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Smoke and mirrors: Dalligate probe gets accountability slap

Dalligate ‘returned’.

The forgotten Maltese paleo-scandal of trading in influence that rocked the career of disgraced former commissioner John Dalli, pulsed back into the news cycle 10 years later after a Belgian court decided that the EU’s anti-fraud agency OLAF had mishandled the cash-for-influence investigation.

Giovanni Kessler, an Italian anti-mafia and anti-corruption maverick who today is the head of the Italian Customs and Monopoly Agency, was decreed to have illegally taped a former Dalli canvasser, the late Silvio Zammit, as part of an investigation.

A Belgian judge ruled on the criminal complaint, from Zammit – who until his death was still facing charges of soliciting a €60 million bribe from the European smokeless tobacco lobby Estoc – in an unprecedented rebuke of the EU’s justice system.

Dalli, who up until October 2012 had been the EU’s health commissioner, was embroiled in the OLAF investigation into Zammit’s contacts with Estoc and its main company, Swedish Match. As the investigation goes, Dalli was said to have entertained telephone calls from Zammit while the latter was actively soliciting the bribe from Estoc to convince the commissioner to overturn an EU retail ban on Swedish tobacco snus. At the time, Dalli was negotiating rules on the Tobacco Products Directive; while the legalisation of snus to be sold outside Sweden was not on the table, but Swedish Match had contracted a Maltese lobbyist – Gayle Kimberley – to approach Dalli on a possible concession.

Left to right: Gayle Kimberley and Silvio Zammit

Left to right: Gayle Kimberley and Silvio Zammit

Pure Maltese drama

The scandal carried with it all the elements of the smalltown networking that makes Malta what it is. Gayle Kimberley, a former functionary at the European Council, was tapped by a Swedish Match official to approach Dalli in Malta on the prospect of overturning the retail ban on snus in the upcoming revision of the Tobacco Products Directive.

Kimberley had been lobbying on the side: she was then a legal at the Malta Gaming Authority, with an intimate friendship to one Iosif Galea – today that former MGA employee is a gaming consultant, recently extradited from Germany to face financial crime charges in Malta (he was arrested in Italy in 2021 on a German EAW for tax evasion).

Galea put Kimberley in touch with Silvio Zammit, a Nationalist Party canvasser heavily involved in Sliema community life and business, who was connected to John Dalli, the veteran PN finance minister. Zammit was also known to Swedish Match – apparently he had been selling snus to gaming emigrés in Malta from his Sliema kiosk, and Kimberley called upon him to secure a meeting with Dalli.

OLAF investigation

The investigation was prompted by a report from Estoc lobbyists to the European Commission, into the request for a bribe from Zammit. And here the drama balloons into an unexpected plot-twister.

Kessler, as eager prosecutor, took it upon himself to ambush Kimberley while representing the MGA at a conference in Portugal in 2012 – a highly unorthodox way of extracting information from a possible witness. “I was ambushed and put into a room. There were three of them,” she told a court hearing the corruption charges against John Dalli this year. Without any legal assistance, Kimberley – though free to leave the hotel room booked by OLAF – was under the impression that she would lose her job if she did, remembering the imposing impression made by Kessler on her. “He had wanted to see my computer and files about meetings with the LGA (lotteries and gaming authority),” she said of the six-hour meeting. Even more controversially, Kimberley was taken out for an informal dinner with Kessler, offering her wine so that she could “relax a bit”.

But the clincher in the OLAF investigation was that, although bereft of direct evidence connecting Dalli to Zammit’s bribe request to Estoc, there was “unambiguous circumstantial evidence” in the form of phone calls repeatedly made between Zammit and Dalli at crucial times: in between Zammit’s conversations with ESTOC for example, or after Zammit’s interrogation by OLAF chief Giovanni Kessler.

For the then-president of the European Commission, Manuel José Barroso, the suggestion that Dalli was entertaining such contacts with Zammit was enough to show that he was not above suspicion in the entire affair. Taking immediate action to avert a disastrous scandal that could embroil the EC itself, in October 2012 Barroso asked Dalli to resign – the Maltese politician left, vowing to contest Barroso in the European Court of Justice (both cases for unfair dismissal and damages were thrown out by the ECJ years later).

Giovanni Kessler

Damaging circumstantial evidence

Nothing could move Kessler or Barroso from the picture that Dalli may have been aware of Zammit’s machinations with Estoc and did nothing to place himself out of danger. On his part Dalli denied discussing snus with Zammit after having accepted a meeting with Kimberley back in January 2012, and that the Zammit phone-calls (only logs of the calls were possible at the time) dealt simply with party matters.

The big mystery is the role played by Kimberley in allegedly convincing her Sliema compatriot, Silvio Zammit, to solicit the Estoc bribe – depending on whose story one believes of course.

OLAF found a note prepared by Kimberley for Zammit, as follow-up questions to ask Dalli in a meeting set for 10 February (the feast of St Paul’s shipwreck in Malta). Zammit returned the ‘Meeting with the Commissioner’ paper with hand-written notes. Allegedly, these notes suggested that Zammit noted a “six zeroes” figure to lift the snus ban – it is moot whether he jotted it down while discussing with Dalli or whether, as he claimed, this was suggested to him by Kimberley herself.

OLAF’s analysis of the Dalli telephone logs were enough to suggest a pattern – calls from Zammit on the day he lunched with Estoc officials, when meeting Kimberley, while Zammit was trying to solicit the multi-million fee from Estoc, or the call after OLAF approached Silvio Zammit in Malta to be called in for an interview.

So in his final summary, Kessler stated that while no conclusive evidence of Dalli acting as a mastermind in this bribe request existed, Dalli might have been aware that his name was being used by Zammit to gain financial advantage. “At no stage did Dalli take action to disassociate himself from the facts or to report the circumstances of which he was aware. As a result... it can be considered that Dalli put at risk the image and the reputation of the European Commission in the eyes of the tobacco producers and, potentially in front of public opinion.”

Kimberley and the bizarre snus triangle

But Kessler also declared in his report that even Gayle Kimberley should have been prosecuted in connection with their investigation into a €60 million bribe – she was not, and Maltese police in October 2012 only charged Silvio Zammit while Dalli made himself scarce, staying on in Belgium for health reasons. Dalli was finally charged years later and is still in court, denying the accusations.

OLAF investigators knew that Kimberley had lied about a meeting she claimed to have had with Dalli on 10 February at his St Julian’s office, supposedly to impress Swedish Match of her attempts at approaching Dalli.

In deleted emails extracted by the Maltese police from Zammit’s computer, Kimberley is also found in conversation encouraging the Sliema canvasser on suggesting a ‘rounder’ €60 million bribe from Estoc. Her lawyers have in the past insisted the email “has been shown to be false”, while Zammit’s lawyer said police have never raised any doubt about the content of the email, and that the evidence should be presented in court.

Indeed, OLAF investigators themselves pointed Kimberley out as a possible accomplice in the €60 million bribe request, in their report. Rather than being prosecuted, Maltese police elected to use Kimberley as a witness against Zammit and Dalli.

The email dated 29 February 2012 shows Kimberley’s husband Matthew, forwarding a lobbying proposal to Zammit, suggesting that he forwards it to Inge Delfosse, the Estoc secretary-general. “Silvio, suggest you forward this to Inge. Gayle is in copy. You may like to wait for her input before sending.”

The email contained a list of services that Matthew Kimberley’s company You Rock Ltd could offer Estoc, with Gayle Kimberley’s resumé attached. The fumbling Zammit forwarded the email to Estoc, leaving the subject line as ‘copy/paste proposal’. Upon learning of this, Kimberley reprimanded him and guided him how to write the email to clarify the mishap.

Finally in March, Estoc’s Inge Delfosse started recording her conversations with Zammit as the canvasser got bolder in soliciting a handsome pay-off for the attempt to overturn the snus retail ban.

Lawrence Gonzi and Manuel Jose’ Barroso

Lawrence Gonzi and Manuel Jose’ Barroso

Illegal telephone recording

While Dalli steadfastly maintained his innocence after 2012, he always claimed the industry had cut his legs off by conspiring with Estoc. The Zammit telephone calls were passed on to Michel Petite – a former head of legal services under José Manuel Barroso – who at the time of the recording was a Clifford Chance lobbyist working on the account of tobacco giant Philip Morris (PMI and Swedish Match then had a business relationship selling snus in the United States). Petite took them to the EC’s secretary-general.

OLAF’s investigation was later criticised by its own supervisory committee, which said that OLAF had listened in to a private telephone conversation between witnesses in July 2012, an action that contravened Silvio Zammit’s human rights. “The recording of a telephone conversation in the presence of an official of a public authority, acting in the performance of his duties and making a crucial contribution by making available his office, his telephone and his tape recorder represented an interference in that person’s right to respect for her correspondence.”

OLAF’s investigation came under fire for being politicised: centre-right and Green MEPs targeted Kessler, and pushed to lift his immunity to face charges, filed after a complaint from Silvio Zammit, for illegally recording the July 2012 phone conversation.

In its ruling, the Belgian court earlier this month said it was “concerned” by Kessler’s attitude, as he “claimed to be unaware of the existence of legislation regulating the recording of phone conversations,” even though these restrictions derive from the European Convention on Human Rights that he could not ignore given his role as chief of OLAF.

For Dalli, who believes he was removed on brittle suggestions of impolitic behaviour by an eager Barroso, this decision might give him only slight reprieve for a career that has been dominated by other accusations of impropriety (he was later associated with a Christian con artist and his own daughter faces charges of money laundering). “It took 11 years to finally breach the European Commission’s secrecy, although on just one part of the investigation,” Dalli said in a statement following the judgment. “The truth will prevail.”

No lessons learnt

As told to Politico this week, transparency activists know that since Dalligate the Commission has never improved integrity standards. “They don’t have a proactive, forward-looking agenda of scoping where the gaps in our transparency and ethics regime could lead to serious scandals,” Olivier Hoedeman of the watchdog NGO Corporate Europe Observatory (CEO), said.

Of six reforms proposed by CEO at the time of Dalligate, only one had been fully addressed: the removal of a lobbyist – Michel Petite himself – being on the Commission’s ad hoc ethics committee.

After Dalligate, commissioners and top civil servants had to post all their meetings online and made entry in the Transparency Register mandatory for meetings.

Under the global Framework Convention for Tobacco Control (FCTC), the EC is expected to protect public health policies from commercial interference by tobacco lobbyists – and still there is no specific mention of tobacco lobbying in the code of conduct for commissioners, Hoedeman said. Even European Ombudsman Emily O’Reilly criticised the Commission in its lack of uniform policy, and for failing to log details of some meetings.

Only the health DG Sante seems to take the matter so seriously as to block all dialogue with the tobacco industry, to the latter’s frustration.