The Finance Ministry’s permanent secretary had called an urgent meeting in September of 2017, after being alerted by a local bank that energy consortium Electrogas had defaulted on a multi-million loan facility guaranteed by the government.
In an email sent to Alfred Camilleri on Monday, September 4, Bank of Valletta had informed the government of a default concerning the bridge loan facility agreement and said the borrower was requesting a waiver that BOV was “not in a position” to concede.
That email had sounded the alarm bells for Camilleri who, within minutes, called for a meeting “for this Wednesday, first thing in the morning,” to deal with the “serious and urgent matter” that was to take precedence above all else.
All stakeholders were summoned, including then-tourism minister Konrad Mizzi and his permanent secretary, Ronald Mizzi.
“I’m risk-averse,” said Camilleri, when testifying at length on Friday about the Electrogas project, before the public inquiry into the assassination of Daphne Caruana Galizia.
Caruana Galizia was murdered on October 16, 2017. A huge cache of Electrogas documents had been leaked to her a few months before her assassination.
Yorgen Fenech, who served as an Electrogas director, stands accused of complicity in her murder. Fenech quit the energy consortium in November 2019, shortly after his arrest.
‘I think this is a good wake up call for GoM’ - Yorgen Fenech
Azzopardi told the court that following the call for an urgent meeting, there had been an internal round of emails between various interested parties on the Electrogas board, including one from Fenech, addressing a certain “Markus” and stating, “I think this is a good wake up call for GoM.”
“You should know what was written behind your back,” parte civile lawyer Jason Azzopardi said when questioning the witness.
“Let me make it clear. I know nothing about such communication,” Camilleri replied, failing to find an explanation for Fenech’s remark.
“What I do know is that that meeting was duly held, first thing on Wednesday, because there was nothing more urgent than that matter and I had kicked up a big fuss (kont għamiltilhom qorti),” said the top official, who has served as finance permanent secretary since 2006.
Camilleri went into detail about his risk-cutting strategies, including maximum collateral and a sound financial safety net, to ensure that the €450 million bank loan, 80% of which was being guaranteed by the government, would not spell negative repercussions for the country’s economic stability.
Seeing all those efforts being wasted at an advanced stage of the process was certainly a cause of serious concern, he explained.
“I am always prepared for default. But at that stage, when we were getting to a financial close, you wouldn’t expect that, no.”
“I took it very badly. It drove me to the edge (Jien Kont ħadtha bi kbira din. Kwazi wasalt fit-tarf),” Camilleri stressed.
Bank guarantee in 2013 was a ‘no go’
The idea of a bank guarantee to Enemalta was first mooted in 2013, following proposals for the shift to gas-powered energy.
However, such a suggestion was a “no go”, given the financial difficulties of Enemalta, with the Auditor General stating that such a guarantee would “land the country in great problems.”
That was the reason why the government had opted for a security of supply agreement, made known to all bidders for the Delimara power station project, Camilleri explained.
However, the process had ended up in a total impasse, when, despite being approved by the state's aid-monitoring review board, the banks insisted upon a legal guarantee, saying that they would only be satisfied once the security of supply agreement was green-lighted by the EU Commission.
The ensuing impasse had cast a shadow upon government policy and necessitated government intervention guaranteeing a bridge loan to Electrogas.
The first guarantee for €110 million came into effect on December 19, 2014, extended by a further €27 million in May of 2015 up to the end of August.
A second guarantee, incorporating the previous one, for €450 million came into effect in July of 2015 and was extended for two months, up to December of 2017, to resolve the default problem following the urgent September meeting.
Camilleri unaware Gasol dropped out of consortium
While having been informed about the default, Camilleri said he only got to know that Electrogas shareholder Gasol had dropped out of the consortium in June of 2015, through the press.
“What do you mean?” asked parte civile lawyer Therese Comodini Cachia, her surprise echoed by the judges on the inquiry board.
“Wasn’t there some clause in the tender agreement for you to be informed about any change of shareholders?” asked Chief Justice Emeritus Joseph Said Pullicino.
“I never saw that agreement and had no say in it. When it happened, it was settled within two days,” came the reply.
“Did you carry out due diligence?” pursued Comodini Cachia.
“Yes, by PwC [Price Waterhouse and Coopers]. After this story, I went back to PwC and told them to reassess the situation. They reported, “there’s nothing to worry about [m’hemmx inkwiet].”
Pressed further about this, Camilleri said, “In all large projects, there’s always an element of concern.”
Scicluna of ‘like mind’
Being “risk-averse”, Camilleri said he had been troubled from the start about the proposed government guarantee and had discussed the matter with his minister, Edward Scicluna, “who was of like mind.”
“But once it was approved by Cabinet, it was approved. That was policy,” Camilleri said.
Asked about meetings with cabinet ministers, he confirmed having been present for internal discussions between Scicluna and Mizzi.
“Was Keith Schembri present too?” asked the board.
“No,” Camilleri replied.
As for the ‘kitchen cabinet’ mentioned by his minister, Camilleri stressed: “all decisions were taken by the whole cabinet. Don’t ask me about a kitchen cabinet because I don’t know about that.
“Whoever made this assertion is better placed to explain it,” he added.
‘Redacted copy of ministry file practically useless’
As his testimony drew to an end for the day, being summoned to testify further next week, the board issued one final instruction.
“We asked for a document [the ministry file on the bank guarantee] and what we got was a redacted copy, which is unacceptable,” said Judge Said Pullicino.
“We wanted a copy of the guarantee but the copy we got is so redacted that it is practically useless,” added Judge Michael Mallia.
The board thus instructed the permanent secretary to pass on the message to the minister that the original document was called for.
“Let me make it clear. I gave no advice on that,” was the witness’s final word.
The inquiry, which continues on Wednesday, has also had its term extended to December 15. It was originally established for a nine-month period which would have lapsed at the end of this month.
Correction August 28: A previous version stated that Alfred Camilleri told the court about a round of internal emails following a call for an urgent meeting. It was Jason Azzopardi who did so.