President George Abela yesterday announced that the government has appointed a board of inquiry to establish whether his former right-hand man leaked confidential documents to the media in order to "create a story" about the head of state.

In a surprise press conference yesterday afternoon, Dr Abela said his office had compiled an official report on the matter which will be submitted to a board set up by the government to "establish the facts".

The board will be led by Alfred Fiorini Lowell, former head of the Public Service Commission, the body which disciplines civil service staff.

Dr Abela said he had no idea what the 'leaked' documents were about, but added: "These papers from the Office of the Presidency, that are in people's hands, do not worry the presidency in themselves as much as the interpretation being given to them and that is why I am here today."

Yesterday's press conference comes after a series of newspaper articles alleging that the President's former secretary, Olaf Terribile, left his post at the after flagging financial irregularities.

Dr Abela dismissed this claim yesterday, saying that after initially trusting his right-hand man he had "lost faith" in Mr Terribile because of the way he had behaved.

He did not go into detail, but pointed out that Mr Terribile had effectively been sacked from the post on June 9 by the head of the civil service, after Dr Abela complained about his most senior member of staff. Mr Terribile has since returned to the Foreign Affairs Ministry.

The President also dismissed the charge of financial irregularities in connection with the €32,000 refurbishment of the Sir Anthony Mamo room at San Anton Palace.

Here too, he pointed fingers at Mr Terribile for questions that surrounded this project. In a detailed explanation, Dr Abela said there were two payments for the room's restoration, one for €20,000 and the other for a little over €12,000.

The first payment was in line with estimates and was endorsed by the finance ministry last year, even though the ministry observed that approval should have been sought before the office committed itself with suppliers, not after.

However, the ministry withheld payment after being told by Mr Terribile that he was not in a position to approve the bill. What his former secretary had omitted to tell the ministry, the President said, was that he could not sign off the paperwork because he was no longer officially the head of secretariat when he received the request for his signature.

"When we explained the situation, the ministry said it had no idea Mr Terribile was leaving. The matter was settled and payment was approved," he said.

Dr Abela also rejected the accusation that his office was being extravagant, pointing out that the Sir Anthony Mamo room had not been refurbished for at least 20 years and had to be redone from top to bottom, including the restoration of seven paintings by Giuseppe Calì.

"The Office of the President receives an annual budget of €2 million but when the wage bill of €1.2 million is deducted, all that is left is €800,000 which has to make good for hospitality expenses, state visits, maintenance and all the rest," he said.

He also referred to the setting up of an audiovisual department within the Community Chest Fund and the employment of Noel Pace and Fabian Mizzi, directors in the production company Image 2000, in which the President's spokesman Marica Mizzi is also a director.

Dr Abela said Mr Pace and Mr Mizzi were employed following a unanimous decision in August 2009 by the board of the Malta Community Chest Fund, which is made up of representatives from the main parties, the Church and civil society.

The rationale behind their employment was to save money on the thousands of euros spent contracting audiovisual material for the charity extravaganza L-Istrina, with the setting up of an in-house department, which even ended up being used by the government during the Pope's recent visit.

The two men were employed on a fixed term contract for a year, which included an obligation for them to bring their own equipment. He insisted that the Malta Community Chest Fund had no connection with Image 2000 and had employed Mr Pace and Mr Mizzi precisely because it wanted to deal with individuals - not companies.

They were the only ones "on the market" who were willing to bring their equipment with them, Dr Abela said. However, when The Sunday Times asked whether they were chosen through a call for applications, the President's response was that there was no need for such a call.

Several attempts yesterday to contact Mr Terribile for comment were unsuccessful.