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Oil firms’ tax probe widening

Bunkering company made sales of €1.2bn but €4m loss

A bunkering company owned by key suspects in the Enemalta oil scandal only paid a fraction of its trading in taxes between 2003 and 2011 after registering huge losses despite thriving oil sales.

A number of oil and related companies are being investigated
- Finance Ministry

During this period, Island Bunker Oils Ltd sold $1.3 billion worth of fuel oils and gas oils to ships and made a steady mark up, leaving the company with an accumulated gross profit of $78 million.

However, it posted an overall loss of $4.5 million and piled up loans and overdrafts in excess of $36 million, an analysis carried out by The Times reveals.

Three of the company’s directors, former Enemalta chairman Tancred Tabone, Cassar Ship Repair chairman Tony Cassar and Francis Portelli of Virtu Ferries, were charged in court with bribery last week along with Frank Sammut, the petrochemist first exposed in connection with the case who at one point was also a silent partner in the company.

According to audited accounts submitted to the Malta Financial and Services Authority, the finances went haywire after 2008 when the company posted a loss before taxes of $8.9 million, followed by surprise profits of $3.6 million in 2009 (the company never made this much profit in a year) and then losses again of some $1.2 million in 2010.

The Times flagged the company’s apparently anomalous performance to the Finance Ministry and asked whether the Tax Compliance Unit was aware and investigating the matter.

A ministry spokesman would not disclose if the company was under investigation but said the ongoing tax probe at Aikon Ltd – the company belonging to the pardoned rogue oil trader, George Farrugia – has been extended to “a number of companies operating in the oil and related sector, also on the basis of information which came to light in recent weeks”.

Suspects’ firm posted losses despite having thriving sales

An Island Bunker Oils spokesman, on the other hand, declined to comment, citing commercial sensitivity.

An industry source pointed out that bunkering is a low margin type of business, partly because of the competition in the Mediterranean but also because of the value of the commodity being traded.

However, it is also known to be a relatively safe trade with high but predictable costs.

The company is part of a network of marine and oil related subsidiaries – all directly or indirectly belonging to Mr Tabone, Mr Cassar and Mr Portelli – which had been hit by an assets freeze as part of police investigations into the scandal.

However, questions have been asked for years about the company, which inherited the lion’s share of the bunkering business formerly belonging to State-owned Medi­terranean Offshore Bunkering Company (MOBC).

Back in 2004, Labour MP Leo Brincat quoted in Parliament from an influential bunkering magazine, which reported on the imminent departure of Mr Sammut from MOBC, where he was CEO, to become an independent consultant.

Industry players were concerned the move would imply that Island Bunker Oils might inherit some or all of MOBC’s supply business and be treated more favourably than its competitors in terms of storage capacity at the terminal.

Moreover, the magazine reported on the anger among the smaller players in Malta’s bunkering industry since Mr Sammut would be “closely associated” with the recently formed company Island Bunker Oils Ltd.

It has now turned out in court that both Mr Tabone and Mr Sammut were silent partners in Island Bunker Oils, while they held official positions at Enemalta and MOBC.

This latest development comes after The Sunday Times revealed that the company belonging to Mr Farrugia, the oil agent granted a presidential pardon to tell all on the scandal, has been under investigation for tax fraud since 2011.

Finance Minister Tonio Fenech later revealed his ministry was given a dossier with dubious invoices, indicating under-declaration of income, by Malta’s intelligence agency, the Security Service.

Besides the Island Bunker Oils directors, Mr Tabone and Mr Sammut, the police also arraigned Enemalta’s former financial controller Tarcisio Mifsud and a member of the corporation’s oil procurement committee Alfred Mallia.

They all stand charged with varying degrees of corruption; however, Mr Portelli and Mr Cassar’s charges are unrelated to allegations of kickbacks on oil tenders. They are accused of bribing Mr Tabone and Mr Sammut, who at the time were public officials.

Who owns Island Bunker Oils?

The company has as its directors Tancred Tabone, Tony Cassar, Francis Portelli and Frederick Frendo (who has not been implicated in the scandal). However, Island Bunker Oils is formally owned by two companies, AOH Ltd and Blue Sails Holdings Ltd.

Both these companies are directly or indirectly owned by Mr Tabone, Mr Cassar and Mr Portelli or their relatives through a network of subsidiaries. During court proceedings against Mr Tabone it emerged that this network of ownership was used back in 2004 to hide his involvement and that of Frank Sammut, who, at the time, held top positions at Enemalta and MOBC, putting them in a direct conflict of interest.

Audited accounts filed at the MFSA

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