On the recently published Fairmount findings, Minister Austin Gatt essentially makes two points: (1) the militant GWU, politically aided and abetted by the PL, prevented a satisfactory level of productivity; (2) the Shipyards’ (MSL) wonderful board of directors is so capable it cannot possibly be at fault.
Ironically, he says the PN government subscribed to Alfred Sant’s decisions on the shipyards, who, while promising to strengthen worker participation, had factually demolished it. Basing his actions on the Cassar White report (made in the aftermath of the disastrous Um El Faroud fatalities that demolished employee morale) he failed to consider changing trends. Sant appointed A&P Appledore as consultants, ignoring this company’s own disastrous performance, and that they had been responsible for closing down, not saving, many shipyards. By not reviewing these decisions, the PN therefore takes on itself the responsibility for what happened afterwards.
Back then Eddie Fenech Adami had stated Sant was doing the opposite of what he had promised in his manifesto, but the PN still agreed with Sant. The weakening of antagonists was to their advantage, and they correctly foresaw the drop in support of the hard left element for Sant – a feature that eventually contributed to Labour’s electoral failures. This fact nullifies Gatt’s theory that the Labour policy was geared exclusively for partisan gains. Sant’s actions on the shipyards cost him precious votes.
The PricewaterhouseCoopers report into the Fairmount contract lets the MSL board of directors off the hook (as the management was working behind the directors’ backs…). The directors failed to ensure that management was working to the benefit of the organisation and presumably within the policies the board formulates. But wasn’t management working according to the board’s policies? Did the board approve the suspension of established estimation mechanisms? If yes, it was wrong. If not, it did not see what was happening under its nose. Directors are responsible for their negligence and incompetence.
Austin Gatt steers well clear of the justified suspicion of management fraud. The PWC report, that unequivocally states that management hid information from the direction, implies ulterior motives and hence the possible intention to defraud. But there is another reason to suspect fraud.
Under the amateur worker-directors system, the better percentage returns were on bigger and more complicated contracts. European shipyards rely heavily on cheap sub-contracted labour from immigrants and refugees, so that unskilled labour goes into less demanding work. More complex work requires either an own workforce or more highly skilled subcontractors.
In either case, the labour-cost component soars by a factor of five or six – labour rates become competitive and work can get done without heavy discounts or excessive reliance on additional work that may crop up outside the original contract price. Time and time again, Malta has shown it can do very well on bigger, more complicated jobs: conversions, specialised building, life extension works, upgrades and similar complex work. The decision for a pruned Malta Shipyards, to go for this type of work, was correct.
With the former Malta Drydocks (MDD) workforce, this type of work was always the main target. But not enough work was available to satisfy workforce capacity. What the ‘expert’ board of directors did not ascertain was the adequacy of the methodology of quotation, negotiation and execution of such contracts. A professional management team should in theory have also been able to get the quotation, negotiation and execution right. With Fairmount, the percentage losses on the contract was so high that the management was either outright incompetent, or crooks! Austin Gatt assures us they were not incompetent.
PWC confirms that at the negotiated prices, heavy losses were inevitable. So the workforce’s productivity becomes irrelevant: the results were doomed before the ink on the contract’s signatures went dry! Tony Zarb was right all along. The PL’s stratagems, the GWU’s unreasonable militancy, bad habits, the lack of balls and the worker’s downright laziness, are not at issue here: what is at issue, according to the PWC, is that the management, knowingly or unknowingly, made a huge gift to the Fairmount owners. And that the board failed to see this, prevent it or take mitigating action when matters were going astray. Is this how these “experts” run their own private business?
By implication, Gatt shoves all potential responsibility on former chairman John Cassar White and the directors at the time even if he praises them to high heaven. He completely omits mentioning the subsequent chairman, his good friend Bobby Aquilina (from the firm Salvo Grima), who took over in January 2008.
Despite the warnings in the media, the MSL board took no action. This in contrast to the former MDD Council when it came to the suspected fraud on the conversion of the superyacht Princess Tanya, where all work was stopped (General Manager Lawrence Farrugia was suspended. And in startling similarity to this case, Farrugia had bypassed the existing cost-estimation apparatus and put in his own man to work out the cost, a quiet type who simply plugged in the costs as advised by Farrugia. Eventually, MDD lost the London court case but the resulting damages were only 20% of the anticipated losses that would have been incurred had the MDD Council not acted). So if fraud was being suspected on the Fairmount contact, it should have been possible to renegotiate the contract – even after work had started. Fraud is never easy to prove but if a business concern is told it will be hauled over the coals, it will come to its senses and renegotiate a dubious contract. The apparent disappearance (according to PWC) of the individual most responsible for this adds to the indication, if not evidence, of management fraud.
Why did government publish the PWC report now, and why did it publish it at all when the majority of inquiry reports are not publicised? The improved retirement offers to the shipyard workers satisfied the GWU (offers improved after Tony Zarb insisted on the Fairmount inquiry). PWC confirmed Zarb’s claims and shows a deficient management for whom the directors, appointed or retained by the PN government, are ultimately responsible. So why did the PN government bring this report into the open?
One reason I can think of is that the PN wants to dilute Labour’s attack by drawing it across several fronts. At present, the other major saga is Enemalta’s Delimara power station extension. Much of what the PL has claimed so far can be countered by technical arguments. While the PL has not really touched on very important issues such as the timing of the contract, the maintenance contract, site issues and the type of engines ordered (and for which the arguments would be against the PN), these arguments are highly technical and would not make sense to the man on the street. PN and PL supporters would each believe their own side, leaving floating voters divided or not caring less, or even resigned to their fate.
I think the PN is worried that Labour has more inside information than that already made public, and that has yet to release proof positive of high-level mis-governance. Shame on you Gatt et al. The people now know better.
Anglu Farrugia is Labour deputy leader for parliamentary affairs
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