Fresh from an electoral victory in March 2013, Prime Minister Joseph Muscat and his government wasted no time in issuing a request for proposals for concessions to open and operate a casino in Malta and another one in Gozo.
For the casino licence in Gozo, despite the initial interest from potential investors, history repeated itself and the request for proposals did not materialise in the granting of a new casino on the island.
The process for the granting of a new casino in Malta, on the other hand, was not as plain sailing due to a series of events that seriously demand an explanation from the Prime Minister and his government.
It all started on July 31, 2013, when the Labour government issued a request for proposals for the opening and operation of a (single) casino in Malta. According to the established timeline, the concession agreement was expected to be executed on October 31, 2013.
The government appointed an ad hoc evaluation committee to evaluate the proposals and recommend to the Privatisation Unit (that was acting on behalf of the government) the preferred proponent following a detailed analysis of the submitted proposals. However, there is much more than meets the eye. The process was flawed from the start and lacked transparency throughout.
Let us not erode a sector that has been going from strength to strength
Firstly, the government had absolute discretion in deciding whether to accept the recommendations of the evaluation committee. So why set up an evaluation committee if the government has absolute discretion in deciding whether to accept or reject its proposals?
Secondly the request for proposals had no predefined weighting index for each of the established criteria when evaluating the bidders. This means that the weighting related to the best financial offer was not established prior to the opening of the bids but, on the contrary, it could have been influenced by the knowledge of the submitted bids.
Hence, the second question is: how were the weighting parameters established to analyse the proposals? And how was the quantitative analysis carried out?
It turned out that there were actually five bids for the concession of the casino in Malta: Dragonara Gaming, Corinthia Group, Polidano Group, Eden Leisure Group and Sea Bank Group.
The evaluation committee shortlisted two casinos: Dragonara Gaming, which had the best financial offer at €4.3 million, and Eden Leisure Group, having the fourth best financial offer at €1.25 million, surpassing the least advantageous financial offer by just €25,000.
With this information, can the Labour government give us the reason behind the evaluation committee’s decision that the two shortlisted proponents are the one with the best financial offer and the casino with the second least favourable financial offer?
For the sake of transparency, we, as Opposition, must pose the following questions: a) what is keeping the Prime Minister from publishing the recommendations of the evaluation committee? b) Who were the members of the evaluation committee? c) Why didn’t the government follow the recommendations made by the evaluation committee?
It is clear that the government was not satisfied by the recommendations of the evaluation committee and so abolished the recommendations and appointed a new committee, this time the technical committee, to analyse and compare the two shortlisted proposals – Dragonara Gaming Ltd and Eden Leisure Group.
This technical committee analysed the two shortlisted casinos according to the set of criteria established in the request for proposals, had the knowledge of who had the best financial offer and had no pre-established scoring framework to follow.
What we know for a fact is that Dragonara Gaming Ltd’s offer was €3 million higher than its competitor and, given the company’s reputation, local experience in the local gaming industry, credibility and soundness (all of which are required criteria), then, assuming all criteria were given equal weightings (not to give any advantage to the financial offer criteria), then Dragonara Gaming should have outperformed the competitor in most of the criteria or, at the least, be at par in other criteria to which Eden Leisure might have an equally strong standing.
Hence, unless a credible explanation is given by the government, it goes against all logic to accept Minister Chris Cardona’s declaration that Eden Leisure was the most advantageous proponent and that the technical report was inconclusive.
If the technical report really is inconclusive then what is keeping the Prime Minister and the minister from publishing the technical report? Why was the selection process overdue by more than 12 months? How can the government justify this supreme lack of transparency and fairness?
The other day, the government came up with another shocking revelation, that is, that both shortlisted bidders should each be granted a concession.
I am not even going to question the government on whether a market feasibility study was carried out prior to the publishing of the initial request for proposals to determine whether the casino market in Malta is actually concentrated, a study to determine whether certain geographical locations are more adequate for a new casino than others. But I will certainly ask the government whether the decision to swiftly grant a second concession and, more recently, the minister’s blanket statement of a no capping policy for the casino market were based on some sort of study or was it simply a matter of pure political convenience.
One last question: is the granting of a second concession, when the request for proposals issued was strictly for a single casino legally, binding? Can the minister at least reassure us on this one?
The casino industry, like the rest of the gaming sector, has been going from strength to strength over the past decade due to its sound regulatory framework and definitely not due to a free-for-all approach. Let us not start eroding such a significant sector to the economy through shortsighted decisions to make political favours but at a price that is detrimental to the stability of thousands of employees in the casino sector alone, millions of euros in tax revenue and destabilising the socio-economic bearing of this vital industry.
Kristy Debono is the Opposition’s spokeswoman for competitiveness and economic growth.