The General Workers’ Union was legally bound to pay at least €3.2m for its landmark Valletta property before it could lease the building to government utility bills company ARMS Ltd and other entities within the complex.
The Sunday Times of Malta discovered the valuation in a document put together in 2008 which was not seen by the National Audit Office which has been investigating the sub-letting of the GWU’s South Street office block.
Under the terms of a perpetual emphyteusis granted by the government in 1957, the GWU – which leased the property for its headquarters and printing press – was permitted to sub-let parts of the building only if it had a majority shareholding in a tenant’s entity.
The only way the union could be exempt from the contract is if it purchased what is referred to as the directum dominium (full ownership).
The GWU had expressed an interest with the Land Department in going down this route in 2008, but decided against after a notary commissioned to carry out the valuation had set the purchase price at €3.2m. However, following the change in government in 2013, the union proceeded with renting out part of its premises to ARMS Ltd, receiving €61,950 every six months.
Property valuation not seen by NAO
The National Audit Office concluded in a report tabled in Parliament last Wednesday that the union had breached the conditions of its contract when it sublet parts of the property ARMS Ltd, the travel agency Vjaġġi Untours and Sciacca Grill restaurant because it did not have a shareholding in any of them.
However, NAO said that its “attempts at sourcing” a copy of the 2008 valuation for its investigation had been “to no avail”.
After acquiring a copy of the document, The Sunday Times of Malta put it to the GWU’s former general secretary Tony Zarb that he must have known about the €3.2 million valuation; however, he declined to comment.
Since controversy erupted over the issue, the union has argued that by redeeming the ground rent on the property for €16,026 it had extinguished the conditions of the contract. However, case law does not support this position, according to the Attorney General and the NAO’s legal adviser.
Asked to explain how he justified his statements that the GWU was in line with the law when it had paid €16,026 rather than €3.2 million, Mr Zarb insisted that the newspaper was “dragging out” this story.
The NAO report also notes the former Land Commissioner had phoned Mr Zarb to inform him that a parliamentary resolution was necessary before the premises could be leased.
The report states that Mr Zarb told the former commissioner in a telephone call not to cause any problems because “the pertinent authorities were aware of this matter” and that the request should be approved.
Both the principal permanent secretary, Mario Cutajar, who held the post of GWU deputy general secretary, and Planning Parliamentary Secretary Michael Falzon denied Mr Zarb was referring to them.
Mr Zarb has refused to divulge any names, saying only: “When it’s the appropriate time I will say who told me.”
In a statement following the publication of the NAO report the government said there was “conflicting legal advice on the issue”. In fact, the NAO report shows that both the AG and the Auditor’s legal advisers gave the same opinion.
It was only the GWU lawyer – representing the party that has an interest in this case – who was insisting the union’s move was in line with the law.
The NAO concluded the AG should consider legal proceedings against the GWU for breach of contract.
The investigation started earlier this year after the potential breach of contractual obligations was raised by shadow justice minister Jason Azzopardi.
Recalling the Café Premier bailout, the Gaffarena Old Mint Street debacle and the repossession of Australia Hall in Pembroke by the Labour Party, Dr Azzopardi said the Prime Minister bore full responsibility because the Land Department was part of his portfolio.
caroline.muscat@timesofmalta.com
GWU says article is 'pure speculation'
In a statement this afternoon, the union described the article as “pure speculation” and said it did not know of any valuation of the property or that it had expressed an interest in the purchase of full ownership on the basis of that valuation.
It said that if such valuation had been carried out, it had not been communicated with the union.
The GWU insisted that it had the legal right to use the property as full owner and speculation that it had to pay any sum do this this was completely baseless.
The union statement was issued despite the fact that the story was built on the notary’s valuation that is in Times of Malta's possession – a valuation that was only necessary if the GWU had expressed an interest in acquiring full ownership to remove the conditions set on the lease of the property to third parties.
It should also be noted that Mr Zarb, when contacted, did not deny he knew of such a valuation. He simply chose not to comment.
Meanwhile, the GWU’s insistence that it had the legal right to use the property as full owner is contradicted by the Attorney General and the legal advisers of the NAO. That is why the Auditor General advised that legal action is taken against the union.