The National Audit Office has found irregularities in the way the General Workers Union leased part of the government-owned premises it occupies in Valletta to Arms Ltd.

An investigation was carried out at the request of the Opposition, which argued that the lease was in breach of an emphyteutical agreement under which the government had originally handed the property to the GWU. The agreement, as amended in 1997 permitted the GWU to transfer part of its building only to companies in which the Union had more than 51 per cent of the shareholding.

Yet on April 24, 2014, the GWU leased part of the property to Arms Ltd.

On 15 May 2015, the GWU exercised its right for the redemption of ground rent.

The Audit Office said the GWU did not have any shareholding in Arms Ltd, and therefore the lease was in breach of the Government’s emphyteutical contract with the Union.  

The Audit Office noted that on 28 March 2014, the GWU had requested the Commissioner of Land’s confirmation that should a government entity wish to lease part of the property from the Union, the GPD would find no objection.

This letter was followed by a telephone call made by the former Commissioner of Land to the GWU Secretary General.

"In a minute recorded in the Property Division file following this call, the Commissioner noted that the Union had been duly informed that the request could only be acceded to through a parliamentary resolution. According to the Commissioner of Land, the GWU Secretary General informed him that the ‘pertinent authorities’ were aware of this matter and that the request was to be accordingly acceded to," the Audit Office said.

"Notwithstanding the numerous attempts made by this Office to establish who the authorities referred to were, the GWU Secretary General and the former Commissioner of Land did not provide this information. While the GWU Secretary General failed to reply to all correspondence sent by the NAO, the former Commissioner of Land claimed that he could not recall whether the GWU Secretary General had informed him of their identity."

RECOMMENDED ACTION

The auditor said the Government Property Division should consider  instituting legal action against the GWU for the evident breaches of conditions set in the emphyteutical contract before the redemption of the ground rent.

He also urged the Property Division to establish, through legal action, whether the conditions of the emphyteutical contract applied following the redemption of ground rent, and in the affirmative, to institute judicial action against the Union, or any other type of action deemed suitable.

See report in full on pdf below.

OPPOSITION REACTION

In an initial reaction, the shadow minister for justice, Jason Azzopardi, who had originally raised the case said in a Facebook post: "Yet again, Opposition proved right. Government condoned abuse and breach of conditions by GWU. Any political responsibility?"

GOVERNMENT REFERS REPORT TO THE ATTORNEY GENERAL

In a reaction, the government said it had noted the Audit Office report. It said there were conflicting legal views on the situation, especially after the redemption of the ground rent.  

The government said it was referring the report to the Attorney General for his advice so that the government would safeguard its rights.