Developers have called on the government to seek legal advice on how to take back the ‘ITS site’ in St George’s Bay in the wake of the deep concerns raised by the Auditor General on the controversial deal involving db Group.
But db Group said the report absolved it of all the allegations and confirmed the price paid was in line with the market value.
Malta Developers Association director-general and former PN MP Marthese Portelli told Times of Malta the manner in which the process had been handled left much to be desired in terms of governance, as highlighted by the findings of the National Audit Office’s investigation.
“Any deal which does not benefit the common good, including any deal which allowed or allows for change from original uses, should be looked into properly and the government should seek legal advice on how such properties which were disposed of in this way can be retracted in the best interest of the country,” Portelli said.
Spanning over an area of 24,000 square metres, this prime site of public land housing the Institute of Tourism Studies had been transferred to db Group in February 2017, following a request for proposals issued by the government.
Under this concession issued by state agency Projects Malta the successful applicant had to construct an upmarket mixed tourism and leisure complex including a five-star hotel.
The price paid was in line with the market value
Barely a month after the deal was signed, then Opposition leader Simon Busuttil had requested the NAO to investigate the concession amid claims of corruption and that this prime site had been awarded for a pittance.
In his report published last Wednesday, the auditor general raised doubts on the land transfer deal on various fronts saying it lacked transparency.
Major concerns were also raised on the negotiation committee with certain members failing to provide any input, while flagging the absence of Government Property Division throughout the process.
In September 2018, the Planning Authority had issued a development permit for the project with 10 votes in favour and four against. However, last June a court of appeal revoked the permit citing a conflict of interest with respect to one of the board members. Consequently, db had to go back to the drawing board and submit a fresh application.
Portelli was among the four PA board members who had voted against the project, albeit in her capacity as the Opposition’s representative.
She said the NAO confirmed concerns raised by developers in 2016 about good governance, transparency and equity.
“It is of great concern to note that the NAO highlighted various issues that called into question the motivation that led to this disposal and also highlighted the false sense of urgency behind it,” she said.
Looking ahead, the MDA acknowledged that deals involving public land had been dealt with badly by various administrations from both sides of the political divide.
“We cannot afford to keep making the same mistakes and selling valuable land for peanuts,” Portelli remarked.
In this respect the MDA expressed its belief against the sale of public land.
“At best government land and government property should only be given out on temporary emphyteusis which guarantees the return to the state upon the expiry of the term,” she said.
Sole bidder db Group was awarded the site for an initial down payment of €15 million over seven years. Faced by criticism it had given this prime site for a pittance, the government had insisted it would be recouping €56 million over a number of years.
This amount – which reflected the value established by Deloitte on the strength of the project proposed by db Group – included revenue from the conversion from temporary to perpetual emphyteusis, and ground rent redemptions.
Though the deal is for 99 years, it gives db Group the option to convert residential, office and garage units to perpetual emphyteusis, meaning the lease would be extended indefinitely.
In a statement, db Group said the details of the report were still being reviewed by its core executive team.
It noted, however, that “the price paid by db San Gorg Property Ltd is consonant to the market valuation carried by the Auditor General as part of its terms of reference.”
The group also said that: “No allegations of whatsoever nature are levelled against db Group in its dealings with the Government-appointed negotiation team.”
It welcomed the publication of the report, “as it brings to an end the various unfounded and at times malicious allegations against db Group regarding the price it paid for the concession of the land in question.”