Yorgen Fenech wrote a resignation letter to Electrogas shareholders six months before he eventually quit its board prior to his arrest, a board of inquiry heard on Monday.
Fenech, who stands accused of complicity in the murder of journalist Daphne Caruana Galizia, resigned all his directorships days before he was arrested aboard his yacht at the crack of dawn in late November 2019.
On Monday, entrepreneur Mark Gasan told the inquiry into the murder that Fenech had been impossible to reach in the months after he was exposed as the owner of secret company 17 Black. That report was published by Times of Malta and Reuters in November 2018.
German multinational Siemens wanted Fenech out following the revelations, Gasan confirmed, and in May 2019 it seemed that wish was about to be fulfilled.
Six-month wait following resignation email
Following a board meeting which Fenech skipped, board members received an email from him in which he said he would be resigning and that Mark Gasan would be replacing him on the board.
Gasan, however, refused to do so, saying he did not have the time to do it. The matter remained pending until November that year, when Fenech was replaced on the Electrogas board by fellow shareholder Paul Apap Bologna.
Gasan, Fenech and Apap Bologna are shareholders in GEM Holdings, which owns one-third of the Electrogas power station venture. Siemens and Azeri energy giants Socar also hold a 33 per cent stake each.
Caruana Galizia, who was killed in October 2017, was researching a cache of leaked Electrogas documents at the time of her murder, and was the first person to name 17 Black, the secret company which emails would subsequently reveal was intended to funnel money to offshore companies owned by former minister Konrad Mizzi and former OPM chief of staff Keith Schembri.
Gasan said that Fenech had denied owning 17 Black and had written his fellow shareholders a “rather long email” in which he rebutted allegations made about him.
But Fenech had never followed through on his pledge to issue a public statement through UK lawyers denying he was 17 Black’s owner, the witness noted.
“I saw nothing,” Gasan said. “Publicly, it looks like he hasn’t denied it”.
From passive investment to hands-on
Gasan said he had entered the Electrogas venture with the intention of being a passive investor in it and leaving it up to others to run. The family entered with a €5 million investment and initial projections were for total project costs to rise to €250 million.
The witness said that the financial models he knew about were for the power station to start turning a profit by "the end of the decade".
His fellow investor Paul Apap Bologna testified last week that the project was expected to be profitable "from 2023".
When confronted with the discrepancy, Gasan said Apap Bologna may have been referring to earlier projections.
Gasan said that he and Apap Bologna were happy to appoint Fenech as the project lead from their end and that Fenech's separate shareholding in GEM through a third company [New Energy Supply Ltd.] was considered fair compensation for the extra work he was expected to put into the venture.
But cost estimates proved to be out of kilter and as cost overruns mounted in late 2015, Gasan said he started to take a more active role in the project.
He and fellow investor Paul Apap Bologna found themselves getting even more involved in subsequent years when Fenech grew more erratic and began skipping board meetings, he said.
Gasan recalled speaking to Fenech’s uncle, Ray Fenech, about his absences and said Ray Fenech was also concerned about his nephew’s behaviour.
Gasan said he and Yorgen Fenech had not spoken since shortly after he was linked to 17 Black. The Gasan family, which has publicly said it is looking for a way out of the Electrogas project, began to get cold feet about the venture around this time, he told the court.
'Nothing untoward' about excise tax issue
Gasan told the inquiry that he was not at all involved in negotiations with government entities concerning tax arrangements or other concessions.
Controversy about who was to pay excise duty related to fuel imports for the project was overblown, he suggested, and the issue was handled by consultants PwC.
A court has heard how then-Energy Minister Konrad Mizzi had issued instructions for Enemalta to absorb the cost of excise duty, despite its insistence that Electrogas was responsible for paying that money.
In an email read out in court on Monday, Gasan told Electrogas board member Turab Musayev that the matter was a “€40 million issue” and asked whether investors should “skip Enemalta and go to the minister”.
Gasan insisted he had only made the suggestion and had not followed through with it.
Muscat at his wedding
Gasan told the inquiry he had not known of Fenech’s personal ties to top Labour officials such as Keith Schembri or Joseph Muscat and only learned that he was friends with Konrad Mizzi later.
Asked about his own ties to those three men, Gasan said that he had met Schembri a “couple of times” after the Electrogas consortium had been awarded the power station contract and had spoken to Mizzi for the first time during the official ceremony to open the power station in 2017.
He and former prime minister Joseph Muscat, on the other hand, were acquainted: Gasan said he had invited Muscat to his wedding and the two had met at some social events.
The witness, however, denied having ever talked business with Muscat during any social events prior to 2013 and also said he had no recollection of an alleged dinner which Yorgen Fenech’s father George had hosted at Portomaso some weeks prior to the 2013 general election.
According to lawyer Jason Azzopardi, Muscat, minister Karmenu Vella, Mark Gasan and Joe Gasan were all in attendance.
The inquiry continues on Wednesday, when minister José Herrera is due to testify. The inquiry is also likely to hear further testimony from Paul Apap Bologna, whose first testified last week.
The witness was also asked about the process to get the power station project under way.
Gasan said that they had been approached by George Fenech around February 2013, with a proposal to join the consortium.
Fenech had already spoken to Paul Apap Bologna.
Gasan said that he had not met anyone from the Labour Party at that stage. It was after the 2013 election that discussions got underway.
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