Konrad Mizzi was behind the controversial Montenegro wind farm project, a review of the deal has confirmed, as it was finally published following a freedom of information battle by Times of Malta.
The internal Enemalta review by law firm Mamo TCV, concluded in 2021, details how the former minister was the man behind the project taken up by Enemalta.
Times of Malta and Reuters previously uncovered how Yorgen Fenech secretly profited from the 2015 deal, via 17 Black, the same company that was set to wire millions to former government officials Keith Schembri and Mizzi.
Here are some of the report's key findings:
1. Konrad’s project
Konrad Mizzi was the person who “introduced” the Montenegro project to Enemalta.
Mizzi was a close friend and associate of power station businessman Yorgen Fenech, who secretly profited from the wind farm deal via a web of offshore companies.
The report commended Enemalta for not implementing the project “blindly”, even though the state-owned company's political master Mizzi was behind it.
This is evidenced by due diligence reports and the engagement of Ganado Advocates to advise on the project, the report says. The same report however also criticises the Enemalta board's handling of the project.
Mizzi was kicked out of Labour’s parliamentary group after Times of Malta and Reuters revealed Fenech’s hidden hand in the deal.
Fenech made a €4.6 million profit off the deal, thanks to Enemalta paying €10.3 million for the wind farm shares, weeks after Fenech’s associate Turab Musayev bought them for €2.9 million, via a company called Cifidex.
Both Fenech and Musayev were Electrogas directors, the consortium awarded a lucrative power supply contract by Enemalta.
A leaked e-mail from Mizzi’s financial advisors revealed plans by Fenech’s 17 Black to pay the energy minister and former OPM chief of staff Keith Schembri €2 million yearly.
Times of Malta and Reuters revealed how a second company mentioned in the same e-mail, Macbridge, was linked to Chinese advisor Chen Cheng, who presented the wind farm project to Enemalta’s board in December 2014.
All involved deny any wrongdoing.
2. (In)competent board?
Despite praising the board for not implementing the project “blindy”, the report says not all board members “might have possessed the all-round degree of competence and experience that one would typically expect of a competent and experienced director”.
Board members included Kevin Chircop, who previously acted as an advisor to Mizzi.
Other board members included former Infrastructure Malta chief Fredrick Azzopardi, who at the time chaired the board, ex-Labour MP Salvu Sant, engineers Jonathan Scerri, Savour Zammit and Steve Agius.
Scerri and Zammit resigned from the board in December 2014, prior to the final go-ahead for the project being given. They were replaced by Gao Yongxin and Sun Ji, who represented Enemalta's new shareholders, the Chinese state-owned company Shanghai Electric Power.
Mizzi’s personal lawyer Aron Mifsud Bonnici acted as board secretary.
In so far as the board’s independence, the report notes how as is often the case in state-owned enterprises, many of the board members are political appointees.
This has the potential to lead to a lack of independence (or, the perception of the same) exercised by the said appointee, the report says.
Mamo TCV said it was unable to source any minutes showing that the board had discussed the fact that Cifidex acquired the project for €2.9 million, one-third of the price eventually paid by Enemalta.
The report says “one would have expected” that Enemalta would have discussed the matter, which was publicly announced in a press release by the previous wind farm owners Fersa.
“This is surprising, as this should have been considered as a fundamental development and would therefore indicate a weakness with respect to board of director’s effective oversight of the project,” the report says.
At the time Enemalta agreed to buy the shares from Cifidex, Cifidex had not even completed its own purchase of the shares from Fersa.
Enemalta refused to publish the report, only being forced to do so after a freedom of information appeal filed by Times of Malta as part of a legal support programme for journalists by the Daphne Caruana Galizia foundation.
3. Cifidex secrecy
Enemalta “appears” to have been unaware of who ultimately owned Cifidex.
The report says that had Enemalta known Cifidex was owned by Musayev, who had formed part of the winning Electrogas bid, this would have allowed the board to “question the project and the links between the two.”
“The mere fact that the board of directors was not aware of the conflict of interests or potential conflicts of interest that might arise as a result of the alleged identity [of Cifidex’s owner] being disclosed, highlights the importance of, and the consequence of not having carried out, an appropriate due diligence exercise,” the report says.
Moreover, from a simple business perspective, parties typically prefer to know with whom they are dealing, Mamo TCV added.
Mamo TCV said it would have expected “more rigorous due diligence procedures” to have been conducted by Enemalta with respect to Cifidex, to allow it to identify any potential conflicts of interest and any other material issues.
It further highlighted how the agreement with Cifidex protected it from any “alleged overpayment” for the share transfer. Mamo TCV remarked that it had never encountered a similar clause in a contract.
4. ‘Incorrect’ price
One prevalent mystery in the report is why the “incorrect” purchase price for the project was listed on official documents in Montenegro.
Although Enemalta paid €10.3 million for the project shares, the price declared in Montenegro was €3.5 million.
Enemalta bought the shares from an anonymous shell company called Cifidex, which was controlled by former Electrogas director and Fenech associate Turab Musayev.
An intermediary, Stefano Panniello, was used by Musayev to deal with Enemalta over the purchase terms.
Mamo TCV appears to have been given the merry-go-round while trying to establish why an incorrect price was listed on official documents.
Enemalta told the law firm that the matter was dealt with by its legal counsel, while Ganado Advocates said the issue was handled by lawyers in Montenegro.
The Montenegro lawyers, Schoenherr Attorneys, told Mamo TCV that they did not believe that the“underreporting” of the purchase price had an impact on Enemalta.
They however could “not recall” why the price was under-declared.
5. Purged e-mails
The report compiled by Mamo TCV was limited to information provided to it by Enemalta, as well as a few interviews carried out.
Although Energy Minister Miriam Dalli assured parliament that Enemalta cooperated with the review, the report reveals how Mamo TCV had limited information to work with.
E-mails from Enemalta’s board members were not available, as individual board members were not given an official e-mail address.
Enemalta told Mamo TCV that access to personal e-mail addresses “would not be possible”.
Furthermore, Enemalta told Mamo TCV that it was its practice that the contents of e-mail boxes would be “discarded” after six-months after an employee leaving.
The law firm was also unable to conduct any electronic searches on Enemalta’s computers.
6. Policy paucity
The review examined Enemalta’s corporate governance structures to establish whether the project abided by any relevant internal policies.
Mamo TCV concluded that Enemalta does not have any particular policies, procedures and/or guidelines in place when conducting investments like the Montenegro wind farm.
“It follows therefore that Mamo TCV is unable to opine on whether Enemalta’s internal policies and procedures relating to any particular investment process were of a particular standard, nor, naturally, whether there was adherence to any particular policies, procedures and/or guidelines with respect to the project,” the report says.
As a result of the review, Enemalta said it has put the relevant policies in place, including an anti-money laundering policy.