Chambray: apartments for the rich at social housing costs - Sant

Opposition leader Alfred Sant said yesterday that Fort Chambray was being transferred to a private developer for such a low price, it was like allocating housing to the rich for the price of social housing.

He said that while he was not criticising Gozitan developer Michael Caruana, who would take over the fort, the proposed contract meant a betrayal of the Gozitans by the government.

The opposition, he said, was willing to work with the government for a sound solution to the problem to be found.

Dr Sant was the last opposition speaker in a two-day debate on the emphyteutical grant of the fort to Dr Caruana.

He said that should the government be willing to reconsider the deal, the opposition would work with the government for the way forward to be found, a way through which all those who were involved would be compensated while the project would make sense for the country.

He said that tomorrow he would go to Gozo on his own to lay a stone in front of Chambray, and a small manifestation would be held on Tuesday to show that the opposition was against the proposed contract.

The opposition would also keep a close eye on how the project evolved.

He said the contract the government had presented to the House was disgusting.

He respected Dr Caruana for his work and for his cultural commitment and he did not want what he was saying to reflect on his operations. Dr Caruana had contributed a lot to Gozo.

But the opposition was against the deal the government had proposed because it was not in the interests of the country.

The government had admitted that the original deal, reached in 1993, had failed. But who had been responsible for this tragedy? Was the government to continue mocking the Maltese and Gozitans in this way? Who had defended financier Roberto Memmo? Who had introduced him to the government?

Dr Memmo had not spent a penny on this project and would walk away with millions. The opposition had long warned the government about Dr Memmo's credentials, but the government had carried on regardless. What the opposition had said had been proved right.

Dr Sant said he had been shocked in this debate over the arguments by government speakers that there was no need for a hotel to form part of the Chambray project. The original Chambray project called for the building of a four-star hotel. He felt it should have been a five-star establishment. But now there might be no hotel at all.

Was it the government's vision for Gozo tourism to reduce bedstock when tourist numbers dropped, rather than make tourism viable? This was in stark contrast to the opposition's view that the tourism industry needed to be developed and Gozo had the potential for it.

The Chambray saga, Dr Sant said, was only one of many bad decisions taken by the Nationalist government, the others including the way the Delimara power station had been built, overspending on the airport, Maghtab, HSBC, the purchase of RJ Avroliners, the investment in Azzurrair and the Freeport, where debts were not even being covered by the revenue from the new operating agreement.

The Chambray development, Dr Sant said, should have been incorporated in a regional development plan for Gozo.

Dr Sant said that once the 1993 Chambray deal had been terminated, the issue should have been taken back to parliament at that stage.

He had been shocked, Dr Sant said, that the broker of the new agreement was Pawlu Abela, the same person who had drawn up the agreement on the building of the new Gozo Channel vessels just hours before the 1996 elections, a deal which had crucified Gozo and Gozo Channel.

Fort Chambray, Dr Sant said, should be used to promote tourism in Gozo. To have a project without a focus on tourism amounted to treason.

Replying, Public Investments Minister Austin Gatt observed that Dr Sant had said the new agreement amounted to a betrayal of Gozo, but it was only the government that was being accused of betrayal and treason.

Dr Sant had said he respected the other party to the deal, businessman Michael Caruana. Yet through its arguments, the opposition was also accusing him of betrayal. (uproar). Indeed, there was so much respect that Dr Sant had said he would keep a close eye on how the project evolved.

Dr Sant's new theory that former shareholder Paul Abela was the string puller in the deal did not make sense. Mr Abela had been a shareholder in Fort Development Ltd since November 1995. What had Dr Sant done as Prime Minister to remove him between 1996 and 1998?

All that Dr Sant had done in those two years had been to get Edgar Mizzi to report politically but not legally about the 1993 deal. Had he had his way, Dr Sant would have resorted to expropriating the site, but that would have sent the wrong message to all potential investors.

Dr Gatt said there was an intimate connection between premium and emphyteusis: if the former was low the latter would be high, and vice-versa. In the case of Fort Chambray it was the emphyteusis that was low. Nobody had said that the Lm1.2 million the government would receive for its sale of shares in the Chambray project was too low.

Although not impossible, it would not have done Gozo any good if the government had moved to dissolve the 1993 agreement in court. But it would have been a difficult and long drawn out case. The only other two ways would have been either to expropriate or look for a solution that made sense for the Chambray project and Gozo, even if not ideal.

The government had now managed to replace the old deal with a new one with a new shareholder whom the opposition said it respected.

The deal involved the building of a commercial centre and a total of 236 apartments in a small area, besides maintenance of the fortifications, which was a very expensive undertaking in its own right. A hotel may also be built on the site.

How much could the developer realistically spend and reap on his investment? Every unit would have a sales value of Lm84,000, making for a total of Lm19.8 million.

A BOV sanction letter given to Dr Caruana showed a drawdown of Lm7.1 million, bank fees of Lm250,000, loan to complete construction, Lm3.5 million; interests at 6.5 per cent until 2008 Lm2.5 million for a total Lm13.9 million. In all, the project without a hotel would cost Lm19.6 million. Therefore, whether the hotel was built or not would make or break the project.

The government had given Dr Caruana the option to decide about the hotel within one year.

If not built, the hotel could be substituted by 40 other units for a total income of Lm3.36 million. If the developer spent Lm500,000 on construction, he would make a profit of Lm2.6 million and pay Lm290,200 in tax.

Dr Gatt said the project had been at a standstill for several years. Paul Abela and others had cajoled Sol Melia, Deutsche Bank and several entrepreneurs to get involved, but such was the extent and the risk involved, that only Dr Caruana was ready to go for it.

Dr Caruana was getting involved for a return of six or seven per cent, yet the opposition was trying to denigrate the contract and his involvement.

To say that tourism in Gozo depended on a hotel being built in Chambray did not make sense. Gozo had done something which no other sector had done: it had made a niche of the internal market.

The Gozitans always said their best tourist was the Maltese. The Chambray development was important even for value-added Maltese tourism. Chambray would not create as many jobs as a hotel, but 236 residential units would create both direct and indirect employment.

No opposition speaker had said anything about the conditions of the contract. The developer would have to pay a daily fine of Lm100 if the project was not completed in time. He would not be able to sell any shares in the project until it was complete. He had to restore the barracks, the bakery and the polverista, and all of these would revert to the government at the end of the emphyteusis. The developer would also be responsible, for 88 years, for the maintenance of the fortifications, no mean commitment given that the bastions had a subsidence problem as they were built on clay.

So did all this make Dr Caruana a speculator?

Concluding, Dr Gatt said the government's decisions were based on the need to reactivate the Chambray project. But he was sure those decisions would stand Gozo and the Gozitans well.

The motion was then approved after a division.