Auditors from the European Commission's anti-fraud office have visited Malta to investigate the Local Councils Association after it retained a portion of EU money allocated for air tickets.
At least two auditors from the European Anti-Fraud Office (OLAF) turned up unannounced at the offices of Lufthansa and Air Malta three weeks ago to look into the issue. A travel agent has also been asked to go through records.
The inquiry relates to tickets purchased, and used by various members of the association between 2004 and 2006 while PN Gzira councillor Ian Micallef was its president.
When contacted yesterday, Dr Micallef confirmed the probe, but he insisted there had been no wrongdoing on the part of the association.
He also said that the Committee of Regions had already cleared the association over the issue.
"The committee carries out various audits which focus on air tickets because that is obviously one of the biggest expenses.
"It took a few tickets at random and looked into them. There were some small discrepancies which reflect discounts we were given by airlines," he said.
Dr Micallef said the committee asked the association to justify its position and was satisfied with the responses. He added that it concluded that there had been no bad practice.
However, the committee then submitted its report to OLAF, which decided to carry out further investigations through its auditors.
Dr Micallef said: "The visit by the auditors you mention, which I didn't know about, would have been to double-check the information we gave to the Committee of Regions."
When asked if the EU had been short-changed, Dr Micallef said the association had made savings on its EU air ticket budget because it had negotiated discounts with local travel agents.
He insisted the extra funds were then diverted to the association's accounts and used for expenses.
"We believed that it would be good to make use of the money we managed to save on air travel through a public fund which would help fund the increasing costs for the Maltese delegation."
Dr Micallef also insisted that the association was entitled to retain any money it had made as a result of negotiating discounts.
"We used our heads... should this sponsorship be deducted from the money given to us?
We're saying it should not if we managed to get a better deal... we could have sat on our laurels and paid the regular fare."
Michael Cohen, Dr Micallef's successor as association president - who took up the post in October 2006 and is also Labour mayor for Kalkara - said the air ticket purchase procedure had now changed.
However, Mr Cohen felt it was too early to comment on the inquiry:
"At this stage I have nothing in hand. We work directly with airlines and the system is transparent. It is procedure that certain investigations are carried out and just because there are some doubts it doesn't mean that the doubts are founded, so one has to see."
When contacted, a spokesman for OLAF said that the EU Anti-Fraud Office was bound by confidentiality and he would therefore not comment on the matter.