Inflated salaries and dubious IT contract found at Malta Air Travel

The National Audit Office has found a financial mess at Malta Air Travel, the company set up by disgraced former minister Konrad Mizzi to hold Air Malta’s most profitable landing rights as part of its faltering restructuring process.

In an audit report on public finances published earlier this week, the NAO found the company’s chairman and directors should have been paid €14,000 and €6,000 respectively for the financial year ended 31 March 2021.

They were, however instead paid an extra aggregate amount of €20,000 by having their salaries linked to the wrong pay scale.

According to the NAO’s workings, the company – chaired by Public Broadcasting chairman Mark Sammut – had been established as being at Level 3 with the chairman paid 33% of the scale 2 salary and the directors pegged at 13% of the same salary scale.

But the audit found, “Instead, since inception, they were incorrectly paid at Level 1, whereby the chairman and the directors are pegged at 53% and 23% respectively of the salary in Scale 2.”

Malta Air Travel’s management blamed the tourism ministry, then headed by Mizzi, for the oversight that led to inflated wages.

It explained that when the company was set up by Mizzi, the board’s remuneration had been set at Level 1 “on the basis of the business plan of the newly established company and expected operations”.

It told the NAO that “an exercise” carried out in 2022 following the audit had actually indicated that the company’s categorisation should have been at Level 3, and thus henceforth, the remuneration of the Board will be at this level. The Board of Directors is informed accordingly”.

The company is known commercially as Malta Med Air, and its operations mainly comprise charter and consultancy services to aviation and non-aviation business customers in Europe and elsewhere.

It owns the landing rights at Heathrow and Gatwick airports, purchased for $69.8 million during its first year of operations.

The company was one of Konrad Mizzi’s brainwaves apparently aimed at saving the still-beleaguered national airline by making it seem profitable as a result of selling the landing rights to another government company.

Former Air Malta officer paid €156,000 a year

The NAO also flagged the case of an agreement with a former unnamed Air Malta officer that Malta Air Travel – along with Air Malta, the Tourism Ministry and the Malta Tourism Authority – entered into for consultancy services for a total charge of approximately €156,000 a year.

The report also highlights a separate case involving the company secretary who was still on the payroll even though the individual’s contract had expired more than a year earlier, since January 2021, and had not yet been renewed. Furthermore, the original three-year agreement – covering the period between January 2018 to January 2021, was signed retroactively in August 2018.

IT services: MAT ‘should have at least obtained other quotes’

The NAO also highlighted how Malta Air Travel had engaged a Maltese company for 25 months for information technology services in June 2019 at a monthly fee of €1,080.

According to Malta Air Travel, the company in question, which remained unnamed, was chosen because it provides the same infrastructure to Air Malta.

The NAO, while acknowledging that Malta Air Travel is not bound to follow public procurement regulations, said that “for good practice and considering the considerable amounts involved, the company was at least expected to obtain quotes from potential service providers, either locally or abroad to get the best competitive offers”.

Malta Air Travel chairman is Mark Sammut, an IT entrepreneur who is also the chairman of Public Broadcasting Services. Its directors are the former head of customer care at the Office of the Prime Minister under Joseph Muscat, Sandro Craus, former Labour Party MEP Marlene Mizzi, Stephen Xuereb, Cameron Farrugia, Jorge Grech and Josef Vella, while the board secretary is Andre Borg.

Chairman Mark Sammut is a former IT adviser to John Dalli and was engaged in 2013 by the health ministry to devise a new patient administration system for Mater Dei Hospital.

Sammut – reportedly an IT expert specialising in solutions for supermarkets and car park systems – had worked for Dalli in Brussels.

When Dalli had been roped in as an adviser for Mater Dei, Sammut had been engaged as the eHealth advisor for former health minister Godfrey Farrugia and had been tasked with developing a new patient administration system for the hospital.