The National Audit Office (NAO) on Wednesday published its 600-page investigation into Electrogas, the consortium behind the gas power station that is mired in corruption and part-owned by Yorgen Fenech of 17 Black.
The evidence is damning. Yet the government knows that few, if any, will read the full NAO report. The government was prepared with an arsenal of disinformation materials to control the narrative and spin the report into an attack on the Opposition, and a platform for praise for the success of Joseph Muscat’s government.
Even former union boss Tony Zarb – the newly appointed ‘consultant’ to Tourism Minister Konrad Mizzi – started to earn his keep by supporting Mizzi’s stream of videos and promotional material pushing false narratives.
The government pumped out the disinformation hard and fast, attacking journalists dealing with the facts in the report in the process, and filling the airwaves with multiple false and deceitful narratives in the hope that some useful ones will stick.
Let’s compare the facts that emerge in the NAO report and the government spin that followed:
What the NAO investigation found
- The €360 million (later raised to €432 million) government guarantee on Electrogas’ loan was “irregular” and posed “significant risk” that was completely transferred to taxpayers. The NAO noted that this guarantee emerged in mid-2014, when it became evident that the ElectroGas Consortium would struggle to obtain funding.
- Electrogas’s bid to build a power-station and control a monopoly supply of energy to Enemalta failed compliance with minimum requirements on “multiple instances” to win the public contract.
- The price per unit of electricity bought by Enemalta would have been 64% lower (€50.64 megawatts/hour cheaper) had we stuck with the interconnector rather than gone with Electrogas.
- The supply deal lost Enemalta €10 million over a 15-month period.
- Electrogas’s bid (Stage 4) was assessed by three Nexia BT employees, including Brian Tonna, which opened secret Panama companies for the Minister behind the deal, Konrad Mizzi, and government chief of staff Keith Schembri. Tonna was also the auditor for GEM Holdings, a company behind the bid that’s part owned by Yorgen Fenech, who also owns 17 Black – the company set to transfer €150,000 a month to Schembri and MIzzi’s companies
- A pre-2013 election presentation by GEM bore “multiple similarities” to the final project Enemalta undertook, lending “credence” to former PN Leader Simon Busuttil’s claims that the project was sewn up ahead of Joseph Muscat’s first election.
- Financial due diligence was lacking particularly in relation to Gasol plc, the lead partner in the Electrogas consortium, about whom concerns were too readily discarded. When Gasol hit financial troubles and needed to be removed from the equation, this change in the consortium’s composition and transfers of Gasol’s shares was in breach of the Implementation Agreement.
- There was a “possible distortion” of the tendering process with the late inclusion of conditions securing minimum revenues for the bidders, favouring those with less financial resources.
The NAO’s investigation corroborates the report published in The Guardian in April that revealed that over the past year, Malta paid at least €131.6 million for its gas – nearly twice the open market rate. The report also revealed that a total of €1.3 million was transferred to 17 Black, which is owned by Electrogas director Yorgen Fenech.
The government’s disinformation tactics
Government officials repeatedly made the claim across Labour Party media and social media that consumer electricity prices are lower thanks to the new power station. One social media meme from Konrad Mizzi claimed that the power station is giving €80 million to the Maltese people every year.
Global energy prices have more than halved since 2013. No one in Malta had any control over this. The right comparison is what we’re paying with Electrogas now compared to other currently available options. The NAO investigation makes this comparison finding that over the most recent months, we’ve been paying 64% more than necessary.
While government and Labour media were busy pushing the price deceit, Mizzi and his associates busied themselves with promoting the minister’s other projects. Social media was flooded with memes about Air Malta and e-gaming, now under Mizzi’s control and photos of Mizzi that made absolutely no connection to the NAO report or to the power station, pushed by Tony Zarb.
Labour Party media and government officials repeatedly pushed the lie that the NAO investigation called the process for the Electogras award “fair and transparent”.
The NAO used the word “transparent” just four times in its 600-page report, and all four times in the context of what a process should be rather than what it was.
The report made no mention of “best practice” and comments, red-flags and concerns raised throughout make it amply clear this process was anything but:
- “The NAO’s concerns regarding the design of the procurement process emerge.”
- “Concerns relating to the uniformity of approach and the extent of leniency applied.”
- “Certain infringements… were substantial, constituting evident departures from the provisions stipulated in the EoIC with respect to administrative compliance.”
- “[A] concern that emerged from the NAO’s review of the EoIC evaluation process was the inconsistent approach at times adopted by the EoIC Evaluation Committee in its assessment of submissions. While the NAO acknowledges that a number of submissions were rightly eliminated on sufficient and justifiable grounds, this Office noted that others were allowed to proceed to the RfP despite similar shortcomings.”
- “Concerns regarding the governance of the RfP (Request for Proposals) process emerge.”
- “These major changes, at this stage in the RfP process, were deemed by the NAO as a shortcoming in terms of the governance of the procurement process. … the nature of the changes and their timing drew the Office’s concern, for they drastically altered the nature of the contractual relationship that was to be entered into, rendering the risk to revenue for the selected bidder inexistent”
- “Implications on value for money.”
- “Of significant concern to the NAO was the lack of appropriate due diligence undertaken at the RfP stage of evaluation… Checks relating to fraud, bribery and corruption, internal controls, risk management considerations, ethical conduct and other governance issues were not part of the due diligence carried out.”
The disinformation campaign waged by the Labour Party and the government is publicly funded.
It is taxpayers’ money that Mizzi is using to promote his thousands of sponsored posts, live videos, and memes across Facebook. His target audience: people aged 16 and older in Malta.
When a Times of Malta journalist pointed out this abuse of public funds to Mizzi’s head of marketing, Alex Cutajar (of “Alex, please manage this” fame), hit back with “surely it reaches a much wider audience than your pathetic articles”.
It is the government that has rendered us pathetic – using our own money to feed us lies.