Ian Borg ‘uncertain’ when he found out about suppressed Fortina valuation

Deputy Prime Minister Ian Borg is “uncertain” when he first found out about a valuation report at the centre of the Fortina land controversy.

The valuation carried out by auditors Grant Thornton concluded Fortina should pay the government a minimum of €18 million to make public land transferred to them in the 1990s available for commercial use.

Instead, Fortina paid the government €8.1 million on the strength of a motion presented to parliament by Borg in July 2019, who at the time was the minister responsible for the Lands Authority.

The discrepancy in valuations led to a multi-million-euro loss for the government, the Auditor General concluded.

In a report published last week, the Auditor General said Lino Farrugia Sacco, who chaired the authority’s board of governors, “suppressed” the higher valuation for fear it would cause “difficulties”.

In testimony to the Auditor General, Borg said he was unsure whether he found out about the valuation before or after the parliament debate that signed off on the deal.

The minister said on learning of the valuation, he had sought clarification from Farrugia Sacco, who died in 2021.

Borg said Farrugia Sacco informed him that the report had been commissioned to determine “whether a further valuation was required, that it was flawed, that it was to be disregarded, that it had not been received, and that the authority had opted to proceed with the valuation already in its possession”.

The Auditor General noted that claims the report was defective and that it had not been received were “contradictory”.

According to the Auditor General, the authority’s own internal valuation of €8.1 million was “incomplete”, as it did not value all the land that was subject to the deal.

Following publication of the Auditor General’s report on Monday, Borg vowed to lead efforts to recover public funds potentially lost because of the deal.

The partial valuation

The Auditor General zoomed in on how Borg missed the fact the €8.1 million valuation was only for part of the land in question.

This limitation was acknowledged in the valuation report drawn up by the authority’s architects and forwarded by Farrugia Sacco along with other documents to Borg and his junior minister Chris Agius.

The Auditor General’s report noted how the fact the €8.1 million valuation was only a partial one was not included in the parliamentary motion presented by Borg.

As a mitigating factor, the Auditor General drew attention to how Farrugia Sacco failed to make any “direct reference” in his correspondence with Borg about the incomplete nature of the valuation, and only “vaguely brought up” that the external valuation from the audit firm was still pending.

The Auditor General also slammed the authority’s board for referring the matter to Borg with an “incomplete valuation”, a situation that favoured Fortina and harmed the government’s interest.

When questioned by the Auditor General to the fact that the €8.1 million valuation was incomplete and was not included in the parliament motion, Borg argued he could not include facts he was not aware of, and did not delve into other issues as he actioned the case as referred to him by Farrugia Sacco, and presented facts that he deemed relevant to the case.

To compound the confusion, the Auditor General found there were conflicting understandings as to whether the Lands Authority had actually signed off on the deal or simply referred it to Borg for his decision.

Board approval

Correspondence submitted by Farrugia Sacco in June 2019 indicated the deal was being referred to Borg and Agius for their consideration, without any recommended course of action by the authority.

On the other hand, the Auditor General’s report noted that the motion presented by Borg in parliament indicated that the Lands Authority’s board had recommended the minister proceed with the deal.

Borg told the Auditor General that Farrugia Sacco “did not object” to him framing the June correspondence as a recommendation by the Lands Authority for the deal to be approved.

Furthermore, Borg argued that none of the other members of the authority’s board contested his presentation of developments as framed in the parliamentary motion.

Agius also backed Borg’s version of events, adding that he discussed the motion with Farrugia Sacco during a meeting, during which any “lingering doubts” about the board’s recommendation were dismissed.

Conflicting versions

On the other hand, the Auditor General said several members of the authority’s board argued that the parliamentary motion did not reflect what has been agreed at board level.

This point was, however, not raised by any board members during any subsequent meetings, the Auditor General noted. 

Most board members had no visibility over the parliamentary motion prior to it being presented to parliament’s national audit committee. The only exception were the government and opposition MPs who sat on the authority’s board.

According to the Auditor General, the Opposition MP Ryan Callus did raise “several concerns”.

One notable dissenting voice came from the board’s deputy chairman John Vassallo, who said the parliament motion “misrepresented” the board’s decision, as they had only agreed to gather information and refer it to the government to consider further parliamentary action.

Vassallo, who now chairs the authority, told the Auditor General the decision was ultimately the government’s as it had a broader overview of the intended investment by Fortina than the board.

Labour must 'come clean' on donations - Momentum

The Momentum political party on Monday called on the Labour Party to 'come clean' on donations given to it by the Zammit Tabona family, which owns the Fortina Hotel.

Momentum Chairperson, Arnold Cassola, said, "The scandal surrounding the Fortina deal is not just about one chairman of the Lands Authority signing off on a disastrous agreement. Chairmen do not act in a vacuum. It was the political masters who gave the green light and who must carry the responsibility.

"The Labour Party cannot wash its hands by blaming Joseph Muscat and Keith Schembri alone. If Labour pocketed Zammit Tabona’s money while handing over prime public land for a fraction of its value, then the rot runs right through the party. This is not a case of one or two bad apples but rather an entire system of political clientelism, cronyism, and the culture of ‘donations’ buying favours that has corroded our democracy.”