Finance Minister Edward Scicluna has distanced himself from former prime minister Joseph Muscat's government, describing a "kitchen cabinet" of advisors that "bypassed the system".
Scicluna, who was also finance minister under the previous administration, said he was not part of the "inner core", who made decisions and allowed a series of controversial projects to go ahead.
He was testifying before the public inquiry into the circumstances around the murder of investigative journalist Daphne Caruana Galizia.
Scicluna was the second government minister to give evidence to the board, following Foreign Affairs Minister Evarist Bartolo, who also spoke of a shadow government during Muscat's tenure.
Separately, Scicluna is also subject to a magisterial inquiry into the decision to hand the management of three hospitals to Vitals Global Healthcare.
Highlights from Edward Scicluna's testimony
- Edward Scicluna says he was not part of the 'kitchen cabinet' or 'inner core' that influenced Joseph Muscat's government and 'bypassed the system';
- He named former prime minister's chief of staff Keith Schembri as being part of that core, along with former minister Konrad Mizzi, on some projects;
- He said he advised Joseph Muscat to remove Konrad Mizzi from cabinet after his secret offshore company was revealed in the Panama Papers leak;
- He admits there were weaknesses in the system that allowed a series of controversial 'Schedule 3' projects to go ahead without his ministry's oversight;
- He defended his role in controversial projects, saying it was limited to allocating funds and ensuring they were budgeted;
- He would advise against the Vital Global Healthcare hospitals deal, were he consulting privately on it;
- Scicluna says his only role in the Electrogas power plant project was providing a bank guarantee "at a late stage";
- He did not know Yorgen Fenech, the businessman behind the Electrogas power plant, owner of secret company 17 Black and the man accused of conspiring to kill Caruana Galizia;
1.21pm David Casa has tweeted his reaction to Edwards Scicluna's testimony.
Details of next hearing
1.02pm The inquiry will continue on Wednesday August 19 with Marvin Gaerty, Commissioner for Revenue and the current CEO of the Planning Authority, Martin Saliba.The following Friday, August 21, former police commissioner Lawrence Cutajar is slated to testify.
Scicluna's testimony concludes
12.48pm After more than three hours, Edward Scicluna finishes his testimony for today. We'll have a short summary at the top of this blog in a few minutes.
Request for documents upheld
12.45pm Scicluna says that the finance ministry has no issue with handing over documents but says that the project was handled by another ministry and Projects Malta. The finance ministry was only involved in the granting of a bank guarantee.
The board upholds the request and orders that the documents be handed over.
A motive for murder?
12.35pm Comodini Cachia points out a minute in a meeting stating that the terms of the guarantee was to be evaluated within 10 days by the finance minister and asks him to explain that. He says that the urgency of the situation was that funds would not be tendered unless a bank guarantee was given.
Comodini Cachia formally requests that files of projects linked to Electrogas at the finance ministry be exhibited to the board.
She said it was relevant because the timeline of the project, in light of the investigations by Caruana Galizia, indicates that the motive for her murder might lie in the project.
12.23pm Lawyer Comodini Cachia again presses Scicluna on his role in the Electrogas power plant project, through a bank guarantee.
Scicluna again says that the 'Schedule 3' gave Projects Malta the faculty to "do what they liked. They asked for the guarantee "at a late stage", he says and said it was needed until it passed the Commission.
He said he and his officials wondered how they would get the project past the EU Commission stage.
Comodini Cachia reads a minute from a 2013 board meeting stating that he was to be consulted.
"Again, I can't recall that guarantee was ever mentioned to me before the matter was made public. As far as I know, my permanent secretary was not involved."
He said his role was to ensure no EU rules were breached.
Energy project involvement
12.15pm Scicluna is asked if he was involved in the drafting of the energy project, prior to the 2013 election.
"No I wasn't. I saw a power point presentation on the project and how it was to reduce energy tariffs. There were foreign experts roped in by Mizzi. It was a straightforward project, costing so and so and could be done in a determined time."
He recalls an English consultant at the presentation during the pre election campaign. When bidders were shortlisted, he was informed but only went into details when a bank guarantee was called for because the project needed EU Commission clearance.
He was also not involved in the Request for Proposals process regarding Electrogas.
"It was all in the hands of Projects Malta," he says.
Views on David Casa
12.11pm Last year, Scicluna said that he believed Opposition MEP David Casa and others were letting down their country. He is reminded of those words now and defends them, saying that it was unfair for Casa to influence the European Commission.
Why did you support a vote of confidence?
12.04pm Scicluna is asked why he supported government when a vote of confidence was presented in parliament despite all his reservations detailed to the inquiry.
He said he had left a €100,000 job in Brussels and his comfort zone to enter local politics and he would not take resignation lightly.
"Why should I resign if someone else did wrong? In parliament it was not a free vote. It was either vote in favour or resign. I chose the former. Unfortunately, it was not a free vote."
Power plant deal 'questionable'
12.01pm Azzopardi asks Scicluna what steps he took to "rein in and investigate" the power plant deal.
He says he usually asks for an impact assessment and brings on board expertise. "In this case, we were not asked to do so," he says. "Having said that, the power plant was beneficial. The shift to new energy was good. But the method of going about it was questionable."
Schedule 3 projects
11.54am Scicluna explains that many government projects were labeled 'Schedule 3 projects', which allowed for a degree of freedom that "may have been misused".
This allowed his ministry, and his permanent secretary Alfred Camilleri, to be bypassed.
Lawyer Jason Azzopardi asks why certain projects were entrusted to Projects Malta rather than the finance ministry, which would have done them differently but better.
"Yes, differently for sure", replies Scicluna.
Vitals: 'I'd have consulted a private client to steer clear'
11.45am The questioning turns to the controversial deal that saw Vitals Global Healthcare given a deal to run three hospitals, despite having no prior experience.
Scicluna speaks about the importance of a track record in a particular area. From personal work experience in consulting, he says, "I would have consulted a private client to steer clear."
He says he has not yet testified in the magisterial inquiry into the deal.
11.36am The questioning now moves to the appointment of Silvio Valletta to the board of governors at the FIAU. Scicluna says he was given three names and could not reveal the two eliminated nominees, under advice from the data commissioner.
Silvio Valletta was chosen as the most senior of the nominees. The second nominee was about to retire, he said. And the third nominee did not have the necessary seniority.
"When signing approval of Silvio Valletta, you knew he was the husband of your cabinet colleague?", lawyer Comodini Cachia asks.
He says Valletta held an important rank in the police force and insists that there are situations in other countries where husbands and wives are allowed to work similarly and arrangements are made.
"Was there an arrangement here?" he is asked.
"I'm not aware".
Blank cheque to beef up economic crimes unit
11.30am While this inquiry has been wide-ranging, Judge Said Pullicino recalls that the remit is to see if the institutions could have avoided the assassination of Caruana Galizia. Scicluna is reminded that he was a "senior minister" in Muscat's government, and remains one.
Scicluna assures the inquiry that "from the very start", he had run a risk assessment on economic crimes, before the power plant deal. He said he had summoned the police commissioner and told him that he gave the relevant ministry a "blank cheque" to beef up the economic crimes unit.
The board remarks that there appeared to be an "overhead network" that acted otherwise.
11.26am Do you still believe in the political integrity of Joseph Muscat, Keith Schembri and Konrad Mizzi today, Scicluna is asked.
"I cannot answer that question," he replies. He says he himself has faced "terrible allegations" so he says he cannot judge others until the process has taken its full course.
'I feel let down'
11.22am Great pressure was put on Konrad Mizzi to resign in November, Scicluna says. But he also admits he was not present at a marathon late night cabinet meeting, as he had been excused by the prime minister and was out of Malta.
He says that he feels "let down" by the "kitchen cabinet".
Asked if he feels he was instead, led astray, Scicluna repeats that he felt let down."
The elephant in the room
11.19am Scicluna describes Muscat's government like "a coin with two sides". He says that on the one hand, it was doing a fine job.
"It was positive. On the other hand, there was a shadow, like the elephant in the room."
17 Black revelations 'suppositions and allegations'
11.12am Scicluna is asked if he gave any advice to Muscat after Fenech was revealed to be the owner of secret company 17 Black.
He said he "didn’t have a sufficiently intimate relationship to speak to him about that."
Pressed by Said Pullicino about whether he raised the issue at cabinet and insist for an explanation, Scicluna says there were "suppositions and allegations".
Yorgen Fenech: 'I did not know the man'
11.07am The questioning turns towards Sai Mizzi, wife of former minister Konrad Mizzi. "What benefits did Malta get out of Sai Mizzi?"
Scicluna remarks that she was employed with the foreign ministry.
On the friendship between Muscat, Schembri and Yorgen Fenech, Scicluna says he "had no idea" and "did not know the man". Fenech was "not my age group".
He says he never saw Fenech at Castille.
11.03am Scicluna is asked about Macbridge, the secret company that was to pump millions into the secret companies of Konrad Mizzi and Keith Schembri.
"Does it mean anything to you?", he is asked.
"No," he responds.
10.59am Scicluna is asked about the Montenegro scandal, which revealed how Enemalta agreed to pay €10.3 million for a wind farm in Montenegro, when the same site was worth a third of the price a couple of weeks before.
He is particularly asked about his response to Times of Malta's Jacob Borg, when Scicluna said the government wasn't to blame for certain acts of corruption.
He replied that the finance ministry was involved in the China deal because of the purchase of shares but not any further. He is asked to make a copy of the agreement available to the board.
10.55am Scicluna says that a change in the law to be amended in October will mean that any similar revelations into non-payment of tax won't be met with a fine and people would have to face court.
As the law stands today, people involved in the Panama scandal have paid a penalty and the matter has stopped there.
Labour parliamentary group's advice to Muscat on Panama
10.51am Scicluna gives an insight into Labour's parliamentary group reaction after the fallout of the Panama Papers revelations. He says that in the "early days" the matter had "dragged on" and "justifications were given".
"The majority of the parliament group were advising the prime minister to distance himself. I clearly recall that in the parliamentary group. I recall that crystal clear."
Asked what the prime minister did, he said a decision was to be taken, either by Konrad Mizzi or himself.
"We had discussions later that day but I don't recall anything later."
Influence of business
10.48am Scicluna is asked about the influence of business on Muscat's government. He says it "takes two to tango". Businessmen always try to influence politicians, he says.
Asked about due diligence on various government projects, Scicluna says: "We are not the police."
Scicluna 'advised Muscat to distance himself from Panama Papers'
10.39am Scicluna says he spoke to former prime minister Joseph Muscat after the Panama Papers revelations in 2016 and "advised him to distance himself in an absolute manner".
He also said the he advised him to remove Konrad Mizzi, who was revealed to have a secret offshore company, from cabinet.
Scicluna did not challenge Muscat on corruption
10.33am Lawyer Comodini Cachia asks Scicluna about his comments in a media interview once, where he said he could not go anywhere without hearing about corruption in Malta.
Asked if he had ever challenged Joseph Muscat, Konrad Mizzi or Keith Schembri about allegations of corruption, he replies: "No".
"There are ways and ways of going about it," he says.
10.26am Scicluna speaks about his ministry's guarantee on the Electrogas deal. He says he asked for it to be announced publicly and his ministry vetted it closely. "I only put my signature to the guarantee for a bridge loan."
He says his ministry was only concerned with the impact on the budget and was not bound to check the competence of investors.
Asked who carries out due diligence on investors on so-called 'Schedule 3' projects, Scicluna says it is the ministry involved.
In the case of the AUM deal it was the education ministry, while with Vitals and Electrogas it was Projects Malta, ie Konrad Mizzi, he explains.
Scicluna remarks: "God forbid if one thinks that colleagues are thieves!"
Challenge to extract information from Projects Malta
10.21am Scicluna complains that his ministry found it difficult to get information and at one point 'joined forces' with the Health Ministry to get information from Projects Malta. He says "I can say that Projects Malta was not transparent".
Konrad Mizzi headed Projects Malta, Scicluna explains.
He says that three projects - American University Malta, Vitals Hospitals Deal, the Electrogas project and the Montenegro windfarm were all government policies that were public knowledge.
10.14am Scicluna explains that he never allocated any funds to projects unless there was a cabinet decision or they were budgeted.
On the controversial hospital deal, he said that the funding "was indicated as line items (in the budget) for all to see".
He said the Energy Ministry was responsible for Projects Malta, which managed the public-private initiative such as the Vitals hospitals deal, and Scicluna wanted more information on it.
He agreed there was a "weakness" in the system.
'Everyone knows me as 'Mr No'
10.09am Scicluna is challenged about some of the controversial government deals, and is reminded about early scandals such as Cafe Premier and Gaffarena. Was he involved?
Scicluna says that the finance ministry can not implement Memorandums of Understanding.
What about at cabinet level?
"Good question," Scicluna remarks. "It depends if the matter was on the agenda."
But certain things were out on the media, Mallia exclaims. Didn’t you question in cabinet?
He responds "Obviously I did question. Everyone knows me as 'Mr No', sounding my mind and very rigid in my approach. But whoever wanted to bypass the system would find a way of doing so."
'Your concerns are mine'
10.03am Said Pullicino challenges the systems, saying they failed, "possibly leading to assassination." He suggests to Scicluna: "While you were doing all this work, someone else was undermining it."
Scicluna says that yes, we do have a weakness that needs to be addressed and that the system was interpreted in such a manner that "they kept distant/away and came along only in the end."
“Your honour I can assure you that your concerns are mine!” he says.
Minister gives an overview of ministry
10am Scicluna describes how his ministry is responsible for some €25 million budget a day and says he entered politicis to bring about change. This included passing the Fiscal Responsibility Act and repealing the Public Finance Act, which had not been amended since 1962.
'I wasn't part of that kitchen cabinet'
9.50am Scicluna tells the inquiry board he has been finance minister since 2013. He is almost immediately asked about the influence of former prime minister's chief of staff Keith Schembri and the Office of the Prime Minister on government.
"I wasn’t part of that kitchen cabinet," he says. "This is my opinion, but I felt I wasn’t part of that inner core. There was no buddy-buddy."
Asked to clarify who he is referring to, he says that everyone knew of the close relationship between Schembri and former prime minister Joseph Muscat. He adds that Konrad Mizzi was "with them" on the hospitals deal.
Edward Scicluna enters
9.48am Scicluna enters the hall, briefcase in hand, wearing a mask, and takes his place at the stand.
Prepare for a long sitting
9.45am Comodini Cachia says that she was going through a 600 page National Audiot Office report on the Electrogas power station deal when preparing questions. She says that probably Prof Scicluna’s will not be wrapped up today.
9.42am Chief Justice Emeritus Joseph Said Pullicino, former Judge Michael Mallia and Judge Abigail Lofaro take their place.
What happened in the previous sitting?
9.37am Today is the first sitting of the inquiry this month. Nationalist MEP David Casa was the last person to testify. His evidence focused on the secret company 17 Black, which Caruana Galizia was beginning to write about in the months before her murder. It later transpired to have been owned by Yorgen Fenech, who is facing charges of conspiring to kill the journalist. That compilation of evidence is due to continue on Thursday.
Daphne's family arrive
9.32am: The hall is slowly filling up ahead of today's sitting of the inquiry. Daphne Caruana Galizia's sons Matthew and Paul are here today, along with her sisters. Therese Comodini Cachia, the lawyer representing the family is here as well as lawyer Maurizio Cordina, representing the state advocate.