech said.
Mr Farrugia was recently granted a presidential pardon to spill the beans on alleged corruption in the procurement of oil for Enemalta dating back to 2004. The scandal was exposed recently when a newspaper published emails purporting to show that illegal commissions had changed hands.
Earlier yesterday, Labour MPs Chris Cardona and Michael Falzon had claimed that Mr Fenech, as minister responsible for Enemalta and for taxation, should have heard the alarm bells ringing when his ministry received documents in 2011 indicating possible tax evasion at Aikon.
Calling his own press briefing later, Mr Fenech vehemently denied having known about the tax investigation and that it involved Mr Farrugia.
Mr Fenech said he first discovered that the investigation was under way when his ministry received questions from The Times asking for confirmation that Aikon Limited, the company owned by Mr Farrugia, was being looked into over tax evasion.
He also said that it was the first time since he was appointed to Cabinet nine years ago that he had ever heard of a tax evasion probe being requested by the head of the Secret Service.
Mr Fenech, who again denied ever meeting Mr Farrugia, said the oil trader was granted the presidential pardon on February 8. He learnt of the tax investigation on February 13 when the questions were sent by The Times.
He noted that both the head of the Security Service and the TCU were covered by legislation under which they are not answerable to the Finance Ministry. Neither could they divulge detailed information on their investigations.
“I never saw the documents that were handed to my head of secretariat to hand over to the TCU. I do not know whether it was part of a wider investigation and do not know the details of the TCU investigation.
“All I know, and only because I have asked to be briefed, is that this investigation is at an advanced stage and involves Aikon Limited and Mr Farrugia, and had been widened to include all companies which Aikon traded with,” Mr Fenech said.
He said Mr Caruana had not seen the documents either and had passed them on immediately to the TCU without informing him about it.
He still had no information about the specifics of the investigation and the amounts the alleged tax evasion could involve.
The probe, he said, included a Swiss bank account. He explained that the investigation had taken some time because when it started, Maltese and Swiss regulators did not yet have arrangements in place to exchange information on tax matters, a situation which had since changed.
Should any tax fraud result, all due taxes and penalties would have to be paid, he said, when asked whether the pardon covered tax evasion.