The National Audit Office investigative report on the way the new power station contract was awarded to Electrogas lists findings that raise serious doubts on the competence, management practices and good intentions of those who conducted the procurement process. Minister Konrad Mizzi never shied away from the fact he was behind many of the decisions taken – decisions described as “serious shortcomings” by the NAO. The lengthy report can be distilled in a few paragraphs that highlight the unconventional way the award process was conducted under Mizzi’s political guidance.
Its first conclusion is that the expression of interest evaluation process was characterised by “the inconsistent approach adopted by the Evaluation Committee”. While some submissions were eliminated on justifiable grounds, others with similar shortcomings were deemed eligible. Put simply, the process was tainted with unfairness, and the NAO defined this shortcoming as its “main concern” about the process used.
The streak of unfairness that seems to have been endemic in every stage of the contract award process is again evident in the way that “terms of major changes” were effected in the clarification process. The NAO worryingly comments that “these changes were not considered as clarifications, but the introduction of new concepts”. The rules of the game changed and consequently favoured some competitors over others.
This procurement malpractice was made to the detriment of taxpayers as the risk of the project was progressively transferred from the private consortium that ultimately won the contract to Enemalta and the government, who are now required to purchase 85 per cent of the annual production of electricity irrespective of requirements.
The list of shortcomings identified in the NAO report includes the “lack of due diligence undertaken” in the initial stages of the procurement process. The report argues that the due diligence undertaken was insufficient and only partially addressed the risks associated with a project of such magnitude. The financial aspect of the due diligence was insufficiently robust and deemed inadequate by the NAO. This shortcoming was catered for by the government abandoning current practice of not guaranteeing the debt of private investors.
The Electrogas Consortium bridging loan with some banks was secured by a government guarantee. The financial strength of the members of the consortium was allocated a maximum score of just four per cent out of a possible 100. Such a vast project that carried substantial risk could only attract private financing if the government guaranteed the borrowing of a private consortium thereby putting taxpayers’ money at risk.
The NAO was justifiably concerned that favourable conditions were created for bidders still involved in the tender process at its later stage through the introduction of provisions that substantially altered the nature of the tender, rendering it more advantageous to the bidders. Whether this was done through lack of proper and competent project planning or just a stratagem to favour certain bidders is left to the judgement of the readers of the NAO report.
The NAO brief did not include an in-depth forensic investigation of any suspicious shortcomings. So the report rightly concluded that although the documentation made available to the NAO did not indicate the conditions were created specifically for the Electrogas consortium, ultimately it was the consortium that benefitted from new provisions late in the adjudication process.
Mizzi insists there was “no evidence of wrongdoing” and extended the argument to distance himself from the 17 Black revelations. Addressing a press conference, he argued that neither the NAO report nor the Dubai company ownership provide claims of corruption.
He continues to ignore the fact that criminal responsibility is not the same as the political responsibility that a politician should carry when a project that he led is tainted with at best incompetence and at worst disregard of standards of good governance. Like the Prime Minister, he believes that his and the PL’s electoral endorsement in 2017 has washed away any stains of abuse of power.
Both are unlikely to change their mantra that they will not act until criminal evidence regarding Electrogas or 17 Black is brought forward to prove any wrongdoing. This attitude deprives them of any right to claim they are acting in the best interest of democracy that is underpinned by good public governance.
Mizzi’s political role, like that of Keith Schembri, was not tenable when the Panama Papers were published. It is even more untenable now even if the Prime Minister continues to back them blindly.
Mizzi should do the honourable thing and resign if he is to retain any shred of political respectability.
This is a Times of Malta print editorial