Malta’s largest audit firms rubbished claims made by Nexia BT’s Brian Tonna that they used to share offices at Castille when Joseph Muscat was prime minister.

Replying to questions from The Shift, PwC, Grant Thornton, KPMG, DF Advocates and RSM denied the claims made by Tonna while testifying under oath during an ongoing analysis by parliament’s Public Accounts Committee (PAC) on the National Audit Office’s report on the Electrogas power station deal.

Tonna insisted that his firm, Nexia BT, was not the only one using offices at Castille during Muscat’s time. “Consultants from PwC, Deloitte, Grant Thornton, KPMG, DF Advocates and RSM would make use of offices at Castille,” he told MPs in an attempt to justify his own company’s proximity to Castille.

“They all shared five offices at the OPM which they could book in advance and hold meetings,” Tonna insisted.

The assertion, which if true would put the firms on a collision course with their international partners due to serious conflict of interest issues, has been flatly denied by all those mentioned by Tonna, except Deloitte, which did not reply to The Shift’s questions.

While a spokesman for KPMG said they “had no knowledge” of what Tonna was referring to, PwC emphasised that while members of its team would have attended meetings at the OPM, “the firm never had the use of shared office space at Castille”.

“It is common that consultants attend meetings at the office of their clients and utilise their facilities for performing their engagements,” PwC clarified.

The same response was given by RSM, which insisted that neither the firm, nor its partners “ever had an office at the OPM or shared an office with any other consulting firm”.

Grant Thornton said “the firm was never aware of such a practice”.

DF Advocates, also singled out by Tonna for their close relationship with the government, also denied the claim.

“Our firm was never engaged nor has any member of our firm ever acted in any capacity, including that of consultants/advisors for the OPM,” the firm said.

Too close to power?

Although the firms mentioned flaunt international credeentials and have denied having an office at the OPM, industry sources told The Shift that in some cases, there was, and still is, a very cosy relationship between the big audit firms, individual partners at the same firms and members of the current government, particularly ministers.

Most of these firms, who employ hundreds, depend on continuous government contracts and assignments to survive.

Some of them were given tens of thousands in direct orders during the past years, not only for auditing assignments of government entities and companies but also for consultation reports, mostly to justify government projects.

Industry sources pointed out some of the most notorious cases, including the use of Deloitte to justify the scandalous sale of the ITS site in Pembroke to Silvio Debono’s DB Group, and the millions given through direct orders to Ernst & Young by the MFSA during the time it was managed by Joseph Cuschieri, a former consultant at the same firm.

“Many of these firms, which include mostly auditors, accountants and advisors, have the ability to produce very comfortable reports for the powers that be and charge hundreds of thousands in fees paid by taxpayers,” industry sources insisted.

“Many of them also wholeheartedly embraced the cash-for-passports scheme and recruited dedicated staff to cash in from Maltese citizenship when the opportunity arose,” they added.

Tonna claims discrimination while pocketing €2 million in direct orders

During the same PAC session, Brian Tonna told MPs how he was not really the favourite at Castille, as claimed by the media, since the government “avoided awarding tenders to his firm due to the negative press surrounding Nexia BT”.

An investigation by The Shift, published in 2019, revealed that during Labour’s first four years in power Tonna or his associated firms received a total of €2.4 million worth of government contracts – 85% of which were through direct orders.

The assignments varied from negotiations on the public hospital’s privatisation deal to a study on public toilets.

Tonna’s Nexia BT had a very close relationship with Muscat’s administration, particularly with Keith Schembri, Muscat’s right-hand man, and audited his Kasco Group for a number of years.

Soon after Labour returned to power in 2013, Tonna had opened and operated secret Panama companies for Schembri, disgraced former Minister Konrad Mizzi and for another individual who was so important his name could not be given in writing but was communicated only over Skype.

Tonna, together with his partners at Nexia BT, are among 11 facing criminal charges over money laundering, fraud and a list of other financial crimes. If found guilty, they risk spending a number of years behind bars.