Air Malta chairman’s contract under EU scrutiny for breach of state aid rules

A consultancy contract awarded to David Curmi by Finance Minister Clyde Caruana worth €774,000 over three years that sees him serving as Air Malta’s Executive Chairman is under EU scrutiny for a potential breach of stringent state aid rules, The Shift is informed.

Following The Shift’s revelations last week, in which Curmi’s contract was made public after years of stiff resistance by embattled Finance Minister Clyde Caruana, sources at the ministry said that Brussels immediately sounded the alarm bell and is questioning the contract’s legality.

According to EU state aid rules, which are overseen by the Directorate-General for Competition, the government cannot subsidise the airline without first obtaining a green light from Brussels.

Even though the government is currently in talks with the European Commission over the possibility of a new injection of hundreds of millions of euros into the ailing Air Malta to stave off bankruptcy, it has circumvented rules by funding the airline boss’ salary, one of the state payroll’s highest, with public funds instead of the airline’s own resources.

According to one source speaking to The Shift, who preferred to remain anonymous given the issue’s sensitivity, “The latest revelations about how the government is circumventing the rules to reduce Air Malta’s costs and instead further burden the taxpayer was not well-received by Brussels.

“Payments for the airline’s executive chairman should be included in the airline’s costs and not lumped onto taxpayers. Clyde Caruana is shooting himself in the foot at a time when he is seeking the European Commission’s approval for his state aid requests.”

However, The Finance Ministry is not answering The Shift’s questions about whether Malta’s State Aid Monitoring Board, which is chaired by the Ministry’s Permanent Secretary Paul Zahra, had been asked to scrutinise the contract.

Although Caruana attempted to camouflage Curmi’s contract as a general consultancy for the Ministry, an annex to the contract published by The Shift shows Curmi’s duties are specifically connected to his performance as the airline’s executive chairperson.

This is not the first time the government has thwarted EU state aid rules for the airline.

The Shift recently revealed how the government awarded a €35 million direct order to a company, Centrecom, to provide call centre services.

Half of the company’s shares are owned by Air Malta, which directly benefits from the state aid.

Caruana and Curmi also devised an early retirement scheme to shed more than half of the airline’s workforce.

But, once again, the millions required for that part of the restructuring process came from state coffers rather than the airline.

Caruana and Curmi are seeking to convince Brussels that around €220 million in new state aid is required to keep Air Malta afloat, but they have so far been unsuccessful.

The state of affairs prompted Curmi to confirm The Shift’s previous reports that the national carrier will be shut down by the year’s end.

While paying Curmi an extraordinary salary of €21,500 a month, Finance Minister Caruana was caught misleading parliament twice. He first informed MPs that his handpicked chairman was not being paid for his role as chairman.

He was later forced to admit he had been incorrect and blamed Curmi for giving him the wrong information.

Curmi is also a director in a Corinthia Group company, QP Management Ltd, which is a regular recipient of government direct orders.

Curmi’s contentious contract was signed by Alfred Camilleri,  who was at the time the Finance Ministry’s long-serving Permanent Secretary. Camilleri has since retired from public service, and in addition to his role at QP Management, he is also chairman of the Malta Philharmonic Orchestra.