Sunday, 28 July 2013

The Chairman's territory

Alex Tranter -ex Chairman Enemalta
appointed be ex -Min. Austin Gatt
joined TOTAL when he left
'his territory'

This article was published in The Malta Independent on Sunday - 28th July 2013
A new term has been coined – ‘the chairman’s territory’. It was born concurrently with baby Prince George of Cambridge – the future King George VII (assuming that the monarchy will still be around some half a century down the road).
The term was invented by former members of the Fuel Procurement Committee (FPC) within Enemalta who, on condition of anonymity, revealed to the media that under the chairmanship appointments of former PN Minister Austin Gatt, the process of fuel procurement was considered “the chairman’s territory”.
Here are some very interesting quotes by these internal sources who are now clearly attempting to exculpate themselves from the gross irregularities revealed by the National Audit Office (NAO).
“Enemalta’s fuel purchasing was ‘totally the domain of the chairman’.
‘It was no secret at Enemalta that the fuel procurement process was the chairman’s domain.’
‘It is true that the bids received used to be decided by us (the committee), but it was a chairman-driven initiative. It was the chairman who used to receive the bids on his own e-mail address and it was his office that used to call the shots, even about when the committee would meet to make decisions.’
 ‘The chairman used to present the bids to the committee and we used to negotiate the best bids. That was how the system worked and it was always like this.’
‘The chairman was the main figure in the committee and the procurement process revolved around him.’
‘I was a very important figure in the corporation at the time and still didn’t have access to certain documents as these were deemed to be the chairman’s territory.
‘I used to complain about the system but things only started to change in the latter part of 2010.’”
The chairman of Enemalta during the period covered by the NAO report 2008-2010 was Alex Tranter, who as a defence could only state: “The committee decisions on fuel procurement during my term as non-executive chairman of Enemalta were all unanimous and all committee members present signed all the committee documents endorsing decisions taken.”
One immediately notes the conflicting interpretations that whereas MPC members considered crucial issues related to fuel procurement as the exclusive domain of the chairman, where lack of governance and transparency was the rule of the day, the ex-chairman makes an effort to define himself as ‘non-executive’. Considering we are dealing with procurement worth a handful of hundreds of millions of euros each year, these contrasting stands represent serious stuff.
Now that the police have been called in to investigate, they will surely have to establish how a non-executive chairman had total control of such important processes as to receive bids on his email address.
Irrespective of whether a chairman is executive or non-executive, there should never be anything in a public organisation that is the chairman’s territory or domain. The chairman’s responsibility is to direct the Board to establish the organisation’s business strategy, to choose the right management capable of executing the chosen strategy, and to build the necessary structures with appropriate checks and balances to guarantee high standards of governance and appropriate measures of risk management.
The late Acting President Pawlu Xuereb must be turning in his grave. I remember him when, as chairman of Medigrain responsible for the procurement of grain and cereals, he used to shut the whole procurement committee in the boardroom where bids would come in a short time envelope on the telex machine (no e-mails those days) and no one would be allowed to leave the room or communicate with anyone outside it until the procurement decision process was completed in full transparency with proper and detailed documentation vouched for by all committee members.
The pity is that the NAO was only tasked to investigate the procurement process from 2008 to 2011. It should have been tasked to backdate its investigation to 2004 shortly after the political responsibility passed from the current Central Bank governor and former PN minister Josef Bonnici to ex-minister Austin Gatt.
In fact, inside informers have made the point that: “The way fuel procurement was carried out under Mr Tranter’s chairmanship was the same as under his predecessor, Tancred Tabone, when it was also considered to be ‘chairman’s office territory’.
I have probably read all publications related to financial fraud and cases of gross corruption. The common feature in such cases is that with hindsight there are patterns, which, if spotted, could have triggered earlier investigations. In case of the scandals related to Enemalta, the pattern is that in both main areas of abuse, the winding down of MOBC to favour a private competitor where insiders had a silent equity stake, and the foul play related to fuel procurement, the first step was removal of personnel of integrity who would not have tolerated abuse.
On the political front, the rushed presidential pardon given during an election campaign to a main beneficiary from this corruption and /or lack of governance becomes more questionable following the publication of the NAO report. The beneficiary of the presidential pardon, which is conditional on telling the truth, is showing characteristics of dementia because he remembers clearly what happened more than a decade ago but seems to remember nothing (or at least is not telling it) on what happened during the period covered by the NAO Report 2008-2010 even though he was a major beneficiary of the system and during which period he used to meet regularly with ex-minister Gatt, but never to discuss Enemalta.
Having read the NAO Report, I have to ask, where were the internal auditors? Have the external auditors flagged the gross lack of governance standards to shareholders? Have the external auditors pointed these out to management in the Audit letter of weakness?
Finally, credit is due to ex-Minister Tonio Fenech for bringing back some sort of orderliness to the governance standards of Enemalta soon after he took over its political responsibility in 2010. This is well acknowledged in the NAO report. Cynics might argue, probably unfairly, that the change really happened only in 2011 when the NAO started investigating a brief received from the Public Accounts Committee on the initiative of now Minister Leo Brincat.
But how can Mr Fenech justify that he did nothing to flag the irregularities happening under his predecessor of which he was clearly aware. Once he claims credit for correcting what was wrong he certainly couldn’t claim ignorance. 
When a vote of confidence was brought to Parliament against Minister Austin Gatt, Mr Fenech voted his confidence and by so doing accepted to take responsibility for issues, which he himself defines as “very serious”. 
As a professional auditor and as the person who at the time was responsible for the public purse and the national debt (both the real one and the contingent one relating to guarantees for Enemalta’s borrowings), Mr Fenech should have known better. His duty to serve the nation should have prompted him to call in the police as Minister Conrad Mizzi has done soon after receiving the NAO report.
Not even royalty in modern times, as Prince George will eventually find out, can conduct their affairs without strict governance standards. Under ex-minister Austin Gatt, Enemalta used to be run with the privileges of old royalty.

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