Wake up NAO

Maltastar



The National Audit Office (NAO) has an extremely important role to play in maintaining checks and balances on democratic institutions, lest they become powerful dictators with a 5 yearly touch contact with democracy.

The Auditor General is appointed by parliament and is responsible to parliament.` He is above the executive (the government) and in fact his role is to control the executive.` To keep check to ensure that the government operates with good levels of corporate governance adopting value for money concepts in the way our funds are being spent by those to whom we give the custody keys of the national purse. `It seems however that the NAO is being effected by the general lethargy which has infected the administration.`

In fact the budget of the NAO is not appropriated by parliament but allocated in terms of constitutional provisions.` Neither government nor parliament can deprive the NAO from the resources it requires to perform its constitutional obligations.

It seems however that the NAO is being effected by the general lethargy which has infected the administration.` Right at the time when the NAO should be sharpening its teeth and showing it mettle, it adopts an attitude of non-chalance, pretending not to know or even suspect that grave omissions of a very serious nature are taking place offending minimum standards of acceptable corporate governance.

Take the case of the conflict of interest of the Freeport Chairman who has undertaken on a private basis a multi ` million investment in a similar port operation in Venice. The government, to the amazement of all who have some salt left in their brains, has solemnly declared that in spite of a breach in the code of ethics applicable to all persons appointed on the Boards of publicly owned organisations, there exist no conflict of interest.

`It wants us to believe that in its contacts with major shipping clients who could be using the service of both ports, things are kept totally separate even though they could be talking to the same person.` Government wants us to believe that the person almost solely responsible for the strategy of the Freeport, which has absorbed some Lm400 million of public funds investment over the years, can handle an investment in a similar operation in the same Mediterranean basin without any risk of conflict of interest. It wants us to believe that in its contacts with major shipping clients who could be using the service of both ports, things are kept totally separate even though they could be talking to the same person.

In 1998 the NAO had very different standards of interpreting of conflict of interest. I was the chairman of Mid-Med Bank, an organisation that had been toying for some 10 years with the study of a project for extending its operating centre at Centru Ruzar Briffa by buying a building next door belonging to Tumas Group.

When I became Chairman the need was extremely urgent for proper implementation of the Bank`s strategy.` As I was a consultant of Tumas Group I abstained from the deliberations of the project.` But I could only do so with responsibility, until the Board did not find itself deadlocked between those who wanted to go for the extension and those that preferred to build a new Centre in a completely different location.` When it came to that, I as a chairman who was ultimately responsible for the Bank`s strategy, had to shoulder my responsibilities. I gave up the remnants of my consultancy engagements with Tumas Group and participated in full in the decision to go for the extension which was passed with a 6-3 majority.

To ensure that the bank does not incur any reputation risk (no matter how unjustified they would` have been ` BOV incidentally is now building a new operations centre just a kilometre away from Centru Ruzar Briffa)` I sent the whole process for prior examination of the NAO before signing any commitment with the vendor. ` Whilst they were eagerly willing to criticise those who consult and ask vetting prior to spending public funds, they now` just look the other way in glaring cases of personal conflict of interest involving large` personal investments.`

After 8 months deliberation, after appointing three independent architects who reported positively on the Bank`s decision, right on the eve of the 1998 general elections the NAO issued its report which favoured the minority view which would have cost the Bank extremely much more than what the Board of the Bank had decided. The NAO even went beyond its brief which was only to check that the process of selection was integral. The NAO felt it had a licence to enter into the merits of the choice itself, for which the NAO have poor credentials, being very scant on banking strategy expertise.

But what matters for today`s argument is that the NAO criticised me for participating in the decision because of possibility of conflict of interest because of my previous consultancy with the vendor. Now I do not hold one single lira of investment in Tumas Group. All my consultancy agreements were terminated in the most formal manner and new persons were employed to take over the work I previously did.` Yet the NAO had so strict conflict of interest criteria that they even saw one where none existed.` The projected was in fact aborted because of the NAO report.

But since then their (NAO) standards have gone down the drain with the rest of the country.` Whilst they were eagerly willing to criticise those who consult and ask vetting prior to spending public funds, they now` just look the other way in glaring cases of personal conflict of interest involving large` personal investments.

With such NAO standards small wonder that they accept matters like Tal-Qroqq hospital project being executed by direct order with scant controls over expenditure.` May be when it ready and all spent and under a new administration, the NAO will recover its teeth to criticise and tell us how things should have been done.

Wake up NAO - you have a big responsibility to stand up and be counted to stop the charade that is going on. Or do you just discover your mission on the eve of an election to embarrass the Labour government`