A controversial agreement on the Dragonara Casino could expose Malta to action from Brussels, the government’s legal advisers have warned.
Senior government officials received legal advice in relation to a motion that was approved in Parliament last week to extend a 10-year lease on the prime Paceville real estate housing the casino for a further 64 years, sources told Times of Malta.
The casino concession was first granted to Dragonara Gaming Limited in 2010, for a decade-long lease.
However, a motion, put forward last Tuesday by Economy Minister Chris Cardona, for the extension of the casino land rights for another 64-years was approved by both sides of the House.
Rival casino operators who spoke to Times of Malta have described the deal as “scandalous”.
“This deal is not only shocking, but probably illegal, and we are not ruling out legal action,” one angry operator said yesterday.
Dragonara was first awarded the 10-year lease following a public tender, and operators on Monday insisted that the extension agreement should have been once again opened for public bids.
“This extension is just mind-boggling. There should most definitely have been a call for public bids on this. It wouldn’t have just been casino operators who would have been interested in bidding, I’m sure gaming companies, and even other businessmen – including possible consortia – would have bid for this,” one industry leader said.
Although the land housing the casino is not government-owned, the government does have title to it for a fixed period of another 64 years.
Sources said that the Dragonara operators had first sought to extend the lease for the remaining period as far back as 2017.
A government source, privy to internal discussions on the matter, said the legal advice handed to them indicated that the extension of the deal should indeed have been done through a public tendering process.
And, although the law permitted for such agreements to be “modified” in certain circumstances, extending the contract for such a long period of time was not considered an acceptable modification.
For such alteration of a contract to be compliant, a new award procedure would be required, the lawyers told the government officials.
Even worse, the legal advice warned the government that the extension of the agreement could constitute a violation of public procurement obligations, and could effectively lead to infringement procedures by the European Commission.
The Economy Ministry said the deed entered into by Casma Ltd with Dragonara Casino Ltd involves the grant of a title of temporary sub-emphyteusis over private land managed and administered by Casma Ltd under title of temporary emphyteusis.
The deed does not grant any rights or provide any guarantees to Dragonara Casino Ltd that it may continue to enjoy a concession to operate a casino from the premises in question. Nor does the transaction involve the grant of any concession in terms of the Concessions Directive and the Concessions Contracts Regulations, the ministry explained.
“The transaction does not involve any public procurement. Before tabling the motion (including a draft of the relative deed regulating the transaction) for scrutiny by the House of Representatives, legal advice was sought and obtained to ensure the transaction is fully compliant with applicable Maltese and EU laws and regulations.”
In reaction, Dragonara Casino director Franco Degabriele said the extension was granted in full compliance with the law, backed up with all the necessary legal advice.
“We are also happy to note that such extension found the approval of both sides of the House of Representatives.”