Lands Authority ordered to carry out new Fortina waiver valuation

The Lands Authority will be going back to the drawing board and carrying out a fresh valuation of the Fortina waiver, parliament’s accounts committee said on Monday.

The authority will have to report back with a new valuation within the next two months.

The decision came after the committee’s members agreed that all valuations carried out so far are either incomplete or not in line with Lands Authority’s laws.

A report published by the auditor general last month found that a valuation by auditors Grant Thornton, valuing the land at €18 million, had been “suppressed” by Lino Farrugia Sacco, then-chair of the Lands Authority’s board of governors.

The hidden report said that Lands Authority architects had produced two valuations for the land, one at €8.1 million and another, marked “draft”, at €12.1 million.

A separate valuation commissioned by the auditor general in the course of his investigation put the value at €21 million.

Fortina ultimately paid €8.1 million for the waiver.

On Monday morning, just hours before the committee met, Fortina argued that it would have paid €4.7 million for the waiver under today’s rules, pointing to what it described as “material errors, methodological flaws, and internal inconsistencies” in NAO’s methodology.

However, the committee agreed that none of these valuations could be considered definitive, with committee chair Ian Borg questioning whether any of them were carried out in line with the law, which requires a valuation to be signed off by three architects.

Despite being drafted by three architects as dictated by law, the original valuations carried out by the Lands Authority in 2017 were flawed because they excluded parts of the land, the committee agreed.

“And it is not usual practice for the party being granted a waiver to carry out its own valuation,” PN MP Ryan Callus added, referring to Fortina’s own valuation released on Monday.

Meanwhile, the auditor general’s valuation was conducted by a single architect, not three architects as required by law, Borg pointed out.

“So NAO’s valuation is a guide, but we cannot rely on it,” he said.

Nevertheless, “we cannot accept that other holistic valuations taking all of the land into account are scrapped,” Callus insisted.

“I hope there is nobody in this country who thinks they can carry out a valuation on this land and pretend that these new valuations do not exist,” Borg replied.

When asked why the NAO did not engage three architects for its evaluation, as stipulated in the Lands Authority’s law, NAO officials argued that “the Lands Authority’s law requires three architects, but the NAO’s law does not”.

“The level of scrutiny required in our valuations is different from that of the Lands Authority. NAO can never take on the responsibility of the Lands Authority, assistant auditor general Keith Mercieca said.

Nonetheless, NAO’s valuation was carried out “according to the methodology used by architects for these valuations,” and in line with the auditor’s standard practices, he added.

PN committee member Stanley Zammit raised a similar point, arguing that “NAO’s work was not to create a valuation, it was to audit whether things were done correctly”.

“Ultimately, if the three architects had originally been engaged to carry out a comprehensive valuation of the missing sites, we wouldn’t be here,” auditor general Charles Deguara added.