At the time of the ‘irregular’ lease deal between ARMS Ltd and the General Workers’ Union the two organisations shared the same company secretary and the same director, the Times of Malta has learnt.
Still, the acting chief executive of ARMS, Carmen Ciantar, told the National Audit Office the company “was not informed of any constraints” within the GWU building, where it leased space to serve as an office.
GWU general secretary Josef Bugeja, who was then deputy general secretary, told the NAO “the union had not indicated any servitudes or legal constraints impeding the union from entering into possible lease arrangements with ARMS Ltd”.
According to the terms in the original ARMS tender, the GWU was bound to inform the government entity of any legal constraints and servitudes.
In a report tabled in Parliament last week, the Auditor General found that the lease of parts of the GWU headquarters in Valletta by ARMS for €62,000 a year was irregular and recommended legal action by the government against the union.
The Times of Malta has since established that, during the tendering, evaluation and decision-making process of this deal, both ARMS and the GWU had common officials.
Aaron Mifsud Bonnici, the GWU’s legal consultant, is the company secretary of ARMS. He is also secretary of two GWU companies, that is, GWU Holdings Ltd and GWU Property Holdings Ltd.
Dr Mifsud Bonnici is also company secretary of Enemalta Corporation, one of the two shareholders of ARMS Ltd. He was appointed to act as company secretary of ARMS and Enemalta by the government following Labour’s return to power.
Also, one of the directors at ARMS, Robert Borg, is financial consultant to the GWU and also sits on the board of directors of GWU Holdings Ltd and GWU Properties Holdings Ltd. Mr Borg was also appointed by the government as director of the Water Services Corporation, the other shareholder of ARMS.
I was not part of any decision to issue these tenders, nor was I part of the adjudicating committee. I do not see any ethical conflict
Asked by the Times of Malta to say whether at the time of signing the contract between ARMS and the GWU he sat on the board of directors of ARMS and GWU Holdings Ltd and GWU Property Holdings Ltd, Mr Borg replied: “I confirm my position as director in both companies. The tender for ARMS was submitted by the General Workers’ Union, not by the companies.”
He said the process for the public call was handled by an adjudicating committee independent of the board of directors, adding: “I was not part of the adjudicating committee that put forward the decision to adjudicate this tender. I always act in line with the legal requirement as stipulated by the Companies Act when there is a conflicting situation arising out of my role as a director in any company that I represent.”
Asked if he informed the ARMS board when the issue of renting the GWU property was discussed that there might be a legal problem with the union building, Mr Borg said: “My duty as financial consultant to the GWU binds me by confidentiality on the GWU’s operations.”
When pressed to state whether he thought his role in the two organisations engaged in a business deal was ethical, Mr Borg replied: “I was not part of any decision to issue these tenders, nor was I part of the adjudicating committee. I do not see any ethical conflict.”Dr Mifsud Bonnici confirmed that, at the time of the signing of the lease agreement, he was company secretary of a number of companies, including ARMS and GWU-related firms.
Asked if he declared his position to the ARMS board of directors prior to the board decision followed by the signing of the contract, he replied: “In terms of the Companies Act, as company secretary of ARMS Ltd and other companies, I am responsible for the summoning of meetings at the request of directors, keeping of the minute book and the filing of forms and returns with the Registrar of Companies.”
As to whether he had informed the ARMS board, when the issue of renting the GWU property was discussed, that there might be a legal problem with the GWU building, Dr Mifsud Bonnici said: “I understand that an ARMS evaluation team considered the proposals that were submitted to ARMS Ltd following an expression of interest. I played no role in the evaluation or in the decision taken by the company to lease the premises in question and was neither asked to play any role in such decision or to be present when such decision was taken.”
He added: “As a legal professional, I am bound by the rules of professional secrecy. Such rules prevent me from discussing matters that may come to my knowledge through legal services provided to third parties. ARMS Limited did not request legal advice from me in connection with the lease.
“Had it done so, I would have flagged a potential conflict.”
Asked whether, as the GWU’s legal consultant, he gave the union advice on problems connected with the leasing of parts of the Workers’ Memorial Building he replied: “I regret that the same legal obligations of professional secrecy prevent me from replying to your query as to whether I provided the union with legal advice on matters relating to the Workers’ Memorial Building.
“I may, however, point out that the legal opinion obtained by the GWU in connection with the emphytheutical grant, which opinion was referred to by the NAO, was not provided by my legal office.”
Dr Mifsud Bonnici said he had always acted in full adherence to ethical standards.
Dr Mifsud Bonnici confirmed that, at the time of the signing of the lease agreement, he was company secretary of a number of companies, including ARMS and GWU-related firms
According to the NAO report, the Auditor General could not find any evidence of the decision by the ARMS board of directors to award the lease contract to the GWU.
“Notwithstanding requests made by the NAO to establish when recommended action was proposed and approved (to award the contract to the GWU), no documentation was provided by ARMS Ltd in this regard,” the NAO report states. It also appears from the investigation that the GWU was informed only verbally that it had won the contract.
“The ARMS Ltd acting CEO informed this office [NAO] that no correspondence to this effect could be traced and that the GWU was verbally notified of its selection,” the report notes. It is not known who from the ARMS board verbally informed the GWU that it had won the bid.
“Following the NAO’s findings, the government said it would be up to the Attorney General to decide whether legal action would be instituted as suggested by the NAO. On his part, the Attorney General said he was still studying the course of action to be taken.
NAO conclusions on other leased parts of the HQ
Malta 5D Show
AV Malta Ltd operates the 5D theatre-cinema housed in the Workers’ Memorial Building.
The company is owned by the GWU (51.5 per cent) and 5D Ltd. Since the GWU has a majority, the NAO said the lease agreement was regular.
Sciacca Grill restaurant
The upmarket restaurant in South Street is owned by M& N catering, which acquired the business from Kasco Food Ltd in 2014. The GWU has no percentage shareholding whatsoever in these companies. According to the NAO, “the occupation of part of the GWU HQ by Sciacca Grill is irregular and in breach of the union’s contract with the government.”
Untours Insurance Agency
In the NAO’s understanding, this insurance agency is not in breach of the government-GWU emphytheutical grant contract as the company is fully owned by the GWU.
Vjaġġi Untours
The travel agency is a joint venture operation between the union (40 per cent) and Orange Travel Group (56 per cent). The NAO feels that Vjaġġi Untours Ltd’s occupation of part of the WMB is not in line with the provisions of the GWU’s contract with the government.