Chief Minister Fabian Picardo today continued his detailed analysis of the Principal Auditor’s 2018/2019 Report, focusing on two main areas: the ex-gratia payment made to the former Media Director on retirement, and the Report’s treatment of several Government procurement processes.

Ex-gratia Payment to Media Director

The Chief Minister described the Auditor’s comments on this matter as “riddled with inaccuracies, mischaracterisations, and omissions.”

He explained that the payment in question was not discretionary, but contractually grounded, consisting of two lawful components:

• A gratuity of 25% of basic salary per year of service, expressly provided for in the officer’s employment agreements of 2013, 2017, and 2021; and
• Overtime compensation in recognition of extensive unpaid hours worked over more than a decade.

The Chief Minister said the payment had been approved by the Chief Secretary’s Office, processed by Treasury, and notified to the Principal Auditor in the normal course. He refuted the claim that No.6 Convent Place failed to respond to audit queries, stating that emails were answered within days and that the Report’s assertion to the contrary was “untrue.”

Mr Picardo noted that the gratuity system had been introduced under a previous GSD administration, and that his Government had ended the practice of 25% gratuities for new contracts.

He said the Auditor’s reference to “golden handshakes” was misleading, given that such payments are a normal feature of public service retirement provisions.

Procurement Matters

Turning to the issue of procurement, the Chief Minister rejected the Auditor’s conclusion that the Government’s contracting practices were “uncontrolled.” He emphasised that during the review period, the Government conducted 270 public tenders and made 214 open awards — clear evidence, he said, of a system grounded in transparency.

He addressed each of the four contracts cited in the Report:

• Northern Defences: Procured through a public Expression of Interest due to the site’s heritage and structural complexity, with no public capital expenditure and significant private investment.
• Occupational Health Services: Awarded to the only suitable local provider to meet urgent operational needs, with conflicts of interest properly declared and managed.
• EMIS (Digital Health Records): Payment ensured continuity of the existing NHS platform and protection of patient data; switching providers would have risked service disruption.
• Waste Management Facility: Procured under a lawful exemption in Regulation 15(1)(b) of the Procurement Regulations 2016 as a civil contingency project.

The Chief Minister cited legal advice from Mr Fisher KC, who concluded that the Report misrepresented lawful discretion as procedural failure and did not reflect the evidence provided to the audit process.

He further referenced UK and EU case law confirming that contracting authorities have a margin of appreciation in applying procurement regulations and that only “manifest error” or misuse of power would justify judicial intervention.

Mr Picardo said the late issuing of audit queries — only days before the statutory reporting deadline — denied departments a fair opportunity to respond, breaching established principles of natural justice.

Conclusion

The Chief Minister said the Government would move to formally reject the relevant sections of the Report, describing them as “factually flawed, procedurally unfair, and legally unsound.”

He added that while some recommendations of the Principal Auditor would be accepted and acted upon, the Government would continue to defend its officers and the integrity of Gibraltar’s public service where unfair criticism has been made.

ENDS