State agency Festivals Malta is being managed like a rural village club, with no procedures or systems in place, no compliance to rules and no adherence to public procurement laws, all of which could lead to possible abuse of public funds, according to a National Audit office report.
The agency, which was set up in 2019 to organise and manage national festivities, previously formed part of the Arts Council and is currently run by veteran Labour broadcaster Norman Hamilton.
Ironically, a few weeks ago, just as the damning NAO report on the agency was published, Hamilton, its chairman, was awarded one of the highest honours of the state, the Order of Merit.
In its findings, the audit discovered that the agency has been turned into a ‘recruitment hub’ for certain service providers – consisting mostly of the same individuals who serve the Labour Party during mass events – through repeated direct orders, paid for by taxpayers.
Jobs by direct order
The NAO slammed this ‘system’ as leading to a complete lack of observance of public procurement rules, pointing to the fact that the agency, with a budget of €5 million a year, depends on some 30 individuals and entities providing their services on a contract basis.
No calls for expressions of interests are issued, although the sums involved normally require a fully-fledged tender, the NAO said. Instead the appointments were being made through direct orders, following the approval of the agency’s CEO, Anabelle Stivala – another staunch Labour sympathiser.
Even more worryingly, contracts are being issued and renewed every three months “consciously bypassing procurement regulations”, the NAO concluded.
In an exercise carried out by the auditors it was found that contracts given to individuals are “vague and lacking clearly defined tasks,” while, although the service providers are not on the agency’s payroll, Festivals Malta is still paying the full contract amounts, even for periods of absenteeism.
“Notwithstanding that upon expiration, a new contract was endorsed each time, this was an absolute copy of the preceding one,” the NAO noted.
“By way of example, the major events that a consultant was expected to be responsible for as per contracts dated 20 August and 20 November 2020, were already held in the respective preceding months,” the NAO found.
According to the list of direct orders, published belatedly by the agency, some familiar names appear frequently.
These include Sean Buhagiar – a close collaborator of Arts Council Chairman Albert Marshall; Sandro Kitcher – a former One TV cameraman; David Borg – a former assistant of disgraced Prime Minister Joseph Muscat; Felix Busuttil – a former Labour election candidate; Willie Mangion – a singer who promoted Joseph Muscat before the 2013 election; Mark Grima – son of former Labour Minister Joe Grima and many others.
One big carnival
Focusing on the organisation of Carnival 2020 – one of just two major events organised by Festivals Malta during the Covid-year, the NAO found a collection of irregularities.
To try to mitigate some of the hundreds of thousands of public funds forked out by taxpayers for the annual traditional merriment event, tickets are sold by Festivals Malta to those wanting to watch the spectacle.
The audit established that out of all available tickets, 33% are distributed free of charge, as complimentary, while the rest are sold through a system with little or no oversight.
The NAO could not establish how many tickets were sold for each of the three categories available – gold, silver, and bronze.
Testing also revealed that tickets were not numbered, and the same ticket could be sold more than once during the same event.
Also, the entities involved in the organisation of Carnival 2020 activities took more than a year from when these activities were held to reconcile proceeds from the same of tickets to the data in the ticketing system, and the depositing of the respective funds. The NAO said that the delays highlighted are “deemed unacceptable.”
Chairman Norman and many others
While Festivals Malta is ostensibly managed by a board of directors, appointed by Culture Minister Jose’ Hererra, there were other mini-boards set-up to steer many different events while increasing the ‘honoraria’ paid to members.
The NAO found that in 2020, when practically no activities were held due to the pandemic, the government paid almost €200,000 in honoraria to members of all the boards.
It also concluded that the chairman of Festivals Malta himself, Norman Hamilton, was failing to follow the rules.
While according to law, board meetings are to be held at least once a month, there were occasions where a board meeting was held once every six months.
“Minutes of meetings were endorsed by the Board’s Chairman and the CEO, when the signature of the Board Secretary was also required”, the NAO observed, while “timings when the meeting was initiated and adjourned were not disclosed”.
It was also found that payments to board members were being taxed wrongly by FM, deducting just 15% of the proceeds as if it were part-time work, when this went against specific taxation rules.