A motion which changes the conditions governing the use of land owned by the owners of the Fortina Hotel in Sliema was approved by Parliament on Wednesday, with the Opposition voting against and slamming the government for seeking a lower payment than it should.
The land had been acquired by the Fortel Group from the government on condition that it was used for tourist purposes.
New conditions approved by MPs also allow site owners to develop apartments, business and commercial activities on a part of the site. Times of Malta had revealed that site owners would be paying €8.1 million for that privilege.
Opposition leader Adrian Delia said the lower-than-due bill, and the way the Lands Authority would be paid, was effectively turning the government into the "banker of the rich".
Shadow minister Ryan Callus said that the value quoted by the Lands Authority for the relaxation or elimination of conditions on the former site of the Fortina Hotel had been intentionally lowered by €4 million following “instructions” from someone within the Authority itself.
He said that several valuations had been carried out by the Authority. The first valuation - marked as a “draft” - had valued the change in conditions at €12 million, but a later valuation had resulted in the figure of €8.1 million. A further valuation had been commissioned from Grant Thornton by the Board of Governors, which, Mr Callus said, was likely intentioned to lower the value further. However, this valuation was never followed through after Fortel Services Ltd accepted the revised figure of €8.1 million.
Price estimate did not include all the land
Mr Callus argued that, apart from the fact that the figure had been revised downwards between one valuation and another, it emerged from a separate valuation commissioned by Fortel that a significant portion of the site which would see its conditions relaxed or eliminated had not been taken into account. As opposed to the 565 square metres cited in the Lands Authority’s valuations, six sites totalling 2,990 square meters would be freed from their restriction to tourism-related use. Various portions of the site would also be freed from other restrictions, including height restrictions.
Indeed, the site owners had already entered into a deal with Bet365 for a rumoured price of between €60m and €70m for development of part of the site.
Mr Callus said that he did not think that the “instructions” which had led the architects in question to change their valuation had come from either the Board of Governors or from its chairperson. The board had simply noted the architects’ reports, passing them along to Minister Ian Borg for a final decision. The architects themselves had been wary of assuming responsibility for the changes.
Senior officials within the Authority had themselves wanted nothing to do with the case, Mr Callus added, forcing the Authority’s chairperson to manage the process after CEO James Piscopo belatedly withdrew due to a conflict of interest. He called for responsibility to be borne by those responsible for the “millions” which would be lost.
Government: Opposition representative should have been raised his issues before the board
Replying, Dr Borg and government MP Robert Abela expressed frustration at the fact that Mr Callus had not raised any of these objections before the Lands Authority Board, or before the National Audit Office Accounts Committee.
Although Mr Callus had stated that he had not made these points before the committee because he did not wish to force the architects who had produced the valuation to testify, Dr Abela said a serious accusation had been made in their regard by implying that they had knowingly tampered with their valuation.
Furthermore, as a member of the Governing Board of the Authority, Mr Callus should have summoned the three independent architects who had carried out the valuation and questioned them before that board, making sure to register his objections. If he thought that the valuation had been carried out on a plot of land which was smaller than that from which restrictions were actually being lifted, he should have brought it up during a meeting and had it minuted appropriately.
Dr Borg said that although, during the debate, several government MPs had made reference to “mistakes” made by Nationalist Party administrations in property transfers, he did not want to justify the government’s agreement with Fortel by referring to past wrongs as this deal was not a mistake.
He expressed his surprise at hearing Mr Callus’s criticism, as Mr Callus was a member of the Governing Board of the Authority and “knows more than I do” of the Authority’s affairs. Apart from the minutes of the Governing Board’s meetings, Dr Borg said that he had only received a communication relating to the proposed waiver of restrictions on 17th June 2019, when the chairperson of the board had informed him of that board’s positive decision with respect to the agreement.
Dr Borg said that he refused to accept that no objection was made before the Board because a parliamentary debate would eventually be held. Governors, he said, were obliged to examine documents properly, to comment where appropriate, and to minute any objections.
Dr Borg reiterated that the land in question was private land owned wholly by Fortel, and that the agreement would set a record price per square metre for the simple waiver of restrictions.
Opposition Leader Adrian Delia argued that the government’s rights over the land in question - the fact that the land could only be used for specific purposes - itself constituted property.
Price 'a fraction' of market value
Furthermore, if the land over which restrictions were being lifted was to be taken in context, the value indicated in the agreement was “a tenth” of what it would have fetched at market.
He questioned whether any private entity would allow the bulk of what was owed to be paid interest-free over a period of 10 years, as this deal provided. The government was in effect acting as the “bank” of the wealthy.
Dr Delia also pointed out that such controversial agreements were always brought immediately before Parliament rose for recess, and that the required information for proper analysis was either not provided or provided at very short notice.
The motion was approved with 34 government votes in favour and 27 opposition votes against.
Parliament has now risen for its summer recess, and will reconvene on October 7.