The bulk of an annual grant of €20,000 controversially given to Staġun Teatru Malti to develop scripts for Maltese language theatre productions was used to pay the company’s owner, Mario Philip Azzopardi and his wife Therese, according to an internal audit carried out by private auditing firm RSM.

The audit, seen by The Shift, described the payments as “improper” and warned that they “may expose the entities involved (Manoel Theatre and the Arts Council) to unwarranted negative publicity”.

Despite the audit’s conclusions in 2016 – two years after the start of an ad hoc grant the government arranged exclusively for Azzopardi – both the Manoel Theatre and the Arts Council continued offering the annual funding – the total so far is €160,000.

The RSM audit report was commissioned by the Arts Council following serious accusations made by another theatre director, Sean Buhagiar, at the time a shareholder with Azzopardi in the company Staġun Teatru Malti.

After falling out with Azzopardi, Buhagiar – himself a regular recipient of direct orders and appointments – accused Azzopardi of abusing public funds.

In his written statement, Buhagiar insisted that he had seen documents “which hold evidence that there has been misuse of public funds which the company received”.

In its short audit report and basing itself on information afforded to it by the Arts Council, headed by Mario Azzopardi’s close friend Albert Marshall, RSM concluded that it could not find any evidence that Azzopardi and his wife were abusing public funds, even though the wording of the contract signed with Staġun Teatru Malti left much to be desired and included a number of loopholes.

However, a study of payments made during the first two years of the grant found that “a significant portion (72%) of the disbursements (paid through public funds) covered invoices issued to Mr and Mrs Azzopardi”.

RSM underlined that “the existing contract does not include any clause which controls and/or excludes such amounts claimed”.

In its conclusions, the audit recommended that “the respective contracts should include specific and appropriate clauses which regulate payments to directors and family members so that the relevant reputational risks may be effectively mitigated”.

The audit also found little or no oversight of how the €20,000 annual grant was being spent by the Azzopardis, even though, technically, it was the Manoel Theatre that was supposed to be administering the fund.

“The Manoel Theatre management indicated that disbursements, amounting to €15,000, affected to replenish the floating fund of €5,000 were made upon the request by Staġun Teatru Malti directors (Mario Philip Azzopardi and his wife) rather than upon presentation of authorised expenditure as indicated in the contract”.

Also, while the same contract regulating the grant stipulated that scripts for plays were to be approved before their finalisation, the Manoel Theatre management admitted that “no synopsis was ever handed to Manoel Theatre for consideration”, as required by the agreement. “The draft script was not submitted regularly to Manoel Theatre prior to the performance.”

According to the audit, generally, the Manoel Theatre Board, led by lawyer Michael Grech, “simply discussed the title of the script”.

Mario Philip Azzopardi, 71, recently faced criticism for announcing a play for the Manoel Theatre that was regarded as an attempt to tarnish the reputation and memory of journalist Daphne Caruana Galizia, assassinated by a car bomb in October 2017.

Following a public uproar, the Manoel Theatre management decided to cancel the play, titled ‘Ix-Xiħa’. Azzopardi immediately announced on social media that the play would still be presented in another theatre.

Azzopardi has been a controversial figure since his return to Malta in 2013 after spending most of his adult life (35 years) in Canada.

Upon his return, he started producing propaganda videos for the Labour Party, at the time led by disgraced former prime minister Joseph Muscat.

He was later awarded a raft of direct orders and appointments by the government, including that of artistic director of the Valletta 2018 European Capital of Culture, through an €80,000 contract.

Questions were sent to the Manoel Theatre asking whether it would be extending contracts with Azzopardi. No reply was received at the time of writing.