REVEALED: Konrad Mizzi’s secret agreement with Azerbaijan’s SOCAR

Tista’ taqra dan l-artiklu bil-Malti hawn.

  • Before today, this agreement had not been made public. Requests for copies, even in parliament, have been repeatedly stonewalled.

  • Electrogas got an open cheque for SOCAR – taxpayers would make up for debts if the private company failed. This was in addition to the previously reported guarantees to Bank of Valletta which ballooned to €432 million.

  • Joseph Muscat, Keith Schembri and Konrad Mizzi got their poster project on taxpayers’ backs while the private ‘investors’ received millions in ‘success fees’.

A secret energy agreement being revealed for the first time shows that the Maltese government gave what is effectively an unconditional guarantee to SOCAR Trading that it would step in to cover any of Electrogas’ debts.

ElectroGas, the consortium selected to supply a power station that was the party in government’s poster project for the 2013 general elections, appears to have received the benefit of this secret State guarantee without charge, raising serious concerns about its legality under EU law.

The long-hidden LNG Security of Supply Agreement (GoM LNG SSA) that disgraced former minister Konrad Mizzi signed in April 2015 and which the government has gone to great lengths to keep hidden from public scrutiny, was, in effect, an open cheque to SOCAR Trading – a Swiss subsidiary of Azerbaijan’s government-owned SOCAR – that was kept hidden from the European Commission.

Before today, this agreement had not been made public. Requests for copies, even in parliament, have been repeatedly stonewalled.

A copy of this agreement was obtained by the Daphne Caruana Galizia Foundation after a year-long FOI battle with the energy ministry following The Shift’s reporting in October 2020 on the existence of this agreement and its significance.

The Shift has previously revealed it was former Minister Konrad Mizzi who personally signed the agreement between the government and SOCAR Trading for the supply of liquified natural gas (LNG) to the ElectroGas power station, based on the findings of an FIAU report leaked by MEP David Casa.

The Shift also revealed that Latvian authorities were investigating money laundering in connection with €28 million in suspect payments relating to an agreement concluded between Malta and SOCAR Trading in 2015 “concluded in a manner contrary to the interests of the [Maltese] State”.

At the time that the GoM LNG SSA was signed in April 2015, ElectroGas, and with it, the viability of disgraced former prime minister Joseph Muscat and Konrad Mizzi’s poster LNG project, was in a dire situation.

Three months after the Maltese government bailed out ElectroGas with, on the one hand, the free GoM LNG SSA guarantee to SOCAR and, on the other, a further bank guarantee towards Bank of Valletta.

The promoters behind ElectroGas, including SOCAR, Tumas, Gasan, Paul Apap Bologna, Siemens, and Yorgen Fenech, paid themselves a further €12 million in “success fees”.

Apap Bologna, testifying before the Public Accounts Committee, said he couldn’t recall receiving the success fees, apart from saying he felt “intimidated” by the questions from the parliamentary committee last year.

The secret agreement they tried to bury

Although the GoM LNG SSA is a brief 14 pages and contains no financial information, it’s easy to see why the Maltese government went through significant lengths to hide or even deny the very existence of this agreement, including with the European Commission.

The project had suffered multiple delays, and Electrogas was fast running out of cash. The government had already extended a last-minute €88 million guarantee for ElectroGas to obtain bridge financing from Bank of Valletta.

The guarantee would later, amid the hubris of a snap election, balloon to €432 million, but it seems SOCAR was still not comfortable with ElectroGas’ financial situation and ability to obtain financing.

Leaked email exchanges show that Electrogas’ lenders’ lawyers were concerned that an agreement signed by Konrad Mizzi which they were denied access to for 20 months constituted unlawful State Aid hidden from the European Commission.

In April 2015, as part of the initial financial arrangements being put in place, SOCAR signed a gas supply agreement with Shell under which SOCAR was undertaking to buy LNG from Shell. Then, under a separate gas supply agreement between SOCAR and Electrogas on the same date, the latter was undertaking to buy that LNG from SOCAR at inflated rates.

SOCAR seemed unhappy to take on ElectroGas’ credit risk. Further, the Maltese government had just gotten wind that aspects of the proposed power purchase agreement and related security of supply agreements may require the European Commission’s approval under State Aid rules or risk being challenged.

Faced with the prospects of the entire deal being delayed further or even falling apart, it seems the government covertly stuck its neck out and acted as a guarantor for ElectroGas, without compensation.

The Maltese government got away with it. With ElectroGas’ LNG supply liabilities effectively guaranteed by the Maltese government, the project was given a lifeline until the European Commission’s approval was obtained in January 2017.

It would later transpire from emails included in the Panama Papers that Yorgen Fenech’s offshore company 17 Black was due to pay millions to secret Panama companies owned by Konrad Mizzi and Keith Schembri, Joseph Muscat’s then Chief of Staff and a known close collaborator of Yorgen Fenech.

European Commission in the dark

The guarantee provided by the Maltese government was neither included in the scope of the original tendering process for the power station nor approved by the European Commission for State Aid purposes.

In fact, based on submissions seen by The Shift, the Maltese government failed to disclose the existence of this GoM LNG SSA and the resulting State Aid to the European Commission. This was also a critical concern raised by the lawyers advising ElectroGas’ lenders in 2017.

Yorgen Fenech, a director and indirect shareholder of ElectroGas, appears to have been aware of its confidential nature. Leaked emails show that the agreement signed by Mizzi in early 2015 was not to be shared with anyone, least of all Electrogas’ lenders.

“The government (GOM) said that under no circumstances it is true (sic) that the government would allow the [GoM LNG SSA] to be divulged to the lenders,” Fenech wrote.

Amid pressure from the lenders, driven by serious concerns that such unlawful State Aid and its non-disclosure to the European Commission risked placing ElectroGas’ State Aid approval and with it the entire deal in jeopardy, the GoM LNG SSA was terminated through an agreement dated 7 December 2017, a copy of which is also being published.

Mere days later, less than two months after journalist Daphne Caruana Galizia’s assassination, ElectroGas received its €450 million refinancing, and ElectroGas organised a lavish celebratory party.

EU law generally prohibits governments from granting selective financial advantages (called State Aid) to firms that may distort competition unless an exemption applies or the Commission approves the State Aid under strict conditions.

Breaches of State Aid laws may incur hefty fines and measures, including the unwinding of transactions and forced repayment of any unlawful advantage.

ElectroGas and the machinations behind this multi-million-euro deal remain of interest to journalists and investigators alike due to its alleged links to the assassination of journalist Daphne Caruana Galizia as one of the last stories she was working on before she was brutally killed by a car bomb in October 2017.

Yorgen Fenech, a director and indirect shareholder of ElectroGas, stands accused of conspiring to assassinate Caruana Galizia. Konrad Mizzi and Keith Schembri have been sanctioned by the US Government through a travel ban concerning corruption involving ElectroGas.

All persons involved deny any wrongdoing.

                           
                               
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S.Borg
S.Borg
26 days ago

There should be arrests and heavy interrogation of all those involved. If not Europol please your intervention is needed.

Bamboccu
Bamboccu
26 days ago
Reply to  S.Borg

Post Konrad Mizzi huwa KOR-DIN.

doreen
doreen
26 days ago
Reply to  S.Borg

I bet nothing will happen

Darren Muscat
Darren Muscat
26 days ago
Reply to  doreen

You won the bet

James
James
25 days ago
Reply to  S.Borg

The US State Department will hopefully also step in again now. They have already named and shamed Mizzi & Schembri in their press release of December 22nd 2021 and surely this credible evidence will allow them to add more names.

They can include the disgraced former PM Muscat, his former legal adviser and current PM Robert Abela and all the other easily identified enablers which the Shift holds on file for starters.

Also the FATF must now reverse their decision to remove Malta from its grey list!

The days of impunity for the corrupt “ untouchables “ are surely numbered.

Paul Pullicino
Paul Pullicino
26 days ago

The short and sweet is that the top of the Labour Party made every Maltese household an uninformed guarantor in favour of the private owners of Electrogas with one clear motivation – to protect the huge scam of 17 Black feeding millions into the secret offshore personal accounts of Minister Konrad Mizzi, Chief of Staff Schembri, and the well suspected real owner of Egrant. No wonder Daphne Caruana Galizia became the target.

D. Borg
D. Borg
26 days ago

Someone cashing Social Benefits cheques for 3rd parties was dragged to Court with an Asset Freezing Order request, whereas our dear (now apparently also saintly) ex-Honourable Mr.Mizzi of “populating family’s assets” fame and his disgraced pals, are stress free as a bird (a bird outside Maltese territory obviously).

Last edited 26 days ago by D. Borg
I. Gatt
I. Gatt
26 days ago

All illicitly obtained funds MUST be returned to the state. Other current economic measures are considered puny when compared to this scale of corruption…..!

Mariatheresa Micallef
Mariatheresa Micallef
26 days ago

Tajjeb, issa jigi Fearne u jghidilna li dawn kollha suppozizjonijiet.
Thank you The Shift News for your perseverance..

saviour mamo
saviour mamo
26 days ago

Was there any reaction from the government or from the governor of the central bank regarding last week’s news about the disappearance of Malta’s gold reserve?

A. Fan
A. Fan
26 days ago

Kudos, one and all on the Shift Team! But, sadly, there is none so blind as anyone who simply refuses see; and the one-eyed will still lead the blind (over the cliff). Those doling out panem et circenses will govern so long as the sheeple keep wallowing in their ignorance. How does one put a stop to inherited credulity — whether red, blue, or some other monochromatic view of the reality surrounding us? The worst fear for a plundering kleptocrat is an educated electorate. Just look at present-day Russia or Turkey (as obvious examples) if local evidence isn’t plain or persuasive enough for you.

v zammit
v zammit
26 days ago

Slowly but steadily the chickens are coming home to roost.

Francis Darmanin
Francis Darmanin
26 days ago

It’s becoming so much clearer why they wanted to eliminate Daphne Caruana Galizia. A million curses on these dirty insatiable vultures.

Austin Sammut
Austin Sammut
26 days ago

Thank you The Shift for slowly but surely pulling the rats out of their holes.

Joseph Tabone Adami
Joseph Tabone Adami
26 days ago

And, just the other day, we thought we had reached the bottom of the cesspit. It seems we have not done that yet.

Still, we have been feeling the offensively sickening stench for far too long, now – with no possibility of wrongs being righted appearing anywhere on the horizon..

KD Far
KD Far
26 days ago

X’ghamlu hazin ghal Maltin? Hafna pajjizi l-istess jghamlu u jahbu l-state aids. Li kieku l-progett ma rnexxiex, kieku llum l-Gvern lanqas jaffordja jzomm il-prezzijiet tal-energija rhas.

Issa jekk kien hemm il-koruzzjoni, dak il-hazin.

carlos
carlos
25 days ago
Reply to  KD Far

kieku l-gherf li ghandek huws stilla, ma jkollniex bzonn l
la x-xemx u anqas il-qamar ghaliex idawwal id-dinja. Kemm kien korrett ezl..

makjavel
makjavel
25 days ago
Reply to  KD Far

Dawn hbew li state highjack. Kieku ma bieghux il Generazjoni ta l-Energija lic Cinizi u lil Electrogas u kissru il Power Stations ta Delimara , kieku il Gvern kien jaffordja izomm il prezz ta l-Eletriku baxx. Issa se jkollu jisusidja kull sena daqs kemm iqum Power station gdid. Fottew lil Malta zgur.

Paul Borg
Paul Borg
26 days ago

So anyone who is a position to report this fraudulence to the EU, SHOULD DO SO!

John Borg
John Borg
25 days ago

What are the opposition members getting for not ever saying a word about scandals coming out daily. Who is benefiting? Who is perhaps funding the ‘no see, no hear, no say’ strategy?

Raymond Farrugia
Raymond Farrugia
25 days ago

If it somehow taints the Labour party it will be swept under the carpet. A party run by criminals.

Edward Mallia
Edward Mallia
24 days ago

Slightly on the borders of this discussion there is still the “mystery” of the Mosura Windfarm purchase, now resolved, the final aim for purchasing it and what is actually happening to the cash accruing from the sale of electricity to Montenegro. Enemalta pleads absolute poverty; so is it getting anything from Mozura and if not who is?

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