More than 12 tumoli of public land in Xewkija, Gozo, have been transferred to a construction company without a call for tenders in a deal that will net the firm a profit of several million euros.

The land, which was under cultivation until recently, is earmarked for the development of an industrial park for small and medium enterprises. The contract is for a 99-year lease and the developers – Ta’ Maġġi Industrial Park Gozo Ltd – is preparing to build dozens of large garages that will sell for at least €130,000 each.

In return, they will be paying a ground rent of €80,000 to Malta Industrial Parks (MIP), which manages industrial areas in Malta and Gozo and is responsible for the contract.

As heavy equipment was pulling down rubble walls and excavating the ground to prepare the site in Madonna Tar-Rummiena Street for construction, questions were raised by property agents who were passing by as to how this piece of public land has ended up in private hands.

Revenue could hit €10 million

The Sunday Times of Malta has discovered that the land in question has been held for years by MIP to be used for industrial purposes.

Ta’ Maġġi Industrial Park Gozo Ltd was formed on May 10, 2017, and is owned by two developers, Francis Gauci and Kenneth Abela.

READ: New MIP chief gets an €80,000 deal, including perks

According to information gathered from several sources, the land was passed on to the two businessmen by MIP in return for the development of the SME industrial park. The park will consist of 76 large garages to be used as workshops or storage facilities.

The catch, however, is that while Ta’ Maġġi will be paying ground rent of about €80,000 a year, it will retain all the profit generated from building and selling the garages.

The potential revenue from the activity is estimated at €10 million.

When contacted, Mr Gauci confirmed they had been given the land by MIP directly and without a call for tenders.

He also confirmed that the company had already started selling the garages on plan.

“The project has been in the pipeline for years,” he said.

“We had also discussed it with the former PN administration but it never materialised. Now, MIP, through its CEO Karl Azzopardi, contacted us and offered us the land, and we took the opportunity to go ahead with this project.”

Asked on what basis the public land had been granted to his company, he confirmed there had been no competition.

“It was MIP who approached me due to my experience with a similar project in Malta. There was no need for a call for tenders as MIP could allocate this land directly to me. It’s as if they gave me a factory,” Mr Gauci argued.

When it was pointed out to him that he was going to be making a massive profit from land that belongs to the public, Mr Gauci said that according to the contract he had signed, the land had been granted to him for 99 years and he would be paying about €80,000 in ground rent for the concession.

Through another company, Mr Gauci and Mr Abela built a private SME industrial park in Xghajra in 2007. This park was built on private land acquired by the two businessmen without any government intervention.

In 2014, the Planning Authority sanctioned a number of illegalities on the Xghajra site including the building of 10 more garages permitted.

Estate agents already touting site

The Sunday Times of Malta has confirmed that a Gozitan real estate agent has been marketing the garages, which vary between 130 and 180 square metres in size, at €1,000 per square metre.

On top of that, however, potential buyers are being told they will have to pay ground rent of about €1,000 a year. It is not yet known whether this separate stream of income will contribute to the €80,000 which Ta’ Maġġi will be paying MIP for the 12 tumoli.

The deal raises the question of whether there has been a breach of public procurement regulations, which are based on EU principles requiring equal treatment and transparency. Generally, the procurement of services, supplies or works must be made by public contract after a call for tenders.

MIP has not made details of the contract with Ta’ Maġġi public but when contacted said the arrangement had been made through a public deed.

Asked to explain how the public land has been allocated to private individuals without any sort of competition with other interested firms, the MIP’s CEO Mr Azzopardi said it had been done according to a law which permits the government agency to allocate factories directly to individuals.

When it was pointed out to him that this was not a factory but land that was being used for property speculation, he insisted it was all done according to law.

“The land was allocated in the same manner as other industrial properties administered by MIP,” he said.

Asked to name similar industrial land given for such a purpose, and not actual factories, Mr Azzopardi did not reply.

He also denied that he had approached Mr Gauci directly and offered him the land. “This is not true as it was Mr Gauci of Ta’ Maġġi who submitted a formal proposal.”

Asked to make available a copy of this proposal, Mr Azzopardi said that this was not possible “due to commercial sensitivity”.

Sources close to the project told this newspaper that apart from Ta’ Maġġi there are other developers, particularly Gozitans, who are involved in this deal.

The sources also noted that activity on the land was moving at a fast pace, with excavation work going on even at night – something very unusual in the local construction industry.

MIP falls under the political remit of Economy Minister Chris Cardona.

Ministry says deal is of 'overarching and strategic value to the country'

In a statement issued on Sunday morning, Dr Cardona's ministry defended the deal, saying it was of "overarching and strategic economic value to the country" and therefore in line with provisions in the Government Lands Act. 

It said MIP would have to formally approve all tenants setting up shop inside the industrial park and that Mr Gauci would not be able to sell the property "as the land ultimately still belongs to the government."