State investment agency head defends Brussels property purchase

Two of the nine floors of the Lm9 million building Malta has purchased in the heart of Brussels will be rented out to private third parties, the money being ploughed back into the government's coffers, Ivan Falzon, chairman of the state investment agency Mimcol, said.

The contract for the purchase of the building, situated right next to the EU headquarters in the Belgian capital, was signed on June 25.

"The need for a new permanent home for Malta's representative offices in Brussels had been felt since Malta began the process of joining the EU but had been shelved until after the 2003 referendum on EU membership.

"The present premises housing Malta's permanent representation was designed to accommodate a staff complement of not more than 20 persons but is today catering for twice as many. This has resulted in a situation whereby Maltese officials are operating in an environment with three or four persons in a single office, no space for filing important documents, no appropriate area to welcome guests and have private meetings and with many other inconveniences associated with overcrowding," Mr Falzon explained.

Since May 1, Malta's permanent representation to the European Union and Malta's embassy in Belgium has been housed in the seventh floor of a privately-owned office block in Rue Belliard, a 15 to 20-minute walk from the European Commission's main offices. The then delegation of Malta to the EU moved into these premises three years ago.

The present premises cover about 800 square metres of office space costing in the region of €200,000 a year to rent.

Some time ago, it had been suggested that in view of Malta's membership, other floors in the same block should be rented to make room for the new staff that would be recruited on Malta's accession. Since the required space would have had to be rented for three years, the proposal was put on hold in view of the government's decision to examine the option of looking for a permanent location.

Malta's permanent representative to the EU, Richard Cachia Caruana, said it was proving difficult to operate efficiently from the present premises but agreed that a decision on whether to rent more space should wait.

"Obviously, there are inconveniences and difficulties for staff members but I think this is something they all understand, particularly since they know this is not how they will work on a permanent basis".

Mr Cachia Caruana feels it was correct to move to the present rented premises three years ago. "It is possible for staff members to walk the 15-20 minutes to meetings being held at the main Council or Commission offices; although this depends to a great extent on the weather and the number of documents they will have to take with them to the meetings... Even when the sun is shining I don't really wish to have people walking backwards and forwards or waiting for taxis between the various meetings they have to attend; I'd rather have them at their desks reporting on these meetings and putting forward new ideas to the government back home.

"Even though the permanent representation is very large in terms of numbers by Maltese standards, it is still relatively small compared to the rest; our people clearly have to cover more meetings than most of their colleagues and their available time is therefore more limited."

When the government decided to look into the issue of a permanent home it charged Mimcol to look into the matter.

Mr Falzon explained that all alternatives were considered with renting, leasing with a buy-back option and a full purchase being on the cards. The recommendation to go for the new property was made by a special Mimcol committee which included former Air Malta chairman Albert Mizzi.

Mr Falzon said that "at the beginning 16 properties within a one-kilometre radius of the main EU institutions were identified. These were brought down to three by December when proper negotiations started and an offer was made".

The Ministry of Finance was consulted and kept informed. The final decision to buy was taken in June this year when the contract was also finalised.

The new building is very different from the present premises. For a start it is situated just metres away from the EU Commission's new headquarters. It consists of a whole block of office space measuring over 4,500 square metres spread over nine floors - less than half of the building will be used to house the permanent representation.

An estimated Lm6.5 million will be spent to buy the property and another Lm2.5 million will go into structural refurbishment works. This figure however does not include the cost of specialised equipment and IT systems that will need to be installed; this cost is still being calculated.

Mr Falzon explained that most of the equipment and furniture to be used is expected to come from the present offices.

He defended the expense, saying that although money involved is significant the investment is certainly the "best choice". "The costs of rental would have continued to rise and any investment made would have been made in other people's property. Malta's EU membership is a fact and a permanent home in the EU's capital is a necessity, and while a smaller building could have been considered just for the permanent representation, this would not have been the correct decision from an investment point of view".

Mr Falzon recalled that Malta House in London had been bought and refurbished by the government in 1991 at a cost of £7.5 million and is today estimated to be worth £9.5 million.

Returning to the new property in Brussels, Mr Falzon said "the location of the building is a key factor... being so close to the permanent home of the EU institutions one can estimate that the value of the property will hold and almost certainly increase at a far higher rate than properties some distance away".

As in the case of other member states, Maltese officials are attending about 100 meetings a week. Additionally, Maltese officials have to maintain continuous contact with the European Commission. The permanent representations of the UK, Austria and Portugal are just a stone's throw away and the offices of Norway, a non-EU member, are right next door.

Asked whether a smaller building would have sufficed, Mr Falzon said the building will not only house the permanent representation to the EU. "The representation will use four, possibly four-and-a-half floors of the building. Other parts of the building will be used to house the embassy to Belgium, the offices of Air Malta as well as other entities that will require offices in Brussels, including the Malta Tourism Authority. At least two of the floors will be leased to third parties on a private basis and will be generating income."

The new Malta House is expected to open its doors in 18 months' time. January 2006 is the targeted deadline.

According to plans, Malta's EU representation will require a total staff of about 60 persons to function adequately in the EU structures. The bulk will be officers posted from Malta, although most of the secretarial and other support staff will be recruited directly in Brussels. At the same time there will still be the need for additional experts to work in Brussels on an ad hoc basis, attending meetings and drafting reports.

Mr Cachia Caruana explained that "with its full capacity of officials, Malta will be in a better position to attend meetings and carry on with the relevant work without depending - to the same extent as at present - on Maltese government officials travelling to and from Brussels every week".