On 23 June 2015, the Public Accounts Committee requested the National Audit Office (NAO) to investigate the transfer of property at 83 Spinola Road, St Julian’s. The Office was to ascertain whether the principles of good governance, value for money, transparency and accountability were respected, and whether any political pressure was exerted. The temporary emphyteusis of this Joint Office property was acquired by E.G. Property Holdings Ltd in 1998, at which point the emphyteusis had already expired. By the time the GPD became aware of this anomaly, the Company had developed the site as part of a larger complex. Compounding matters was the Company’s encroachment on public land when extending the development over the adjacent foreshore, over which Government had initiated judicial action. Notwithstanding the Court ruling in Government’s favour, the GPD disposed of the site, including that of the expired emphyteusis, for €525,000.
It remained unclear to the NAO who instructed and authorised the assimilation of the foreshore with that of the expired emphyteusis. Although this decision followed a meeting between the GPD and the Company, the Office traced no documentation authorising the incorporation of the foreshore as part of 83 Spinola Road, which assimilation significantly increased the dimensions of the site.
When the GPD initiated procedures for the disposal of the site through tender, reference was only made to the expired emphyteusis, despite the fact that the site now incorporated the adjacent foreshore. The NAO noted various instances when decisions to dispose of the site were taken based on this incomplete information, including authorisation of the tender proposal by the Director General (DG) GPD, referral to the Department of Contracts and approval by the Minister for Finance, the Economy and Investment (Minister MFEI) and the Parliamentary Secretary (PS) Revenues and Land. Critical in this respect was the involvement of the Commissioner of Land, who was certainly aware of the Court ruling yet failed to bring this significant fact to the fore notwithstanding numerous opportunities to do so. In the NAO’s understanding, the omission of any reference to the foreshore misled the due consideration of the case and cast doubt on the integrity of the process.
Government failed to secure value for money in the disposal of this site for €525,000, which amount was agreed to by the parties following arbitration. The NAO established the value of the site and structure at €2,400,000. Even if one were to consider the site and its potential, which the NAO valued at €1,500,000, it is immediately evident that the GPD failed to obtain a fair value for the property. Compounding matters was the fact that Government disposed of the site through outright sale rather than through a perpetual emphyteusis. Furthermore, the consideration of the entire site as Joint Office property was erroneous, given that the larger foreshore area was Government-owned. These factors resulted in revenue to Government of €35, with the balance transferred to the Archdiocese as Foundation for Church Schools bonds. A perpetual emphyteusis would have ensured that all revenue be retained by Government. As at April 2017, by which time all payments by E.G. Property Holdings Ltd were to be effected, a balance of €309,000 remained outstanding.
The NAO did not find direct evidence of political pressure exerted in the process reviewed. However, the involvement of the Minister for Fair Competition, Small Business and Consumers (Minister MFCC) and his Head of Secretariat in the latter stages of the process of disposal drew the Office’s attention. In the NAO’s opinion, the context of the change from perpetual emphyteusis to sale indicated an element of ministerial involvement, for it was after a meeting held with the Minister MFCC and the Permanent Secretary MFCC that the DG GPD recommended disposal through outright sale. This contrasted with an earlier recommendation by the DG GPD and the endorsement of the Minister MFEI and the PS Revenues and Land for disposal of the site through perpetual emphyteusis.
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