The National Audit Office is investigating the Malta Film Commission’s spend on rebates and whether this led to tangible benefits for the country, according to correspondence exchanged between the Auditor General and PN MPs. 

Last month PN MPs Darren Carabott, David Agius and Graham Bencini - who sit on parliament's Public Accounts Committee - as well as Julie Zahra, who is the PN’s spokesperson for National Heritage and Culture, wrote to Auditor General Charles Deguara, asking his office to investigate the Malta Film Commission’s spending. 

They made the request after Times of Malta revealed that the Gladiator sequel was given €46.7 million in taxpayer's money as part of a generous scheme that promises production houses up to 40% cash back if they film in Malta.

The film, whose production was halted due to a Hollywood strike, was just one production of the 54 that were allocated a total of €143 million over five years as part of the grant scheme. 

Industry insiders have expressed scepticism about the validity of the scheme, saying big productions are getting Malta-funded rebates for spending they do in other countries. 

Film Commissioner Johann Grech has called such criticism an "attack on Malta". Tourism Minister Clayton Bartolo, who is responsible for Malta's film sector, has pledged an economic impact study focused on the rebate scheme.

In their letter to the Auditor General, the PN MPs said that €136 million of the €143 million spent or committed as part of the rebate scheme were given to beneficiaries registered overseas. 

They pointed out that in the budget estimates for 2023, the Malta Film Commission had been allocated a total of €14 million, €11 million of which were allocated for incentives, a figure which is far less than the amounts published by the European Commission, they said. 

“It is not clear through which procedures these amounts, which overshoot their financial allocation, are being approved and by whom,” they said. 

They asked the NAO to investigate whether the Film Commission and associated government entities were observing the principles of good governance when disbursing €136 million in public funds to foreign film companies and whether the commission was being accountable and transparent in the spending of public funds when it chose to do so. 

What the NAO is investigating

In his reply to them this week, Deguara said that the NAO had already started a “verification exercise” into the Malta Film Commission’s efficiency and effectiveness. 

Deguara said that as terms of reference, the investigation was seeking to evaluate:

• whether the Commission's work was based on clear national and ministerial strategies 
• whether the Commission's financial management followed the principles of accountability, transparency, good governance
• whether there were high levels of internal controls to ensure a proportional spend that leads to benefits for the Maltese film industry
• whether the Commission’s spend on advertising the Maltese film industry was well-planned and according to policy
• whether this ultimately led to tangible benefits for the Maltese film industry. 

The Auditor General said that the investigation will also look into the process of how money was approved, allocated and spent and whether this was in accordance with EU rules on State Aid, a consideration of whether the Film Commission carried out due diligence to ensure that the beneficiaries of these payouts were entitled to the funds and an evaluation of whether the Commission is sustaining and supporting Maltese productions when they try to access financial incentives. 

Film Commissioner Johann Grech has rebuffed questions about the Commission’s ballooning spending and in an unorthodox video last month, claimed that revelation into how taxpayer’s money is being spent on foreign films is an attack on Malta and Maltese people’s jobs. 

"Those who are attacking the Maltese cash rebate incentive are attacking the stability of the film industry. This is an attack on our country, to push away foreign investment," he said.

"Those who are speaking against the cash rebate are speaking against your job and your future. But we will protect your job."

Grech has defended the rebate, saying that the scheme is approved by the EU, works similarly to other rebates overseas and is a refund of money that has already been spent in Malta.