An “embarrassing experience” and a “good example of bad practice” is how the Auditor General described the implementation of a Cabinet decision to grant a €500 weekly pay rise to ministers.
No evidence of illegal misappropriation of public funds
The Auditor’s report, which was published at 6 p.m. yesterday after an extraordinarily busy news day, also said “no evidence of illegal misappropriation of public funds” had been found.
The inquiry, carried out at the discretion of the Auditor General, followed a ruling given by the Speaker last March after Opposition Whip Joe Mizzi claimed there was “a strong smell of misappropriation of public funds, carried out collectively by the Nationalist Cabinet”.
Reacting to the report last night, the government accused the opposition of having “once again” made false allegations.
However, the Auditor rapped the officials involved for their “incorrect” handling of the Cabinet decision and laid out a number of recommendations for next time.
“NAO hopes that the lessons learnt from this embarrassing experience, which was a good example of bad practice and which has led to a considerable amount of controversy and public outcry... will be applied in the future.”
The Auditor confirmed that while the remuneration changes decided upon by the Cabinet in May 2008 were immediately implemented for the Prime Minister, ministers and parliamentary secretaries, the Speaker and the Opposition leader did not receive the same treatment.
The Speaker, then Louis Galea, only started receiving his raised salary “at a later stage”, the Auditor said, without specifying when.
Meanwhile, the Opposition leader never received the increases and nor did Dr Galea’s successor Michael Frendo.
“Evidence suggests that the incorrect implementation of Cabinet’s decision is attributable mainly to unclear communications among the key stakeholders involved,” the Auditor said.
The 14-page report confirms that the Opposition leader’s salary was discussed during a Cabinet meeting in April 2009 – six months after Joseph Muscat was sworn in. It was then decided that although the raise should also apply to the Opposition leader, “the details would be hammered out once the current discussions are concluded”.
This is significant because when Dr Muscat announced he had never received his honorarium, Prime Minister Lawrence Gonzi had argued that he was never entitled to it.
In his recommendations, the Auditor said Cabinet decisions involving such pay packets should be communicated to Parliament “as used to be done in past instances”, to avoid any potential misunderstanding.
In the future, “clear and unequivocal” instructions should be given by the responsible authority to ensure all ministries adopt a uniform and standard incidence charge and accounting procedure.
“For transparency’s sake, while respecting the need to deal with Cabinet’s decisions with the utmost confidentiality, taxpayers should be duly informed of any such increases,” the Auditor added.
Also, government departments and public entities should always follow procedures to duly record all documents relative to an issue within an ad hoc ministerial or departmental file to ensure a reliable audit trail.
The Auditor confirmed that the Prime Minister, ministers and parliamentary secretaries all have their “extra” honoraria being deducted automatically from their payrolls until December 2012. Meanwhile, the Auditor’s office was last month informed that Dr Galea refunded the surplus too.
Former Social Policy Minister John Dalli had also confirmed his intention to pay “after some pending issues are cleared”. In its press release, the Auditor confirmed that the payment was refunded on Tuesday.
The Auditor’s report makes no mention of the additional €6,000 duty allowance increase that ministers and parliamentary secretaries received without the public being adequately informed.
This was also never given to the Opposition leader or the current Speaker.
The whole report is available on www.nao.gov.mt
Pay rise timeline
May 5, 2008: Cabinet decides the Prime Minister, ministers, parliamentary secretaries, the Speaker and the Opposition Leader will no longer lose their honoraria as MPs, which will be raised for all MPs to €26,700 from €19,000. The changes are not announced immediately but media reports emerge speculating about a ministerial pay rise.
December 8, 2010: Replying to a parliamentary question about ministers’ pay packets, Finance Minister Tonio Fenech gives details, surprising MPs who were not aware their honoraria had increased.
December 9, 2010: Labour leader Joseph Muscat refuses his honorarium, saying no one should be paid twice for the same job. The rise is later also criticised as insensitive by Nationalist MPs Jean-Pierre Farrugia and Jeffrey Pullicino Orlando, who pledge their honoraria increase to charity.
January 19, 2011: After a meeting with Dr Farrugia, Prime Minister Lawrence Gonzi makes a statement in Parliament postponing any changes to the honoraria until they are agreed upon by consensus at the House Business Committee. Meanwhile, ministers and parliamentary secretaries will refund the difference they have been receiving but retain their double pay.
April 26, 2011: The Times reports that Dr Muscat never got paid his honorarium and the government refused to explain why.
April 27, 2011: The government says Dr Muscat will not receive the pay because the opposition and the government reached no compromise in the House Business Committee meetings.
April 28, 2011: Dr Gonzi says Dr Muscat’s honorarium is included in his pay and since he is “not a government employee” he is not entitled to an additional honorarium.
May 6, 2011: The Times reports that the Prime Minister, ministers and parliamentary secretaries had their €2,329 expense allowance changed to a duty allowance of 20 per cent of their salary (an additional €6,000 increase). It also reports that Dr Muscat and Speaker Michael Frendo were denied their honoraria, duty allowance and an increase in their basic salary, which they were due according to the Cabinet proposals. Former Speaker Louis Galea had received the new pay packet.
May 11, 2011: Labour presents a motion for Parliament to disapprove of the Cabinet’s “insensitive, arbitrary and non-transparent” behaviour. Dr Farrugia says he disagrees with the motion’s wording because it focuses too much on the Opposition Leader’s salary.
June 5, 2011: Dr Gonzi claims there was an “administrative error”.
June 12, 2011: Government defeats Opposition motion.
June 20, 2011: Dr Gonzi apologises for the second time in six months and takes full responsibility for “a series of mistakes”.