Funds deposited by the General Workers’ Union in court for the redemption of ground rent for its headquarters were not withdrawn by the Land Department implying the deal was not accepted as legally correct, lawyers said.
The union deposited the funds in court as payment for the ground rent on the building in Valletta. The GWU argued such payment allowed it to rent out part of its premises to third parties although documented case law appears to indicate otherwise.
“The funds deposited have not been withdrawn by the Land Department, which obviously implies that the owner [the Land Department] did not deem it to be legally correct,” a legal expert said.
While it was normal the government took its time to withdraw funds, in this case so much time had gone by that the cheque was probably no longer valid, unless it was renewed, it was pointed out. The funds were deposited in court on May 15, over seven months ago.
The union’s rental of part of the premises to three companies – ARMS Ltd, Vjaġġi Untours and Sciacca Grill – has been the subject of an investigation by the National Audit Office. The Auditor General found “irregularities” and concluded that the GWU broke lease conditions when it sublet parts of its office space.
Breach of the Land Disposal Act was a criminal offence, the lawyer stressed. Those found guilty would be liable to a fine of up to €2,329, imprisonment not exceeding six months or both.
The GWU has contested the conclusions of the investigation, saying that it relied on the advice of former judge and Labour MP Philip Sciberras that its payment of just over €16,000 freed it from the conditions of the original 1957 contract.
The conditions prevented it from leasing the property to a third party unless it held a 51 per cent shareholding in the lessee company. The GWU does not own such a stake in any of the three companies to which it leased parts of the premises.
The NAO investigation recommends the government takes legal action against the union but no action is known to have been taken so far.
A government spokesman told the Times of Malta last week that the advice of the Attorney General (who agreed with the NAO’s stand) was still “being worked on”.
“In not acting against the GWU, the Land Department is actually disposing of a right which appertained to the State (us),” the lawyer noted.
Fears have been expressed that the GWU deal could jeopardise contracts signed over the years by the Housing Authority, which could mean taxpayers losing millions of euros in assistance that the housing watchdog gave in social housing benefits.
Implications
Over the years, the Housing Authority gave plots of land at discounted rates to various individuals accordng to different schemes. The contracts included conditions to avoid the exploitation of social benefits and land speculation.
One clause laid down that even when the ground rent (ċens) was redeemed, the land was still bound by the conditions in the original contract. Thus, for example, an individual could not demolish a house and build a block of apartments instead even when the ground rent was redeemed.
The GWU insists that, by redeeming the ground rent, the conditions tied to its Valletta headquarters were then null and void. Case law indicates otherwise.
If the government fails to take legal action against the union, it would effectively be accepting the GWU’s argument and open up a Pandora’s Box for the Housing Authority. That would mean that every individual who signed a contract with the regulator could contest the conditions of the original contract when the ground rent is redeemed.