Grant Thornton defends Fortina land deal report before parliamentary committee

A top Grant Thornton executive told a parliamentary committee that the firm “stands by” its report on the Fortina land deal, which suggested the government had failed to secure fair value for the land.

The 2019 report had estimated a minimum value of €18 million on the deal, more than double the €8.1 million eventually paid by the company. A later valuation undertaken by the NAO put the value even higher, at €21 million.

However, a report by the Auditor General found that Grant Thornton’s report had been “suppressed” by the late Lino Farrugia Sacco, who served as the Lands Authority chair at the time.

The report’s author (and Grant Thornton managing partner), George Vella, was summoned to testify in parliament’s Public Accounts Committee (PAC) on Wednesday afternoon.

In his occasionally fiery testimony, Vella told the committee that he was “hurt” by the way the firm’s report was “ridiculed” in some quarters, most notably by current Lands CEO Robert Vella.

Robert Vella had previously testified about the subject before a different parliamentary committee.

“I cannot accept the things said against our firm in this room,” Vella said, accusing the now-Lands CEO of “misleading parliament” in his testimony.

Vella explained that Grant Thornton had been engaged by the Lands Authority in March 2019 to carry out an evaluation of the work carried out by three architects previously engaged by the Lands Authority, not to carry out a fresh valuation of the land.

“We were asked to evaluate the file that the Lands Authority had at that stage, with valuations carried out by others,” Vella said. In practice, he added, this meant that Grant Thornton was not legally required to engage three architects, as stipulated by law.

Earlier this year, parliament’s audit committee scrapped all existing valuations of the deal, saying they did not abide by a legal provision stating that land valuations need to be carried out by a team of three architects.

When asked by a PAC member and the Lands Authority's legal representative, Ramona Attard, whether this meant that the Lands Authority could not legally adopt its figures, Vella confirmed this to be the case.

However, Vella said, the firm found that the valuation carried out by the three architects contained several omissions relevant at the time of the deal.

“When we opened the file, it was obvious that the valuation was not based on the entirety of the site and the most recent PA permit,” he told the committee.

For one thing, it was based on “practically half” the total portion of land, Vella said.

It also did not factor in a planning permit issued in 2018, after the valuation was commissioned, which expanded the land’s use to include office and retail space, automatically altering its value.

Upon finding these omissions, Grant Thornton set about carrying out its own exercise to understand the value of the land, he told the committee.

Vella said the firm had calculated its estimates based upon valuations of similar deals, not least a 2017 public deed in which parliament signed off land at ITS at a rate of €50 per square metre.

“We calculated a similar rate, but were ridiculed,” Vella said.

The firm presented its report to then-Lands Authority chair Farrugia Sacco and later held a brief meeting with him to present its findings.

Farrugia Sacco was alone during the meeting, Vella testified.

At the time, Farrugia Sacco expressed his concern that this was not what the authority was expecting, allegedly telling Grant Thornton officials that “this will cause us problems”.

However, the authority never pointed to any factual flaws within the report, despite repeated requests, Vella said.

Vella also told the committee that the authority had initially refused to issue the final payment for works, with Farrugia Sacco eventually instructing Grant Thornton to submit an invoice to the Office of the Prime Minister for payment.

“Maybe it was not professional, but when we were promised payment, we did what we were asked,” Vella told the committee.