Updated 12.37 p.m. (Most recent in italics at the bottom)

Nationalist MP Beppe Fenech Adami this morning criticised members of the National Audit Office (NAO) for not interviewing people against whom allegations had been made in the oil procurement investigation which the Office had carried out.

He also noted, after repeatedly questioning NAO officials, that the investigation had found no criminal activity and therefore had found no need to refer to the police before, during or after the audit. The NAO officials said their investigation focused on good governance.

The audit office investigated oil procurement procedures between 2008 and early 2011.

During the meeting, the Auditor General, Anthony Mifsud, said in reply to other questions, that Enemalta was against the recording of phone conversations on oil purchase negotiations.

Mr Mifsud said that the recording of such phone conversation was the practice abroad, and his office favoured it because it provided more transparency. But when queried as recently as a month-and-a-half ago Enemalta said it was against such recording, especially because of the element of bluff involved in such negotiations.

In his opening, Mr Mifsud said officials of his office received special training from PricewaterhouseCoopers on oil and foreign exchange hedging before embarking on their investigation.

Mr Mifsud gave an overview of oil procurement practises between 2008 and 2010 noting the absence of policies. He said that for some time, the minutes of the Oil Procurement Committee was handwritten and lacked details such as how bidders were selected and why contracts were awarded to the winning companies. The members of the committee who were present were not listed.

There was also no information on inspections of oil consignments and in some cases, inspectors were actually chosen by the suppliers. In some cases, testing was not as required in the contracts. 

The documents also lacked details on how contracts were renewed. In some cases, oil was supplied without a formal contract in place. This was the case in four months in 2010 and 11 months in 2011.

After Mr Mifsud concluded his presentation, MPs said they wished to question NAO officials and insisted they take an oath. Mr Mifsud objected, saying a precedent was being created. The chairman, Jason Azzopardi, insisted. But no crucifix was available and proceedings were briefly interrupted until an official fetched a crucifix from another office.

Mr Mifsud and his officials then spoke on how the investigation started as an initiative of the National Audit Office after a speech in Parliament by Labour MP Leo Brincat. Following his speech Mr Brincat phoned NAO and at a meeting repeated what he said in Parliament.

He said that as soon as the audit work started, 18 months ago, Enemalta immediately started to remedy matters.

Dr Beppe Fenech Adami (PN) asked about who the members of the NAO staff engaged on this investigation were and what their qualifications were.

Government MPs objected, saying that would make it seem that NAO was under investigation and as Mr Mifsud said last week, questions should be asked to him and he would then refer, if necessary. 

Dr Fenech Adami said the committee and the people had a right to know who compiled the report, even if those persons were not individually questioned.

Mr Mifsud said he did not feel giving such information was in the public interest. Disclosing such information would discourage people from working on such investigations or working for the NAO. Furthermore, he viewed such questioning as an attack on the autonomy of the National Audit Office.

The chairman, Jason Azzopardi said asking justified questions did not mean an attack on the autonomy of the audit office.

Dr Fenech Adami said he would not insist on the names so that the work of the committee could continue.

FORMER ENEMALTA CHAIRMAN ADVISED AUDIT OFFICE

When replying to other questions by Dr Fenech Adami,  Mr Mifsud said former Enemalta chairman Prof Robert Ghirlando (who was chairman 1998-2003)  had been asked by NAO to advise NAO on the workings of the corporation.

Dr Fenech Adami noted that certain goings on had also existed when Prof Ghirlando was chairman and there could have been conflict of interest.

Mr Mifsud said he was confident of Prof Ghirlando's integrity and technical competence as an engineer. He was not involved in the NAO analysis but gave advice on oil quality standards.

Dr Fenech Adami said the issue was that some processes which NAO had investigated were carried on from the time of Prof Ghirlando's chairmanship and even before that.

Replying to further questions, Mr Mifsud said Prof Ghirlando was selected directly since NAO had previous experience of working with him when the BWSC investigation was made.

COMMITTEE MINUTES

Dr Fenech Adami asked the NAO officials why the committee had not questioned whoever kept the minutes of the Oil Procurement Committee.

The officials said the minutes were a state of fact and the audit office got its information from the Enemalta Chief Financial Officer.

Mr Mifsud said this was a system analysis and not an investigation of persons.

Dr Fenech Adami said the findings could impinge on personalities, such as where it was said that there was undue ministerial interference.

Indeed, the decent thing, the basic principle of justice, was that all those against whom allegations had been made should have been questioned for their version.

Mr Mifsud said this was a systems analysis.

Dr Fenech Adami said this was unacceptable.

Mud had been thrown at people who were then not given the opportunity to give their version. Even the members of the procurement committee had not been questioned.

The persons who were members of the Risk Management Committee were not questioned by the Audit Office, despite the criticism of their lack of meetings.

Former Minister Austin Gatt was not questioned even though the Audit Office spoke of 'undue ministerial interference'.

The NAO officials said normal procedure had been followed. This was an issue of good governance. That the Risk Management Committee did not meet for 10 months was a statement of fact.

Replying to questions by Labour MP Owen Bonnici, the NAO officials said that with regard to hedging, the Office interviewed Antoine Galea (Enemalta CFO) and Janice Mercieca, financial risk manager. On oil procurement, interviews were made with engineer  Philip Borg, Frank Cilia, and power station managers. Those who were interviewed were shown the minutes of their meetings by NAO officials.

Explanations were given on the 'scoping' of the investigation, with the NAO officials insisting the focus was on procedures used in oil procurement. This was a performance audit, not a financial audit. The focus was on good governance. Issues such as stock management  or the impact of fuel procurement on consumers' bills were not tackled.

NO FINDINGS OF CRIMINAL NATURE

Asked if any findings of a criminal nature were found, Mr Mifsud said that had that been the case, the matter would have been referred to the police. However this was an analysis of procedures. What had been found were shortcomings of an administrative nature.

Asked repeatedly if crime had been detected, Mr Mifsud and NAO officials insisted again that had they found any crime, they would have referred to the police. But they did not refer to the police, before, during or after the audit.

Dr Fenech Adami said the logical conclusion was that no crime had resulted.

The NAO officials said they had focused on performance matters only.

See more details on the auditor's report at http://www.timesofmalta.com/articles/view/20130715/local/audit-office-in-damning-report-on-enemalta-fuel-procurement-hedging-between-2008-and-2010.478133

ksansone@timesofmalta.com