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Air Malta Chairman’s Contract Faces EU Scrutiny

Air Malta Chairman's Contract Faces EU Scrutiny
by
August 7, 2023
in Business News, NEWS Malta
202

In a significant development, a consultancy contract awarded to David Curmi by Finance Minister Clyde Caruana, worth a substantial €774,000 over three years, has raised concerns of a potential breach of strict state aid regulations set by the European Union (EU). This contract places Curmi in the role of Air Malta’s Executive Chairman and has come under scrutiny by EU authorities for possible violations of state aid rules, The Shift has learned.

EU Alarms Sound After Contract Revelation

Following The Shift’s recent disclosure of Curmi’s contract, which was made public after a prolonged period of resistance by Finance Minister Clyde Caruana, sources within the ministry revealed that the European Union swiftly raised concerns and is now questioning the contract’s legal compliance.

Stringent EU State Aid Rules

According to the EU’s state aid regulations, which are overseen by the Directorate-General for Competition, governments must obtain approval from Brussels before providing subsidies to airlines. Despite ongoing discussions between the Maltese government and the European Commission regarding a potential financial injection of hundreds of millions of euros into struggling Air Malta to avert bankruptcy, the government has bypassed these rules by using public funds rather than the airline’s resources to fund the salary of the airline’s executive chairman—Curmi, one of the highest-paid officials on the state payroll.

Brussels’ Response and Concerns

An anonymous source speaking to The Shift stated, “The recent revelations about the government circumventing regulations to cut Air Malta’s costs and burden taxpayers even more were met with disapproval by Brussels. Payments for the executive chairman should be considered part of the airline’s expenses, not imposed on taxpayers. Clyde Caruana’s actions might undermine his efforts to secure the European Commission’s approval for state aid requests.”

Transparency and Scrutiny

Despite these concerns, the Finance Ministry has not provided answers to queries from The Shift regarding whether Malta’s State Aid Monitoring Board, led by the Ministry’s Permanent Secretary Paul Zahra, has been tasked with reviewing the contract.

Contract Details and Misalignment

While Caruana attempted to present Curmi’s contract as a general consultancy for the Ministry, an annex to the contract made public by The Shift reveals that Curmi’s responsibilities are closely tied to his role as the airline’s executive chairman.

History of Bypassing Rules

This is not the first instance of the Maltese government circumventing EU state aid rules for the airline’s benefit. The Shift previously reported that the government awarded a €35 million direct order to Centrecom, a company partly owned by Air Malta, which directly benefits from state aid.

Misleading Statements and Aiding Air Malta

Caruana and Curmi were also behind an early retirement scheme that aimed to reduce more than half of the airline’s workforce. However, the funding for this restructuring initiative came from state coffers rather than the airline itself. In addition, Caruana misled the parliament twice, initially stating that Curmi was not being remunerated for his role as chairman, only to later admit that the information was incorrect and blaming Curmi for the misinformation.

Challenges in Seeking State Aid

Caruana and Curmi have been attempting to convince Brussels of the necessity of around €220 million in new state aid to ensure Air Malta’s survival, but their efforts have not been successful thus far. This challenging situation prompted Curmi to confirm previous reports by The Shift that the national carrier is likely to be shut down by the end of the year.

Curmi’s Other Roles and Players

While being paid an extraordinary monthly salary of €21,500, David Curmi is also a director in QP Management Ltd, a company within the Corinthia Group, which frequently receives government direct orders. Notably, Curmi’s contentious contract was signed by Alfred Camilleri, who was then the long-serving Permanent Secretary of the Finance Ministry. Camilleri has since retired from public service and holds roles in QP Management and as chairman of the Malta Philharmonic Orchestra.

Conclusion

The controversy surrounding David Curmi’s consultancy contract as Air Malta’s Executive Chairman has drawn attention not only due to its significant financial value but also for its potential breach of EU state aid rules. The situation reflects the challenges of navigating complex regulations while seeking financial support for a struggling national carrier.

Frequently Asked Questions about the Air Malta Chairman’s Contract

What is the value of David Curmi’s consultancy contract with Air Malta?

David Curmi’s consultancy contract with Air Malta is valued at €774,000 over three years.

Why is the contract under EU scrutiny?

The contract is under scrutiny by the EU due to concerns of a potential breach of state aid rules.

Why did the government fund Curmi’s salary with public funds?

Despite ongoing negotiations with the European Commission for additional funds, the government used public funds to pay Curmi’s salary, sidestepping airline resources.

What implications does this have for Clyde Caruana’s efforts?

Clyde Caruana’s actions have raised concerns about his credibility as he seeks approval for state aid requests from the European Commission.

How has David Curmi’s other roles affected this situation?

David Curmi’s roles in other companies, including QP Management Ltd, have added complexity to the scrutiny of his consultancy contract with Air Malta.

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