An inquiry ordered by Air Malta’s board of directors in 1997 into the purchase of the beleaguered RJ70s’ fleet was never concluded, The Sunday Times has learnt.
Former Judge Godwin Muscat Azzopardi, who was entrusted with the inquiry, confirmed he had never completed the investigation assigned to him in March 1997 as “something had happened in the meantime”.
The purchase of the Avro RJs left Air Malta with millions of euros in losses. The decision is often described as one of the national airline’s biggest strategic errors.
The inquiry was meant to establish the identity of management officials who had omitted a crucial guarantee in the purchase of the RJs fleet, which would have significantly diluted Air Malta’s risk.
The issue was revived a few weeks ago by Richard Cachia Caruana – a former member of Air Malta’s Board of Directors.
Judge Muscat Azzopardi confirmed, when asked, that someone from Air Malta had instructed him to stop this inquiry but said he could not remember his identity and why.
“I had received a notification to do this inquiry, but something had happened in the meantime and the inquiry was never concluded.
“So much time has passed since then and I don’t recall why the inquiry wasn’t concluded,” Judge Muscat Azzopardi said when contacted.
After former Nationalist MP Jeffrey Pullicino Orlando levelled accusations at Mr Cachia Caruana of colluding with the 1996 Labour government, former Labour Minister Karmenu Vella had issued a declaration aimed at substantiating the MP’s claims stating that Mr Cachia Caruana had met him and told him he disagreed with the purchase of the RJs and the establishment of Azzura Air – an Air Malta subsidiary.
Denying these accusations, Mr Cachia Caruana challenged the former Labour minister responsible for Air Malta to publish the conclusions of the inquiry order by the board to establish who had omitted the crucial trip-cost guarantees.
The board was replaced
The Air Malta board, which took the decision to start the Muscat Azzopardi inquiry on March 5, 1997, was replaced just two days later when a Labour government appointed a set of new directors, with Louis Grech as the new chairman of the company and Michael Falzon – then a party official – on the company’s board.
Contacted by this newspaper, Frans Camilleri – then one of the top management officials of the company involved in the negotiations for the purchase of the Avro jets – said he had never seen the inquiry mentioned by Mr Cachia Caruana and was never summoned to appear before the board.
He insisted that he had opposed the purchase of the RJs and had made a written declaration stating his position to the then chairman Mr Grech.
The RJs’ saga
1992. Air Malta takes a strategic decision to develop a hub concept. This included a 35 per cent increase in scheduled regional routes by 1997.
1993. Air Malta purchases four Avro RJ70s from British Aerospace while discarding a proposal to buy Fokker regional jets instead. Fokker folds in 1997.
1994 to 1995. Air Malta receives four Avro RJ70s and puts them into service.
1995. Air Malta takes up 49 per cent share in Azzurra Air – a new regional airline based in Italy together with Italian investors.
May 1996. Air Malta buys three Avro RJ85s from British Aerospace and leases them to Azzura Air.
October 1996. Labour is returned to government.
December 1996. Azzurra Air starts operations.
1997. Air Malta leases RJ70s to Azzurra Air.
March 5, 1997. Air Malta’s Board of Directors orders inquiry to establish who from the management was responsible for omitting trip-cost guarantees when the four RJ70s were purchased.
March 7, 1997. Government appoints a new Air Malta board – Louis Grech appointed chairman.
2003. Lease agreement of RJs fleet with Azzurra Air terminated. Aircraft returned to Air Malta and sold.