File photo of George Farrugia. Photo: Chris Sant Fournier

George Farrugia, the trader at the centre of the oil procurement scandal, yesterday accused a businessman and former ambassador, Tony Debono, of threatening to destroy him and his business.

Mr Debono in fact managed to wreck his business and his relationship with his brothers, Mr Farrugia testified yesterday in the case against former Enemalta chairman Tancred Tabone.

Mr Tabone is pleading not guilty to fraud, bribery and money laundering in connection with the Enemalta oil procurement scandal, which surfaced following a story in newspaper MaltaToday.

Mr Farrugia was given a presidential pardon in exchange for his cooperation and all the information he had on the scandal.

Mr Tabone’s defence lawyer, Giannella de Marco, took Mr Farrugia to task over his claims that he had paid commissions to Mr Tabone and questioned him intensely over the details.

At one point she told him: “You are just not credible”.

She argued that the whole issue only came to light after Mr Farrugia was found out by his bothers that he had been defrauding the family business of millions of euros in oil contracts.

Mr Farrugia had set up an oil trading company that competed directly with the family business.

The brothers eventually looked into his office computer and discovered that, over the years, he had siphoned off millions of euros worth of oil contracts from the family business into his company.

Dr de Marco argued that Mr Farrugia claimed he had paid Mr Tabone and others commissions on the oil contracts because his siblings had caught him defrauding them.

Mr Farrugia insisted that his brothers knew about the payment of commissions “all along”.

At first, he had refused to name the person who had threatened him, saying only the person was a government official. This led Dr de Marco to insist that he name the person, a prompt echoed by Mr Farrugia’s own lawyer, Siegfried Borg Cole, who also told his client to go ahead and give the name.

A well-known businessman, a former ambassador to Jordan and a former Telemalta chairman, Mr Debono is connected to Mr Farrugia through his stint as managing director of Power Plan, the company owned by the Farrugias.

Mr Farrugia claimed that Mr Debono had also threatened his wife and Dr Borg Cole besides threatening to destroy Mr Tabone.

He said Mr Debono told him in an intimidating manner that he was a member of “a group”.

Dr de Marco questioned Mr Farrugia sarcastically on the nature of the “group” that Mr Debono formed part of, asking whether it was a “Catholic catechism group”. The witness said he did not know.

Mr Farrugia recounted that the whole affair began when he first approached petrochemist and the former chairman of Enemalta’s oil storage subsidiary, MOBC, Frank Sammut, on behalf of the foreign oil firms he represented, Total and Trafigura.

Mr Sammut told him he wanted a cut on Mr Farrugia’s commissions. He accepted and he would pay Mr Sammut 50c (US) per metric ton on all of the oil contracts he got from Enemalta.

The money, he said, came out of the $1 per metric ton he was owed for his services as an agent.

The arrangement at first was done through Power Plan where he was managing director and his brothers all partners.

At one point, Mr Debono became a consultant to Johns Group, the mother company that owned Power Plan.

Mr Debono appointed himself chairman of the executive board and expected a cut from all deals, even those in which he was not involved. Mr Farrugia said the threats started when he refused to make any such payments.

Mr Farrugia said he had reached an out-of-court settlement with his brothers, who had accused him of defrauding them over a period of 10 years.

His brothers hacked his computer while he was abroad and found he had a Swiss bank account, through which he used to make the payments for his parallel company.

He said he did not want to go to court with his brothers and he paid them €1 million, though they originally asked for €45 million.

Mr Farrugia said he never understood what they had based their request on, given that it was so exorbitant, but he decided to pay up to end the story.

About €500,000 of the sum was meant to settle a debt they had with Volksbank but there were also payments to the Inland Revenue Department and the rest consisted of commissions received.

Dr de Marco asked him whether Trafigura and Total, competitors, knew about his massive conflict of interest since he was representing both when they were at times vying for the same contract.

Mr Farrugia said his clients were not aware of what he was doing.

After the sitting, Mr Farrugia felt ill and it appeared he would not be able to testify in the case against the former head of Enemalta’s petroleum division, Alfred Mallia.

He recovered but Mr Mallia failed to turn up.

The case continues.