A close associate of Rosianne Cutajar has agreed to file an adjustment to his income tax returns to declare payments he received from a €3.1 million Yorgen Fenech property deal in a move to kill a tax probe. 

In a letter to parliament speaker Anglu Farrugia, Charles Farrugia, known as it-Tikka, claimed the money was actually an “ex gratia” payment he got for introducing the seller and the buyer. 

An ex-gratia payment is a voluntary payment made by someone who is not contractually obliged to do so. 

A meeting of parliament's ethics committee to discuss an ethics probe into Cutajar's involvement in the deal is set to take place at 5pm today. 

A total of €124,000 in brokerage fees was paid, with €93,000 coming from seller Joseph Camilleri and €31,000 from Fenech. 

The payments were enshrined in the original promise of sale agreement covering the deal, which eventually collapsed when Fenech was arrested over the murder of journalist Daphne Caruana Galizia. 

He insisted in the letter that Cutajar, who is also subject to the tax probe, had not “benefitted” from the money paid to him. 

The Mdina property at the centre of the deal.

Cutajar “temporarily resigned” in February following allegations she took a €43,000 cut from these fees for her role in introducing Fenech to the Mdina property seller. 

Her resignation was confirmed last week following the publication of a standards commissioner probe finding wrongdoing by the Labour MP. 

'I was not involved in negotiations'

Farrugia said neither the buyer nor the seller had regarded him as a broker, so much so that he played no role in the negotiations that led to the deal. 

He said he would nonetheless voluntarily be filing an adjustment to his tax return, even though he was not legally obliged to do so, as the payment was a gift. 

No figures were mentioned in the letter seen by Times of Malta. 

The letter was dated July 9, the same day Labour sources indicated that the most likely outcome of a tax probe into the deal would be Farrugia declaring to the tax authorities that he had received the entire brokerage fees. 

The PL’s parliamentary group met on Friday and discussed, among other things, Cutajar’s position and future within the group.

Cutajar's future was discussed by the PL's parliamentary group last Friday.

Sources said Abela had made it clear that the fact Cutajar was the subject of an ongoing investigation into her taxes was undermining his own credibility as leader and that of the party.  

“The prime minister stressed that as long as Rosianne Cutajar is being investigated by the Tax Department, he cannot be seen as credible. It will also undermine any criticism of (opposition leader) Bernard Grech’s own tax irregularities, for example,” one Labour MP said. 

Cutajar admitted to taking a €9,000 cut from a €40,000 pile of cash given to her by Fenech. 

How credible is Farrugia's latest claim? 

Farrugia had admitted to the standards commissioner that he was present for the signing of the €3.1 million promise of sale agreement. 

He told Hyzler that he did "all the work" on the deal, but is now saying that he was not involved in negotiations. 

Farrugia had also initially said Fenech had agreed to pay him the €31,000 in cash, representing a 1% cut on the €3.1 million deal. 

In explaining why she was in possession of €40,000 in cash from Yorgen Fenech, Cutajar had told the standards commissioner that Fenech had asked her to pass on the "brokerage fees" to her associate, minus the €9,000 "birthday present".