Updated 7.40pm
The Daphne Caruana Galizia public inquiry’s conclusions about the Electrogas deal are “factually incorrect”, former prime minister Joseph Muscat has argued.
Muscat dismissed the inquiry’s conclusions when testifying before parliament’s Public Accounts Committee about the project.
In its conclusions, the public inquiry had expressed consternation about the fact that then-Finance Minister Edward Scicluna was not at all involved in negotiations concerning the project – a massive undertaking that, by Muscat’s own admission, was unlike any other handled by his government.
But the former prime minister said there was nothing untoward about the way negotiations were carried out, that Scicluna had never expressed consternation about his role (or lack thereof) and that Scicluna was a key part of his government’s decision-making.
The three judges who sat on the inquiry either “did not understand” the detail of the Electrogas deal or had been “misguided” by some of the witnesses who testified before the inquiry, Muscat argued to the PAC.
His insistence on the inquiry having missed the mark drew a deadpan response from PAC chair Darren Carabott.
“Three judges are factually incorrect,” Carabott told Muscat.
“Yes, on this point,” Muscat replied. “Do they have the gift of infallibility?”
Muscat was similarly adamant about Scicluna having been misquoted or misinterpreted when he testified to the inquiry, under oath, about a “kitchen cabinet” that pulled the strings in Muscat’s government.
Scicluna’s testimony, he said, had been “strongly extrapolated, to put it mildly.”
During that hearing, Scicluna had also testified under oath that his only role in the Electrogas deal was providing a bank guarantee "at a late stage".
It was the fourth time that Muscat was appearing before the PAC to answer questions about the deal. The committee is probing the contract after the National Audit Office reported that parts of the winning bid to build and operate a gas-fired power station were irregular, with “multiple instances of non-compliance”.
The LNG tanker in Delimara.The tender was awarded to the Electrogas consortium, which Daphne Caruana Galizia was probing at the time of her murder. One of the Electrogas’ consortium’s shareholders, Yorgen Fenech, stands accused of complicity in her murder.
The NAO was once again a protagonist during Tuesday’s grilling of Muscat, as the witness and committee chair tussled over the existence – or not – of a pre-electoral deal concerning the contract.
Auditor General Charles Deguara and Assistant Auditor General Keith Mercieca, who happened to be present, were asked by the committee to explain what they had found.
Deguara said the NAO could find no clear evidence of any such deal, with Mercieca clarifying that the issue was technically outside the NAO’s remit, as it concerned a political party rather than government.
Deguara confirmed that some documents that the NAO had requested were not provided, but noted that this, unfortunately, happened in every single investigation his office had undertaken in the past 15 years.
Excise tax deal was ‘good for taxpayer’
Earlier in his testimony, Muscat argued that an arrangement that allowed Electrogas to dump its €2 million-a-year excise duty bill on Enemalta was part of a broader deal that was “heavily” weighted in the government’s favour.
Taxpayers stood to significantly benefit from the deal, he said. Carabott, unconvinced, asked Muscat to present documents to substantiate that argument when he next appeared before the committee.
At other points during Tuesday’s hearing, Muscat said that:
- It was a “mistake” not to invite the media to an infamous trip he, his chief of staff Keith Schembri, communications director Kurt Farrugia and Energy Minister Konrad Mizzi took to Baku, Azerbaijan in late 2014. He insisted a guarantee to Azeri energy firm Socar was not discussed during that meeting.
- He would not comment on former minister Evarist Bartolo’s comments about his concerns about Schembri’s undue influence. “Mr Bartolo said many things,” Muscat said.
- Malta is too small to liberalise energy distribution [something the PN has proposed] and an idea to liberalise energy supply markets was discarded following fears that private players would target heavy users, leaving Enemalta stuck with subsidising smaller ones and forced to raise prices.
Muscat will return to the PAC for a fifth time on September 26.
Correction July 29, 2023: A previous version misstated Keith Mercieca's title as Deputy Auditor General.
Live blog ends
3.54pm That's all from us today. This live blog will end here. Thank you for having joined us - we'll have a summary of the key points of testimony at the top of this article shortly.
PAC adjourned to September 26
3.50pm Muscat is done testifying today, but he will be returning for a fifth time. The committee is adjourned to September 26.
€40,000 pocket change
3.49pm Muscat – who served as prime minister for 7 years – seeks to dismiss questions about conflict of interests concerning PEPs by arguing the “problem” is that guidelines on the deliniation between public and private business aren’t clear enough.
[Muscat’s government eased guidelines for MPs’ asset reporting and his chief of staff, Schembri, was a career businessman when he assumed the PEP role].
Carabott asks about Schembri’s offshore dealings, and that irks Muscat, who argues those questions are outside the committee’s remit. He also sneers at the suggestion that Schembri set up a company to “only make €40,000.”
“I’d call him a fool if he did,” he said.
Schembri's mystery payments
3.45pm Carabott asks Muscat about allegations that Keith Schembri received $430,000 in “unexplained funds” in January 2015. That came weeks after the Azeri trip.
Muscat dismisses that claim and says he has no knowledge of anything related to that. He then seeks to redirect discussion.
“My chief of staff was charged with corruption concerning Times of Malta,” Muscat says. [Schembri is charged along with various former directors of Progress Press, a sister company of Times of Malta’s publisher Allied Newspapers].
Keith Schembri at the PAC. Photo: Chris Sant FournierThat infamous trip to Baku
3.41pm Muscat is asked about that infamous trip he and his entourage took to Azerbaijan to meet its president Aliyev. The media was not invited to that trip.
Muscat says that was a mistake, but he does not know why the media was kept out.
The guarantee to Socar “was not discussed” during that trip, he says.
That infamous meeting in Azerbaijan;.Muscat stands by deal
3.39pm "I believe it was for the country’s benefit," Muscat says of the project. "The NAO believes things could have done better but that the outcome was the same. If ‘irregular’ means something that does not usually happen, then yes it was irregular. If ‘irregular’ means criminal, then no."
Electrogas guarantee kept secret
3.33pm Questions turn to the government guarantee given to Socar. [The deal assured Socar that Maltese taxpayers would take over if Electrogas could not afford to pay its dues.]
Muscat argues that the guarantee was intended to protect Malta, not Socar. “Socar can sell its gas anywhere in the world. We wanted to ensure that if something happened to Electrogas, we would be covered.”
The guarantee remained secret for years and was only revealed in 2022 after the Daphne Caruana Galizia Foundation won a long-drawn-out freedom of information battle.
Muscat says he believes that was for confidentiality reasons and says he believes the EU Commission had “full visibility” of the situation.
PAC member Alex Muscat says former finance permanent secretary Alfred Camilleri had said as much during his testimony.
Muscat on Keith Schembri's (non) involvement
3.28pm Carabott cites testimony by Evarist Bartolo, who said he was concerned by the extent of Keith Schembri’s influence on cabinet.
Muscat declines to comment. “Mr Bartolo said many things, he has his position,” he says. "I have nothing to say."
Schembri, he adds, was not involved in the Electrogas process. And all the investigations into the project have confirmed that, he says.
Bencini says Schembri chaired a Labour Party working group on energy. So how could he have not been involved in the Delimara project?
Muscat replies that the working group concerned oil, diesel and Libya – not the power station deal.
Muscat's social media strategy
3.24pm Muscat is back in the room. Meanwhile, whoever handles his social media is keeping busy.
'I’m pleased that the Opposition is saying it accepts all reports drawn up by the institutions because this means it is also agreeing with the independent report about Egrant,’ the official Muscat account posts on Facebook.
Roping in the auditor general
3.16pm A bit of drama: Muscat and Carabott clash over the existence – or not – of a pre-electoral deal.
And as luck would have it, auditor-general Charles Deguara is outside the room. He is called in, and Muscat walks out temporarily.
Deguara: “You can’t say all this process was done well, or all of it was done badly.
“We did not find clear evidence to strengthen the argument that there was a pre-electoral agreement in place [for a power station deal]. The NAO lives and dies by evidence. There was no clear evidence on this point.”
Assistant auditor general Keith Mercieca adds that the NAO could not even really delve into the issue, as it is outside the NAO's remit.
Deguara is asked by Cutajar whether some documents the NAO asked for were not provided.
“Yes, I confirm it. In my 15 years as NAO, that’s my biggest regret – that in every investigation, documents requested are not provided.”
Enemalta's profits and losses
3.07pm Graham Bencini tells Muscat that Enemalta lost €35 million in 2020 – all while its Chinese shareholders booked eight-figure profits.
So isn’t it still a bankrupt company to this day, he asks Muscat.
Muscat argues that Enemalta made profits in previous years. Instead of quoting a media report, he should look at previous years’ financial statements, he tells Bencini.
“You are citing just one particular year, when COVID appeared and there were many problems in energy markets,” he says. “You’re extrapolating one issue.” +
Liberalising energy markets
3.01pm Muscat delves into why his government never opted to liberalise the local electricity supply market: the fear was that companies would target heavy users [i.e. industry] and leave Enemalta stuck with lower-end users, he says.
He also takes a dig at the PN’s proposal, made recently, to liberalise energy distribution. That can never happen in a country as small as Malta, he scoffs. At most you could have one distributor in Malta and another in Gozo.
Scicluna 'never showed any discontent'
2.53pm At no point did Edward Scicluna indicate that he wanted to be more involved, or that he was unhappy with his level of involvement in the deal, Muscat says in reply to a question by Robert Cutajar.
Of judges and infallibility
2.52pm The Caruana Galizia inquiry’s conclusions on this point are “factually incorrect,” Muscat says.
Carabott deadpans. “Three judges are factually incorrect.”
“Yes, on this point,” Muscat replies. “Do they have the gift of infallibility?”
The extent of Edward Scicluna's knowledge
2.45pm There’s some heated discussion concerning [former finance minister] Edward Scicluna, his involvement and what he’s said about the deal.
Carabott is keen to emphasise what Scicluna said during the Caruana Galizia inquiry [where he made his famous “kitchen cabinet” remark] while Labour PAC members want Carabott to quote from Scicluna’s testimony before the committee [where he said he could “not remember” cabinet discussing a government guarantee for Electrogas but did not exclude his permanent secretary knowing of it]
Muscat insists, as he has done in the past, that Scicluna’s testimony at the public inquiry was twisted and misinterpreted. He says the two maintain a good relationship, and argues that Scicluna was involved at all stages of the process and says he was “probably more involved than other finance ministers in other governments”.
[Scicluna had testified that his only role in the Electrogas power plant project was providing a bank guarantee "at a late stage"].
Daphne inquiry judges 'may have been misguided'
2.40pm Darren Carabott turns the screw.
He quotes from part of the conclusions of the Daphne Caruana Galizia public inquiry, in which the judges said it was concerning that the finance ministry was not involved in these negotiations.
Muscat says the inquiry judges "did not understand" the matter or had been "misguided" by certain witnesses.
And then Labour whip Andy Ellul pipes up: he’s unhappy with Carabott referring to the Daphne inquiry, as the PAC’s terms of reference relate to the National Audit Office report.
Why was finance ministry not involved?
2.35pm The finance ministry was not involved in the excise duty issue because there was no need for them to do so, Muscat argues. One side [Enemalta] was paying the other [Electrogas]. The finance ministry would only get involved if things like exemptions became necessary, he says.
Muscat then makes a political argument: the Electrogas deal was structured in the same way as many other deals made by previous governments, he argues.
Gasol in the red
2.31pm Graham Bencini steers Muscat over to Muscat’s Gasol recollections.
Muscat had told the committee that in 2013 and 2014 Gasol had a positive net asset value.
Bencini presents copies of the company’s financial statements for those years, indicating the company’s value was negative in those years.
Muscat notes that he has not been given any time to check the documents and says perhaps he misstated the years. But he needs to take a closer look at the papers first.
Electrogas' €30m tax windfall
2.25pm Carabott asks about a decision by Inland Revenue to allow Electrogas to claim €30 million in compensation as a “tax-deductible” expense.
“If that was the [tax] commissioner’s advice, then that’s his advice,” Muscat says.
Excise issue was 'probably' discussed at cabinet level
2.20pm Muscat says he was not involved in those negotiations [that included the excise tax issue], but he approved it when it was presented to him as it was “evidently” in the government’s favour.
He cannot say exactly when that happened. He thinks it would have been raised in cabinet, but cannot say for sure.
Carabott asks Muscat when he would be able to provide the committee with the information he is referring to.
“When I’m next summoned,” Muscat replies, and Carabott is fine with that. So we know already that we can expect another Muscat PAC appearance.
Muscat takes a seat
2.13pm The former prime minister begins his testimony. The first question centres on the excise tax issue.
The power station tender stated that the winning bidder would pay the necessary excise tax. But it turned out that Enemalta had agreed to absorb Electrogas’ excise tax, to the tune of €2 million per year for the 18-year concession – a €36 million commitment by taxpayers.
Muscat says that arrangement was part of a "final settlement" which, he says, "was strongly tipped in Enemalta's favour."
"Many of the measures were costed and it was definitely a favourable [deal]," he says.
PAC chair Carabott is unimpressed and asks Muscat to source the costings and make them available to the committee at a later stage.
Who's on the PAC?
2.10pm Seven MPs sit on the Public Accounts Committee, with the government getting four members and the Opposition three. The latter, however, gets to select a committee chair. Opposition members: Darren Carabott (committee chair), David Agius (replaced by Robert Cutajar) and Graham Bencini. Government members: Glenn Bedingfield, Clayton Bartolo, Andy Ellul and Alex Muscat.
Muscat’s busy day
1.55pm It is Muscat’s second important appointment of the day.
Earlier, he was in court over the breach of rights case he instituted to remove Magistrate Gabriella Vella in the Vitals hospitals case.
Muscat (right) leaving court on Tuesday morning. Photo: Jonathan BorgWhere did it all begin?
1.50pm While we wait for the hearing to begin, it’s worth recalling where it all started: with an NAO report released in November 2018 which found, among other things:
- That the Electrogas bid did not comply with the project tender’s minimum requirements in “multiple instances”.
- That a €360 million guarantee the government issued in Electrogas’ favour was “irregular” and exposed taxpayers to “significant risk”.
- That a security of supply deal that bound the government to purchase a minimum amount of energy from the Electrogas deal transferred all business risk to Enemalta and the government.
It took a further two years before the NAO report ended up on the PAC agenda. The committee began discussing the report and questioning witnesses in December 2020. We’re now more than two-and-a-half years into that process.
What emerged from the earlier grillings:
- Muscat denied ever discussing plans to build a gas-fired power station with the business people behind the Electrogas consortium.
- He said he had no input into the tender document or make-up of the committee, though he said he saw nothing unusual about Konrad Mizzi’s energy ministry recommending specific people to form part of it.
- The former prime minister, who resigned in January 2020 after his friend and Electrogas shareholder Yorgen Fenech was arrested in connection with the murder of journalist Daphne Caruana Galizia, insisted he never discussed the project with Fenech.
- Muscat sought, unsuccessfully, to steer questions towards allegations that his wife owned secret offshore company Egrant.
Welcome
1.45pm Good afternoon and welcome to our live blog. We’ll be bringing you minute-by-minute updates of Muscat’s testimony to the Public Accounts Committee. It’s the PAC’s fourth meeting with Muscat.
The previous sessions have shifted from the mild-mannered exchange we witnessed during his first appearance, towards a more heated clash in the second session, before an even more ill-tempered third session when the former prime minister insisted he never took a cent .