Parliamentary Secretary Michael Falzon is vehemently denying any conflict of interest even though he was engaged in negotiations with Bank of Valletta in his capacity as a government official while at the same time discussing his personal early retirement package.

Dr Falzon, who is responsible for the Land Department, was involved in discussions leading to the bank taking over the House of Four Winds building in Valletta, which commands stunning views of Marsamxett Harbour.

However, Dr Falzon, who was a bank employee, was also discussing an early retirement package with BOV since he had been appointed parliamentary secretary. The settlement included a unique arrangement allowing him to eventually return to his job in spite of a €260,000 pay out.

When asked if he had discussed the matter with the Prime Minister, Dr Falzon said: “I have already instructed you not to correspond with me in any matter whatsoever.” But in a press conference on Friday, he dismissed any conflict of interest, insisting he is being attacked for managing to secure from BOV “€5 million for the Maltese public”.

The Office of the Prime Minister did not respond to questions about the matter. Article 8.1 of the Ministerial Code of Ethics (see box) states that Cabinet members should seek the Prime Minister’s advice if a potential conflict of interest arises.

Last year, Bank of Valletta reached an agreement with the Land Department to pay €4.6 million to the government to convert a 40-year lease on the House of Four Winds, used as the chairman’s office, to a 65-year emphyteusis.

The deal, which according to the bank’s chairman John Cassar White was beneficial to the bank as it wanted a better return on its investment, also included the payment of €33,750 a year in ground rent. BOV kept the deal, which did not follow normal government procedures, under wraps until it was revealed by Times of Malta in December.

According to the ‘Disposal of Government Land’ law, such conversions are only permitted following the issue of a public tender or through a parliamentary resolution.

Bypassing this provision, the government, through the Parliamentary Secretary, used an exception in the law stating that government land could be transferred by emphyteusis “if it consists of land which is offered for an industrial project after applicant would have satisfied government about the benefit which the project would render to the country’s economy and that it would create an adequate number of jobs.”

Asked how he could justify the deal in the absence of an industrial project, Dr Falzon said the term also included “the banking industry”.

In these negotiations with the bank, Dr Falzon also presented his case to BOV in his personal capacity so that he could benefit from an early retirement scheme reserved for departing bank staff. Unlike 130 BOV employees who took part this scheme, Dr Falzon was given a €260,000 early retirement payment with a proviso that he could return to the bank upon leaving office.

Underlining that Dr Falzon will have to pay back part of his €260,000 grant, if he returns to the bank by June 2018, Mr Cassar White said this was the first time that a bank employee had been appointed to serve in Cabinet.

Mr Cassar White stated that “the rules of early retirement have to have some flexibility to cater for evolving circumstances”.

Dr Falzon did not respond on which dates he had asked his employer to consider him for early retirement and when he was taking part in negotiations with BOV on the House of Four Winds deal.

Asked the same question at a press conference on Friday, Dr Falzon said he did not recall the date of the agreement on the House of Four Winds but added he had already been granted early retirement when the agreement was signed.

Code of ethics

Clause 8.1: Ministers should make sure that there are no conflicts between their public duties and their private interests, being financial or of any other nature. It is the minister’s personal responsibility to decide if and what should be done to avoid these types of conflicts of interest.

In case there will be need of the Prime Minister’s guidance on whether there exists a conflict of interest, his decision is final.

As a general principle, a minister should either dispose of this interest or take alternative measures to avoid it.

Sign up to our free newsletters

Get the best updates straight to your inbox:
Please select at least one mailing list.

You can unsubscribe at any time by clicking the link in the footer of our emails. We use Mailchimp as our marketing platform. By subscribing, you acknowledge that your information will be transferred to Mailchimp for processing.