The post of the man at the centre of the Enemalta oil procurement scandal as head of the state-owned bunkering company, MOBC, had been terminated in 2004 due to a “conflict of interest”, the Prime Minister has said.
Mr Sammut received €100,000 in severance money despite his contract preventing him from having a conflicting position
“At the time it was because of conflict of interest, because he was in some kind of a business and at the time the decision was, ‘no you should not be part of it’,” Lawrence Gonzi told The Times, during a question and answer session with the newsroom.
Yesterday, the Office of the Prime Minister amplified Dr Gonzi’s comment, saying: “Frank Sammut did not resign from MOBC but was terminated in view of the withdrawal of MOBC from the bunkering business. The relative letter of termination has already been published.
“At the same time Government was aware that a possible conflict of interest could have arisen concerning Frank Sammut since it was claimed in Parliament that he was about to leave MOBC and join a private company. In effect this claim was never proven at the time and would not have constituted a conflict of interest even if proven.”
“So while Mr Sammut’s contract of employment was terminated for the reason stated in the letter his potential conflict certainly made the decision easier.”
The Finance Ministry (which is responsible for Enemalta), had previously said that Mr Sammut’s termination of employment was due to a reorganisation of the Mediterranean Oil Bunkering Company (MOBC).
The termination letter sent by Enemalta’s then chairman Tancred Tabone to Mr Sammut said: “Following the decision taken by Cabinet and announced by Minister Austin Gatt (then responsible for the sector) MOBC will cease bunkering operations as being conducted at present. In view of the above the post of CEO shall be abolished and I hereby give you notice of termination of your contract with the company.”
The ministry revealed in the same statement that Mr Sammut, a petrochemist, had been paid a severance package worth almost €100,000 (Lm41,000).
However, doubts have been raised over whether he should have received a pay off since clause four of his contract – which was made public last week – explicitly barred Mr Sammut from holding any private position without the prior approval of the chairman and board of the company.
The chairman in this case was Mr Tabone, who is also being investigated investigation over the graft allegations.
Speaking in Parliament in January 2004, Minister Austin Gatt denied that managers or directors at MOBC had a conflict of interest. He was answering questions by Labour MP Leo Brincat.
Later, in April, answering another question by the same MP, Dr Gatt said he had received written allegations claiming that MOBC directors had a conflict of interest because of their alleged involvement with Island Bunker Oils Ltd.
However, he said the person making the allegations never provided him with tangible proof but added that the Ombudsman was investigating the matter after he encouraged the informant to file a report with him, the police or the Permanent Commission Against Corruption.
In May 2004 Mr Brincat quoted in Parliament an influential bunkering magazine which reported on the imminent departure of Mr Sammut from MOBC to become an independent consultant.
The magazine reported on anger among the smaller players in Malta’s bunkering industry who argued that Mr Sammut would be “closely associated” with the recently formed company Island Bunker Oils Ltd.
Industry players expressed concerned that 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.
Frank Sammut was never a shareholder or director of Island Bunker Oils Ltd but had eventually taken a consultancy role in the company after his MOBC job was terminated.
Mr Tabone became a shareholder in 2008 and remains director on the company’s board.