OPM issues €6.4 million direct order linked to KM Malta Airlines

The Office of the Prime Minister (OPM) has issued a €6.4 million direct order to Centrecom Ltd, a company partly owned by the government’s KM Malta Airlines, in what sources describe as a new indirect channel for state support to the struggling national carrier.

Sources within the airline said the direct order, issued last year, was timed to be reflected in the company’s still unpublished financial accounts, helping offset end-of-year losses.

Despite launching operations in March 2024 under the political direction of Finance Minister Clyde Caruana, the airline has yet to publish its first audited accounts. Insiders say it ended its first year with a multi-million-euro loss.

It remains unclear whether these losses align with the airline’s business plan, which was approved by the European Commission but never made public.

The latest €6.4 million direct order follows an earlier €35 million government contract awarded in 2020 to Centrecom Ltd to operate public service call centre functions, including the servizz.gov.mt hotline. That agreement, which ran until 2025, was also issued through a direct order and did not prevent the folding down of Air Malta.

Centrecom is jointly owned, with a 50% shareholding held by KM Malta (previously Air Malta), while the remaining shares are owned by the Australian-registered Lac Investment Company, linked to businessman Leslie Cassar. The latter had very close connections at the beleaguered Air Malta.

The contract was channelled through Servizz.gov, a government agency set up shortly before the agreement was finalised. The deal was never publicly announced, raising questions about transparency and potential scrutiny under EU state aid rules.

It is not known whether the most recent €6.4 million direct order was reviewed by the State Aid Monitoring Board, headed by Paul Zahra, who also occupies the conflicting role of the Permanent Secretary at the Finance Ministry. Under EU competition rules, state aid, even when indirect, is subject to strict limitations.

Similarly, questions remain as to why the contract was not issued through an open competitive tender, as required under EU procurement regulations.

A separate investigation by the National Audit Office (NAO) into the earlier Centrecom agreement found the contract heavily favoured the private operator and failed to adequately protect government interests. The audit highlighted weak oversight, noting that payments were often based solely on data provided by Centrecom itself.

The NAO also found operational shortcomings, including poor attendance verification procedures at government service hubs.

Governance concerns are further compounded by overlapping roles.

Former Air Malta chairman, and now heading KM Malta Airlines,  David Curmi sits on Centrecom’s board, while the government agency is overseen by Principal Permanent Secretary Tony Sultana.

Despite grounding Air Malta, Clyde Caruana still appointed Curmi as the new Chair of the new airline, putting him on a monthly financial package of over €21,000.