Permanent Secretary involved in FTS corruption scandal chosen as chief taxman

Joseph Caruana, the permanent secretary who had lost the trust of his own minister and was investigated by the police over alleged corruption carried out on his watch by his brother, has been appointed Malta’s Chief Taxman by Prime Minister Robert Abela.

This appointment has already raised eyebrows in the public service and among tax practitioners in the private sector due to its possible implications on Malta’s ongoing grey listing.

Rampant tax evasion and lack of collection of dues were among the main concerns contributing in no small way to Malta’s negative international status.

Only last week, Finance Minister Clyde Caruana revealed that the government is due some €5 billion in uncollected taxes, cautioning businessmen that ‘the holiday would soon be over’.

Government sources told The Shift that although Joseph Caruana was never officially accused of anything, albeit having been investigated by the police, his appointment to such an important government role comes with a lot of baggage, which sends the wrong message, both locally and even more so in international circles.

Currently posted at the Transport Ministry, Joseph Caruana was appointed permanent secretary at the education ministry in 2013, a few months after the Labour Party was elected.

The Caruana brothers are known long-time canvassers of Bartolo on the Rabat district. In fact, in the short-lived Alfred Sant administration – between 1996 and 1998 – Joseph Caruana, together with his two brothers, used to form part of Evarist Bartolo’s private secretariat.

The FTS debacle and Joseph Caruana

With Joseph Caruana as his Permanent Secretary, Evarist Bartolo had appointed Joseph’s brother, Edward, on a person of trust contract at the Foundation for Tomorrow Schools, putting him in charge of multi-million euro projects related to the building and maintenance of public schools.

During the time, FTS CEO Philip Rizzo – another of Bartolo’s person of trust – had discovered that Edward Caruana was allegedly taking bribes from contractors working on government tenders, and had even distributed some €8 million worth of payments to contractors, by hand, on behalf of the Foundation for Tomorrow’s Schools (FTS).

Rizzo, who also alleged that Edward’s brother, the permanent secretary, was fully aware of everything, presented proof of his allegations to both Minister Bartolo and to disgraced Prime Minister Joseph Muscat.

In one of the e-mails presented as evidence, Permanent Secretary Joseph Caruana informed his brother Edward at the FTS of a direction he had given on a €400,000 payment related to a pending contract at the government school in Qormi. The e-mail was sent behind Minister Bartolo’s back.

Caruana never explained why he felt the need to send this e-mail to his brother, who supposedly had nothing to do with payments. Also, as permanent secretary, Caruana was signing direct orders dished out by the FTS to various contractor ‘friends’ of his brother.

It would eventually transpire that during this time Edward had managed to build a large block of apartments in Rabat, estimated to have cost around €500,000 to build, without the need to resort to a bank loan. According to Rizzo, one of the contractors had told him that Caruana was also being paid in kind through building materials.

After months in which Minister Evarist Bartolo took no action over these serious allegations, Rizzo resigned and presented all the evidence to the police.

In 2017, following all these scandals and allegations of involvement in corruption on his watch, Bartolo removed Caruana from the education ministry.

In December 2017, Edward Caruana was charged with acts of corruption and fraud in relation to the FTS. The case is still ongoing. No charges were ever presented against Joseph Caruana in court.

Only a few weeks ago, The Shift reported a surprising development in the case, when Magistrate Donatella Frendo Dimech decided to annul the order to freeze Caruana’s assets, stating that the prosecution had not managed to prove any direct link between the crimes he had allegedly committed, and his assets, including the unexplained wealth indicated by his mysterious block of flats