A controversial scheme to broker minimum wage jobs for unemployed people has proven lucrative for two men close to the General Workers Union, financial records reviewed by Times of Malta show.

Ex-GWU lawyer Aron Mifsud Bonnici and the union’s financial consultant Robert Borg between them extracted over half a million euros in “dividends” and “directors’ fees” from two companies involved in the publicly funded community work scheme.

The job placement scheme was in 2016 outsourced by JobsPlus, the government’s job placement agency, to a “non-profit” foundation set up by the GWU. 

Two sources with knowledge of the GWU’s operations raised concerns with Times of Malta on the lack of transparency within the union about how profits from the government contract are being distributed and used internally.

The contract essentially took an existing jobless scheme that had been run by JobsPlus since 2009 and introduced middlemen into the process, against the payment of fees by the government.

No formal feasibility studies were carried out to justify the outsourcing of the scheme to a private operator.

At the time, the opposition slammed the scheme as a “scandalous” way for the GWU to profit off vulnerable workers.

The GWU’s non-profit foundation outsourced the running of the scheme to District Operations, a private company that is majority-owned by the union’s commercial arm, GWU Holdings.

Mifsud Bonnici and Borg also own shares in District Operations, via another company called District One.

Precise details about how the scheme’s profits are distributed have been kept under wraps, with the GWU citing commercial sensitivity when questioned by Times of Malta.

Financial records reviewed by Times of Malta reveal how Borg and Mifsud Bonnici extracted over €540,000 in private profits from the scheme in a short period of time.

The records show Borg received payments totalling €163,000 between 2016 and 2019 from District One and District Operations. Mifsud Bonnici in turn extracted €380,000 from the scheme between 2017 and 2021.

This figure includes an average of €90,000 yearly in dividends from District One between the end of 2018 and the beginning 2021, totalling €257,000.

Mifsud Bonnici received a further €126,000 in payments from District Operations between April 2017 and January 2021.

When contacted, Mifsud Bonnici said the payments are dividends from his shareholding in District One and District Operations, which are taxed at source, and accurately reflected in the group’s accounts.

Borg told Times of Malta that the payments from District Operations are for director's fees, payable monthly, plus value added tax, according to law.

“A fee that was approved by the company’s board of directors and as duly audited and accounted for.”

He said the payments from District One represent dividends from his investment in the company.

How profits are generated

A freedom of information request by Times of Malta shows how the GWU invoices JobsPlus for approximately €1 million per month to run the scheme.

This figure varies slightly, depending on how many workers are currently employed by the GWU’s foundation.

The bulk of the workers end up being employed by local councils, ministries and schools as cleaners, street sweepers, handymen, clerks and customer care officers.

Although the low-skilled workers are engaged on a full-time basis with the GWU’s foundation, their salaries are entirely funded by the government, and many of them end up working with government entities.

The monthly invoice covers the government’s reimbursement of the workers’ salaries, as well as fixed “operation and management” fees charged to the government per worker.

The “operation and management fees” amount to approximately €116,000 monthly, or €1.4 million annually, according to the bid submitted by the GWU in 2021, when the JobsPlus €109 million contract was renewed.

It is topped up by additional “training fees” charged by the GWU.

This training fee, according to the GWU’s financial bid, amounts to €14,000 monthly or €168,000 annually.

The training is subcontracted to Melita Training and Resource Management, which is also owned by the GWU.

Decades-long hole in GWU accounts

The profits extracted by Borg and Mifsud Bonnici are over and above the cut that goes to the GWU, who are the majority shareholders in the scheme, via the company GWU Holdings.

GWU Holdings’ last available audited accounts date back to 2004, making it difficult to ascertain what portion of the scheme’s money is making its way to the union.

GWU President Victor Carachi, Secretary General Josef Bugeja and Deputy Secretary General Kevin Camilleri all act as directors of GWU Holdings, as well as District Operations.

When contacted, Bugeja said that while the GWU retains the right not to disclose commercial information related to the scheme, all statutory financial reporting obligations are adhered to.

“In so far as GWU Holdings Limited, I am advised that audited accounts have been submitted, bar those relating to one financial year over two decades ago, which could not be traced by the auditors.

“The technical issue preventing subsequent years from being visible in view of the missing year is being addressed, as is the missing year itself. The matter predates my role at the helm of the organisation, and I remain committed to ensure that the GWU achieves full compliance with its subsidiaries’ reporting obligations,” Bugeja said.

He said that the union’s participation in commercial ventures like the community work scheme makes it possible for its members to receive effective representation in collective bargaining, as well as individual support through a portfolio of membership benefits.

Opinion of the Auditor General

The auditor general has in the past raised the alarm about the absence of “sound monitoring mechanisms” by JobsPlus to ensure the scheme’s objectives and productivity levels reach the “desired levels”.

In a 2019 report, Auditor General Charles Deguara observed that JobsPlus was failing to review payments it was making towards the scheme’s running.

The report said JobsPlus was not reviewing the financial statements submitted to it by the GWU for “any significant and unusual transactions”.

“A case in point relates to management charges payable of around €822,000 and €959,000 quoted within the 2016 and 2017 financial statements respectively,” the auditor general's report said. 

The report said that the absence of such information prohibits JobsPlus from making “informed decisions” about the scheme.

A 2022 report by the auditor general found that “only” just over eight per cent of the 1,476 people engaged by the GWU’s foundation between January 2016 and July 2022 went on to find full-time employment outside of the scheme.

Workers finding outside employment would represent a financial loss for the GWU, seeing that the “administration fee” is charged pro-rata per worker in the scheme.

The auditor general said more had to be done to ensure the scheme improved the applicants’ employability skills rather than ending up simply as a “numbers exercise” whereby persons are just struck off from the unemployment list and shifted on to this scheme.

Yet another report, published in 2023, raised “significant concerns” about the scheme’s administration vis-à-vis the workers assigned to the Gozo ministry.

An audit found that the total weekly hours on the attendance sheet of a maintenance and general cleaner “did not reconcile” with the 40-hour per-week he was meant to work.

Furthermore, no attendance records were found for an entire week during an audit sample for a beach cleaner.

The auditor general warned that for “control and transparency”, detailed attendance records are to be maintained for each employee to substantiate the respective payments, which would also enable internal and external verifications.

What about the GWU foundation?

The GWU Foundation’s accounts are not publicly available.

It is however obliged to pass on an overview of its finances to JobsPlus, which Times of Malta obtained via a freedom of information request.

In 2019, the foundation declared a profit of just €600, as its €13.3 million worth of revenues were wiped out by €13.3 million in “administrative expenses”.

The administrative expenses include the profits that go to Borg, Mifsud Bonnici and the GWU. 

The following year, the foundation declared revenues of €15.6 million. However, these too were wiped out by €15.6 million in “administrative expenses”.

When contacted, Borg said these “administrative expenses” cover the salaries of the community work scheme employees and “management fees in line with the tender requirements”.

He said there is a 21-man team running the scheme, 17 of whom are employed full-time.

Apart from the GWU link, Borg and Mifsud Bonnici’s paths have crossed in the lead-up to the “fraudulent” Vitals Global Healthcare hospitals contract.

Borg was hand-picked by ex-minister Konrad Mizzi’s ministry to sit on the selection committee that chose VGH to run three public hospitals, while Mifsud Bonnici acted as secretary to the same committee and went on to carry out contract negotiations with VGH.

Times of Malta had also revealed in 2021 how Borg was involved in a company at the centre of secret financing accusations involving murder suspect Yorgen Fenech and the Labour Party.

Borg denies wrongdoing.

Research for this article was supported by OCCRP/The Daphne Caruana Galizia Foundation.