An Enemalta internal audit report on its corruption-riddled purchase of the Mozura wind farm in Montenegro showed the state corporation knew full well that it was paying a heavily exaggerated price for the deal struck by disgraced prime minister Joseph Muscat and former energy minister Konrad Mizzi.
Maltese and Chinese state-owned energy company Enemalta has been forced to hand over the internal report thanks to freedom of information requests filed independently by the Daphne Caruana Galizia Foundation and Times of Malta.
The audit report by Mamo TCV Advocates was concluded in 2021 but was kept under wraps by Enemalta until now. Energy Minister Miriam Dalli also tabled a copy of the report in Parliament on Monday following a parliamentary question by Opposition MP Mark Anthony Sammut.
Enemalta had purchased the Montenegro wind farm concession for €10.3 million in December 2015 – three times the €2.9 million paid just two weeks earlier by Cifidex, the anonymous offshore vehicle registered in Seychelles.
The Ultimate Beneficial Owner of Cifidex was Turab Musayeva, who was on the ElectroGas board of directors alongside Yorgen Fenech at the time of the share transfer to Enemalta, an investigation by The Times of Malta and Reuters had uncovered.
The investigation showed how Fenech secretly made €4.6 million from the deal through his once company 17 Black.
Back in March 2020, The Shift, following an in-depth investigation into the deal, spoke to intermediaries who said, “Those in the government of Montenegro found the people of their kind in Malta who they could do business with and split the proceeds”.
The 2021 audit report kept under lock and key until Monday evening found, incredibly, that Enemalta knew that Cifidex was itself still in the process of acquiring the Mozura wind farm for €2.9 million when it purchased the shares from Cifidex for more than triple that amount.
Offshore companies Cifidex Ltd and 17 Black Ltd were at the centre of a corrupt deal. SOCAR’s Musayev, who represented Azerbaijan’s interest in ElectroGas Malta Ltd., used Cifidex to purchase 99 per cent of the shares in Montenegro’s Mozura wind farm for €2.9 million in 2015.
Two weeks later, Musayev used the same offshore company to sell the shares to Enemalta plc for €10.3 million. Cifidex purchased the wind farm shares with €3 million borrowed from 17 Black Ltd. After Cifidex sold the shares to Enemalta, the offshore company repaid the €3 million to 17 Black plus an additional €4.6 million “profit share”.
But such was Enemalta’s apparent faith in Cifidex that it did not even carry out any sort of proper due diligence into the beneficial ownership of Cifidex to identify any potential conflicts of interest, nor did it seek a legal opinion from a reputable law firm confirming that the shares in Cifidex could be legally sold without hindrance.
Not only that, but the purchase agreement included a non-standard limitation on liability that protected Cifidex from any subsequent claims of overpayment. Moreover, there had been no policies or standards whatsoever in place to guide commercial acquisitions.
Board members were also allowed to use their personal email accounts to conduct company business, and emails of executives who left the company after their involvement in the dubious transaction were deleted.
In early 2020, The Shift uncovered a complex web of offshore companies used for the deal.
The Mozura Wind Park had previously been owned by the Spanish Fersa which sold it to Cifidex Ltd from The Seychelles in February 2015 for €2.9 million.
Cifidex Ltd was registered in Guernsey, one of Britain’s Channel Islands and a haven for offshore business. Fersa had initially claimed in a stock exchange announcement that Cifidex was a subsidiary of Vestigo Capital then later retracted it without clarifying whether Cifidex had any other relationship with Vestigo Capital.
In feedback sent to the Shift, Vestigo Capital has said there is no connection whatsoever between Cifidex Ltd and Vestigo Capital.
The construction of the wind farm began in March 2016 but on 4 September 2017, the government of Montenegro approved yet another change of ownership in Mozura Wind Park Ltd (until then entirely owned by Enemalta plc).
After the change, Enemalta plc retained just 10% in Mozura Wind Park Ltd while 90% was transferred to Malta Montenegro Wind Power JV Ltd registered in Malta.
Malta Montenegro Wind Park JV is majority-owned by International Renewable Energy Development Limited (IREDL) – a company in turn owned and controlled by Shanghai Electric (as to 66%) and Enemalta (33%).
Alongside IREDL, Guernsey-based Vestigo Clean Energy I Limited has 20% (a fund controlled by the above Vestigo Capital) and Hong Kong-based Envision Energy International Limited has 10%.
As a result of that transfer, the Mozura Wind farm project, originally touted in Montenegro as an investment from an EU member state, is effectively controlled by the Chinese State and has been paraded by the Chinese government as an example of China’s Belt and Road initiative.
“Since both of them (Djukanovic and Muscat) are in love with offshore business something was fishy from the start. Each time capital investment is conducted through offshore companies then you know that something stinks in Montenegro,” Vasilije Milickovic, a representative of minority shareholders of state-owned Electrical Utility of Montenegro (EPCG) and a vocal critic of the government, said in an interview with The Shift at the time.
In February 2021, The Shift also discovered a set of fictitious numbers leading to a €6.8 million difference between actual and fabricated costs of the deal was then transferred to the private accounts of Montenegrin, Azerbaijani and Maltese individuals as kickbacks.
After the refusal of freedom of information requests for the audit report were refused in 2021 and 2022, the Daphne Caruana Galizia Foundation took its case to the Information and Data Protection Commissioner who ruled that the report should be released.
Lawyer Therese Comodini Cachia also filed an appeal on behalf of Times of Malta as part of a legal support programme for journalists set up and run by the Foundation.
In December 2021, the parliament of Montenegro announced an inquiry into the Mozura wind-farm deal.
Vice-President of the Assembly Branka Bošnjak said the investigation was motivated by, “The fact that this is a major international corruption scandal” and that “there is very important evidence of multimillion-dollar corruption in the project that will cost the state Є115 million through a subsidised electricity contract for 12 years”.