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No need to disclose SOCAR deal to EU, Joseph Muscat tells PAC

There was no need to inform the European Union about a deal with Azeri state-owned energy firm SOCAR because that agreement was separate to one between the government and Electrogas, Joseph Muscat said on Tuesday.  

Muscat, who served as prime minister at the time when both those deals were struck, was testifying in front of the Public Accounts Committee (PAC).

His testimony came hours after the Daphne Caruana Galizia Foundation accused Muscat of misleading parliament when he told the PAC in an earlier sitting that the EU Commission had “full visibility of all the information” related to the energy deal.  

The Foundation had noted how the Commission had previously said that it had not assessed the Muscat government’s deal with SOCAR as it was “not part of the notification to the European Commission.”

That notification concerned EU state aid rules related to the deal granted to Electrogas to build and run a gas-fired power plant in Delimara.

On Tuesday, Muscat said that the agreement between the Azeri firm and Malta was a separate agreement that did not involve Electrogas.  

The agreement with SOCAR was an “insurance policy”, so if Electrogas went bankrupt, the government would be able to buy gas itself at the same price as Electrogas’ rates, Muscat testified. 

He said the Commission did not need to be notified because the government would not have been obliged to buy gas from SOCAR, and that therefore the arrangement did not fall under state aid rules.  

Muscat said the advice not to notify the Commission came from UK law firm Clifford Chance, which the government contracted for consultancy services.

SOCAR also owns a stake in the Electrogas consortium.  

Muscat was testifying before the PAC for a fifth time. The parliamentary committee is assessing a National Audit Office investigation into the power station deal, which was the flagship project of Muscat’s time in government.

One of the Electrogas consortium’s directors, Yorgen Fenech, is currently facing charges related to the murder of journalist Daphne Caruana Galizia, who was combing through a leak of consortium documents when she was killed.

‘I never got a trophy’ Muscat on corrupt man of the year award 

PAC chair Dareen Carabott asked Muscat about being declared the 2019 person of the year in organized crime and corruption by the Organized Crime and Corruption Reporting Project, saying that the energy deal was mentioned in the OCCRP’s reasoning.  

Muscat argued that he had named that due to lobbying against him, not because it was objectively true,  

Being named corrupt person of the year “makes my life a bit harder when I have present reasons for the designation when I undergoe due diligence,” Muscat said.  

"I never got a trophy for the award," he quipped.

Asked by Carabott if he had any regrets about the Electrogas deal, Muscat argued that the PAC should ask the Auditor General to conduct a cost-benefit analysis of the deal.  

That would show whether or not people gained from the deal, he said.

While government PAC members supported that proposal, committee members from the Opposition were less keen on the idea.

Committee chair Carabott said that government colleagues on the PAC could ask the NAO directly to compile such a report.

Cries of foul play over vote 

Somewhat unexpectedly, the committee hearing’s most explosive moment occurred once the star witness, Muscat, had left the room.

Carabott nominated a representative from NGO Friends of the Earth as the next witness, to discuss a report that the NGO had tabled.  

Government committee members argued that the study was outside the committee's remit, since it was not a fiscal report.

Carabott called a vote on the matter. While Opposition members voted in favour of the witness, only Glenn Bedingfield vocalised his vote against the motion.

"From what I can understand, the others abstained," PN member Robert Cutajar said. Carabott declared that the vote had passed – prompting a shouting match.

“You're acting like little children,” government MP Andy Ellul yelled. "You really reached the bottom.”

Following a suspension of proceedings, another vote was taken, and the decision to summon a Friends of the Earth representative to testify was reversed.  

The PAC will now ask the speaker to rule if the Friends of the Earth Report is relevant to the committee's role.