Enemalta’s petroleum division chief took commission on oil tenders given to French oil company Total and split the kickbacks with the former financial controller, a court heard yesterday.
Alfred Mallia, who besides controlling the petroleum division also sat on the oil procurement committee, and Tarcisio Mifsud are two of seven men charged in court over the oil procurement scandal and both are pleading not guilty to corruption between 1998 and 2003.
Police Inspector Angelo Gafà, heading the prosecution, yesterday testified in the compilation of evidence against Mr Mallia, being heard by Magistrate Anthony Vella, and against Mr Mifsud, before Magistrate Claire Stafrace Zammit.
George Farrugia, the local agent of Total who was last month granted a presidential pardon in return for information on the oil scandal, told the police that he used to give Mr Mallia a commission from what he legitimately received from the French oil giant.
Mr Farrugia also said that the relationship with Mr Mallia had started in relation to the storage of oil at Enemalta’s facilities in Ħas-Saptan and, before 1999, Mr Farrugia had reached an agreement with Total in London to engage in talks for a storage agreement. Mr Mallia helped facilitate this but asked for commissions, Mr Gafà said.
Mr Farrugia got US16c per tonne from Total and shared a portion of this with Mr Mallia.
The relationship changed when, in 1999, a strike by port workers left Enemalta’s oil reserves running low.
To plug the hole, Enemalta, through a direct order, decided to tap into 20,000 tonnes of gasoil that Total had stored at Ħas-Saptan.
Mr Mallia had made direct contact with the company but Mr Farrugia insisted that the sale should go through him since he was the local agent. But Mr Mallia insisted he should get a cut from the deal, telling Mr Farrugia: “Take care of me as I am not alone.”
The price was higher than usual and Mr Farrugia got a commission of $1.50c per tonne (usually $1 was paid on sale of oil) and passed on a third to Mr Mallia, who earned $10,000 that day. From then on, Mr Farrugia started bidding for Enemalta oil tenders, being successful, according to his own estimate, in about two-thirds of them.
The prosecuting officer said that, at first, Mr Farrugia did not know there was another person involved. However, in 2000, he visited Mr Mallia in hospital after he was injured in a traffic accident and was told that Mr Mifsud wanted to speak to him.
He met the former financial controller and was told that he wanted “what Alfred Mallia used to get”. From then on, he started paying Mr Mifsud after every consignment, Mr Gafà said.
Mr Farrugia told the police the commissions he used to pay were not to win the tenders but simply to be eligible to win tenders as he had a “right” to. However, Mr Mallia also occasionally showed Mr Farrugia the offers of other suppliers.
One day, Mr Mifsud called Mr Farrugia and asked him to go to his office. “I did one plus one and put Lm3,000 (€6,970) in an envelope.”
Mr Mifsud pocketed the money but told him that he would not win a particular tender.
“It’s better like that so it won’t be obvious,” he was told.
Both Mr Mallia and Mr Mifsud, who retired from Enemalta in 2004 and 2005 respectively, were arrested and interrogated on February 25.
At first Mr Mallia denied taking kickbacks and said that he only received commission for acting as an intermediary but not in his capacity as head of Enemalta’s petroleum division.
However, during a confrontation, with Mr Farrugia, Mr Mallia confirmed he used to take commission and told investigators that he used to split his share equally with Mr Mifsud and that, after his traffic accident in 2000, he stopped receiving any money because the financial controller kept it all for himself.
Mr Mifsud denied receiving commissions, knowing Mr Farrugia or even meeting him, even when he faced Mr Farrugia during a confrontation.
The oil trader listed a series of meeting places, including at a wedding reception.
“How can you not recognise me after the many times I came to your office to give you money,” Mr Farrugia told Mr Mifsud during the confrontation, according to Mr Gafà.
Mr Mifsud also rejected any wrongdoing when faced with a claim by Mr Farrugia that hehad once signed a contract to buy fuel oil from Italian energy corporation Enel in 2003 without issuing a tender.
When asked this, he said there was nothing wrong with it and that “he did Malta a favour,” the prosecuting officer said.
The men were arraigned last week after the corporation’s former chairman, Tancred Tabone, and his one-time adviser, Frank Sammut, were accused of bribery, fraud and money laundering in connection with the case. Both men, who have been described as the masterminds behind the scandal, pleaded not guilty.
Ray Ferris, Enemalta’s former projects manager, was also charged with receiving gifts from Mr Farrugia. He also denied the charges.