An audit into the transport regulator has uncovered how it “often bypassed” rules meant to bolster checks and balances in the way public money is spent.

A comprehensive report by the Auditor General, an independent audit body, found that among other shortcomings, Transport Malta took to bypassing procurement rules by failing to consult the Finance Ministry when issuing €17 million worth of direct contracts over a certain threshold.

Public procurement regulations only allow an authority to issue a direct order up to the €10,000 threshold. Any direct orders above that amount must be approved by the finance ministry, and only in exceptional circumstances.

Transport Malta’s former chairperson even took what the Auditor General described as the “unconventional route” of handling “substantial self-procurement”.

Transport Malta’s former chairperson even took what the Auditor General described as the 'unconventional route' of handling 'substantial self-procurement'

The Auditor General said Transport Malta needs to put in place procedures that reduce its reliance on direct orders and instead obtain quotations for services on the open market or issuing tenders through the normal accepted channels.

According to Transport Malta’s management, most procurement was “often urgent”, requiring the use of direct orders.

While the Auditor General acknowledged that some projects might have “fallen onto the authority’s lap” without prior notice, this was certainly not the case for all projects.

The Auditor General noted that the list of direct orders provided included spending on consultancy work and survey costs, for which the audit office could not understand the nature of the urgency.

Taken to the cleaners

The audit detailed how Transport Malta had a request to award a €1.2 million cleaning contract via negotiated procedure, a form of direct order, rejected by the department of contracts.

The department rejected the request due to what it described as “bad planning” by Transport Malta.

According to the Auditor General, Transport Malta nonetheless awarded the contract for cleaning works, at a total cost of €57,820.

No clarification was forthcoming to the Auditor General on how the cleaning contract was suddenly worth a fraction of the original €1.2 million requested by Transport Malta for cleaning services.

Furthermore, the audit discovered how Transport Malta spliced the cleaning contract into smaller tranches of €8,260, in a possible ploy to avoid hitting the €10,000 ceiling that would require finance ministry approval for the direct order.

The Auditor General said that seeing how Transport Malta’s original request for the direct order was rejected by the department of contracts, a tender for the cleaning works should have been issued.

Splitting the costs into smaller tranches and going ahead with the expenditure anyway “surely goes against the spirit” of public procurement regulations, the Auditor General said.

Clerical duties by direct order

Since the end of 2019, clerical duties at Transport Malta have been subcontracted to two service providers.

The Auditor General said that notwithstanding the over €2.9 million in payments to the two providers, Transport Malta engaged them by “direct contract”, without finance ministry approval.

Instead of entering into one service contract with the two providers, Transport Malta instead signed individual contracts with the 51 temporary workers.

The audit revealed that the subcontracted clerks were not being replaced by the service provider whenever they were absent from work due to vacation or sick leave. In addition, one of the service providers was also charging Transport Malta for those hours when its employees were away on vacation or sick leave.

Then Transport Minister Ian Borg was found to have personally approved spending of €400,000 on an exhibition showcasing a €6.1 billion proposal for an underground metro. Photo: Jonathan Borg

That Metro exhibition

Then Transport Minister Ian Borg was found to have personally approved spending of €400,000 on an exhibition showcasing a €6.1 billion proposal for an underground metro.

The Auditor General found a quotation for the exhibition was only sought from one “experienced supplier”, a reference to Labour Party events suppliers Tec Limited.

The option of obtaining quotations from other suppliers was not considered by Transport Malta, due to “confidentiality purposes”.

Despite the approved budget of €400,000, Tec ended up being paid €503,000.

Tec is the same company used by Borg to supply equipment during six campaign events in the lead-up to the March 2022 election.

The finance minister this year confirmed that the project is no longer viewed as a priority by the government.