Opposition sees new Chambray contract as a bad deal

Opposition deputy leader Charles Mangion yesterday urged the government to stop the process for the allocation of Fort Chambray to a Gozitan businessman until a fresh valuation of the site was made.

Dr Mangion argued that the property was being transferred for too low a price, while Leo Brincat (MLP) said the government was being Father Christmas with public property. He described the deal as "a sellout."

The government is to transfer the fort on temporary emphyteusis to Michael and Carol Caruana and will also sell its 49 per cent share in the company formerly responsible for the fort. The deal is worth Lm3.7m. The Caruanas will also buy the remaining shares in the company from Maltese and Italian developers.

Dr Mangion said that while the minister in his introduction (see separate story) had said that the project had run out of funds, he had information that there were Lm2.5 million in funds that remained unutilised after Mepa had stopped the project through an enforcement order.

With the project having run into problems years ago, Dr Mangion said the government should have acted sooner against the former developers by exercising non-performance clauses and dissolving the contract.

Interjecting, Dr Gatt said the condition had been renounced when there had been a sub-emphyteusis.

Dr Mangion said this could only have been done with the government's agreement. Since the emphyteutical grant had been approved by parliament, the House should have been informed of the changes.

The Chambray contract, he said, had been a bad deal right from the start, and the change now revealed by Dr Gatt made it even more obscene as far as public interest was concerned.

Turning to the new contract, Dr Mangion said the involvement of a Maltese investor was a good thing and he wished the Caruana family the best. Nonetheless he had a duty to speak out in the national interest.

Maltese heritage had to be protected and the government should seek the maximum revenue from prime sites. Such sites should not be sold off at giveaway prices. The 1993 contract that the government was now admitting to have been a bad deal should not be redone at even worse conditions. At a time when the people were being asked to shoulder great sacrifices the government was throwing away the opportunity to realise substantial revenue.

Even tenants of social housing with a Lm1 temporary emphyteusis were made to pay dearly to redeem their emphyteusis, but in this case the developer had been allowed to redeem temporary emphyteusis at the same rate as perpetual emphyteusis.

Had the dissolution clauses not been removed from the contract, the deal could have been renegotiated. Matters would have dragged on for another year but the project and the value of the land, which had tripled over the years, would have been salvaged.

Dr Mangion observed that the hotel may not be built because there was an over-supply of bedstock in Gozo. But was it right to base oneself on the current prospects for tourism bedstock in Gozo? Would prospects remain bleak in two years' time, the time it would take for any hotel to be built? The hotel was important as it would create jobs.

Dr Mangion recalled how the opposition had been strongly against the first contract and especially against the involvement of Roberto Memmo. It was clear from the start that the project would run into problems. The then Prime Minister and ministers had praised Dr Memmo, however, and had appeared convinced he would carry the project through.

Now that the development was being re-allocated the government needed to consider the price carefully. Fort Chambray consisted of 90 tumoli of land in a prime site, including 50 tumoli which would be used for residential units.

During the debate on Dar Malta in Brussels, the government had argued that paying Lm7 million for 5,000 metres on a prime site was considered to be a good deal. By that yardstick property which was 10 times bigger should cost Lm70 million.

Prime sites in Malta were sold at Lm4,000 per square metre but Fort Chambray was effectively being transferred for just Lm15 per metre.

The Fort Chambray development, he said, would consist of more than 200 apartments. The minister had said these were small units. Yet no apartments in prime sites were sold for less than Lm150,000.

The House had recently enacted legislation which established that government land could be sold by auction to realise its best value following evaluation and the establishment of a baseline by the Lands Department. In this case, had the department evaluated this land?

Even the criteria used by the Joint Office to establish emphyteutis for properties given with a social aim were much tougher than the criteria used by the government for Fort Chambray.

Indeed, the government should stop this transfer and while protecting the interests of the private party it should insist on a revaluation of the site.

Dr Mangion also asked why Dar it-Tabib was not being considered as a heritage site and it could thus be built and sold to the private sector? Had this been allowed by Mepa? What criteria had been used?

If a mistake had been made in the original contract, it should have been rectified in the second, Dr Mangion said.

He also insisted that the public should continue to have access to the historic parts of the fort.

Labour MP Justyne Caruana said the government had persisted with the 1993 Chambray deal despite strong opposition, and the development had remained controversial ever since, with items of the historical heritage being damaged or destroyed including the cemetery.

Now the government was repeating many of the mistakes of the first contract. Clearly Fort Chambray should be better developed, and it should include a hotel as the fort should serve as a landmark to advertise tourism to Gozo. She also insisted that the people should have access to the fortifications.

Mr Brincat said the involvement of Roberto Memmo, a financier who was a member of Italy's P2 masonic lodge had been shameful, more so as the opposition had given early warning that his project would run into trouble. Mr Brincat criticised the fact that the new developer would not be obliged to build a hotel.

While the tourism minister had said that a hotel at Chambray was not necessary, well known estate agent Frank Salt, who was also involved in the tourism industry, had told the government that a hotel "must" be constructed to give the tenants of the surrounding apartments facilities such as restaurants.

The development of apartments on their own would hardly create any permanent jobs in Gozo.

Mr Brincat lamented the damage cause to the fort over the past few years as well as over-building within the site.

Potential investors, including Spanish giant Sol-Melia had been put off because of the amount of building that had taken place. This did not equate to a five-star investment.

Former MDC chairman Michael Soler had also warned that the focus on residential units would not attract quality tourism.

Mr Brincat said that the fact that there had been 10 changes in the shareholders of the Maltese companies involved in the original Chambray project showed how no one had wanted to pump in more money to benefit Dr Memmo, who never spent a cent on the project after the site was gifted to him by the government in 1993.

Dr Memmo never wanted to withdraw from the project while a particular person remained in the Cabinet. Perhaps it was for this reason that this person recently made a speech hitting out at Mepa, which had issued several stop notices on the project.

That the government had opted not to take the issue to court over non-observance of contract conditions said a lot on the administration's confidence in the courts.

The opposition had a clear conscience, because it had given its warnings from day one. But the government carried on regardless.

Evarist Bartolo (MLP) said the complaints that Gozo had an over supply of bedstock was a vote of no confidence in Gozo's tourism industry.

What Gozo did not have was enough tourists, and rather than closing hotels or shelving plans to build new ones, one should focus on filling them. But that would only happen with quality establishments.

Chambray as built over the past few years, was akin to a ghetto and historical remains had been heavily damaged. It was very different from the luxury tourist apartments, luxury hotel, casino, commercial centre and golf course promised in 1993.

Even then Environment Minister Michael Falzon in a memo to the Cabinet in May 1992 had argued that the contract conditions, including the premium, were weighted in favour of the developer.

He had also warned of speculation and insisted that property should not be sold before a number of years. His remarks were ignored by the PN government. And Mr Falzon, in parliament, had ended up defending the contract he objected to in private. The opposition's criticism, subsequently proved correct, had been described as "empty words" by then Prime Minister Eddie Fenech Adami and no apologies had been forthcoming.

Mr Bartolo said the proposed new contract implied that the historic fort, located in one of the most important sites in Gozo, would not be addressed to tourism.

Gozo had exceptional potential for weekend breaks, but no tourist would go to Gozo for a short break when even the helicopter service had been stopped. It all underlined the lack of proper tourism planning.