Advice by the Attorney General after the Audit Office found irregularities in the lease of part of the GWU’s headquarters had “potential ramifications” for social housing, a government spokesman said.

The National Audit Office report tabled in Parliament in October concluded that the GWU had broken lease conditions when it sublet office space at its headquarters in Valletta to State billing company ARMS Ltd, travel agency Vjaġġi Untours and restaurant Sciacca Grill.

If the government endorsed the conclusions of the report and followed the Land Disposal Act, the GWU’s actions would have repercussions for government-owned land, extending to those in social housing, legal sources said.

The government has acknowledged the potential repercussions, with the spokesman telling this newspaper that “work on the advice is in progress”.

The union argued that its position was justified on the basis of the legal advice it received from retired judge Philip Sciberras that it was enough for it to redeem its ground rent for €16,026.

‘In fairness, this is by no means straightforward’

The land where the union’s offices stand had been transferred to the GWU by the government.

According to case law, redeeming the ground rent did not extinguish conditions tied to its use, lawyers and notaries pointed out. This was also the opinion of the Attorney General and the Audit Office’s legal adviser.

After the report was published, the Prime Minister said he would wait for the Attorney General’s advice before taking a stand.

The government is still studying the advice it was given.

“In fairness, this is by no means a straightforward issue, particularly since it can have ramifications on other property owned by the government, which also needs to be considered,” the government spokesman said.

This newspaper has reported that, according to a valuation made in 2008 but which was not given to the Audit Office, the union should have paid at least €3.2 million for its Valletta property before leasing parts of it to third parties.

The Audit Office made “attempts at sourcing… to no avail” a copy of the 2008 valuation during its investigation into whether the GWU had breached a contract with the government when it leased parts of its Valletta headquarters to third parties.

The sum in question was the amount the GWU had to pay to free itself from the conditions imposed in the original 1957 contract, which laid down that it could not lease the property to a third party unless it held a 51 per cent shareholding in a company.

The GWU does not have such shareholding in any of the three companies to which it has leased parts of the premises.

The former land commissioner told the Audit Office he had phoned former GWU general secretary Tony Zarb to inform him that a parliamentary resolution was necessary before the premises could be leased.

The report notes that Mr Zarb told the former land 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.

Mr Zarb has refused to divulge any names, saying only: “When it’s the appropriate time I will say who told me.”

caroline.muscat@timesofmalta.com