The government is not following recommendations by the National Audit Office and the Attorney General that legal proceedings should be instituted against the General Workers’ Union for breach of contract over its Valletta headquarters.
Instead, six months after clear recommendations were made to open court procedures, the government has decided to postpone legal action once again as it wants to conduct another analysis “beyond the legal field”.
Last December, Justice Minister Owen Bonnici said he was still awaiting advice from the AG on how to proceed on the NAO conclusions issued two months earlier. Last week, the Times of Malta again asked the minister about the state of play regarding the GWU case.
Dr Bonnici said the government felt that more time was needed to analyse the situation further.
“The initial review by the Office of the Attorney General has brought to light the possibility of unforeseen repercussions of the outcome of the proposed legal actions [against the GWU] on other government property,” Dr Bonnici said.
“Therefore, indications are that a wider analysis of the matter stretching also beyond the legal field is called for.” The minister did not specify when or if this new analysis had started. He did not reply when asked whether the fact that the Prime Minister’s chief of staff had business interests in this issue was making it more difficult for the government to decide.
One of Keith Schembri’s companies, Kasco Foods Ltd, used to run Si Mangia restaurant in part of the GWU’s property that was leased illegally. The restaurant closed down in January 2014 and restarted operations as Sciacca Grill in March 2014.
The building in Valletta’s South Street, known as the Workers Memorial Building, was granted to the GWU in 1957 to be used for trade union functions
According to financial services authority records, Kasco Foods Ltd transferred its shares to another company in March 2014.
The investigation by the NAO was launched following the lease of another part of the GWU premises to government utilities company Arms Ltd. The Auditor General concluded that the leases to Arms, Sciacca Grill and another company, Vjaggi Untours, were illegal and in breach of the original contract for the building the GWU has with the government.
The building in Valletta’s South Street, known as the Workers Memorial Building, was granted to the GWU in 1957 to be used for trade union functions. The agreement was changed in 1997 to allow some areas to be used for commercial purposes so long as the GWU held the majority of shares in the companies making use of the leased areas.
The NAO found that the lease by the GWU to the third parties was in breach of the emphyteutical contract and recommended that the government start legal action against the union.
While the NAO’s investigation was going on, the GWU and the government agreed to render the property freehold, with the union paying €16,000 by redeeming the ground rent. This, according to the union, relieved it of the conditions imposed by the original agreement.
However, the NAO and the AG’s office threw out this argument, stating that the original conditions still stood.
Timeline
February 7, 1957: The government and GWU sign contract to grant former Auberge de France to GWU on perpetual emphyteusis for trade union activity.
December 12, 1997: A few months after Labour returns to power, the government amends contract conditions with GWU allowing it to lease parts of the building to companies in which it had at last 51 per cent of shareholding.
September 2011: Kasco Foods Ltd, owned by Keith Schembri, opens Si Mangia restaurant in part of the GWU premises. GWU has no shareholding in new restaurant.
Start 2014: Si Mangia closes and Sciacca Grill restaurant opens instead.
March 2014: Kasco Food Ltd transfers shares of Sciacca Grill Ltd to M & N Catering
April 2014: GWU leases another part of its property to government entity Arms Ltd for €62,000 a year
February 6, 2015: The Times of Malta reveals that the five-year rental of part of GWU premises to ARMS Ltd breaches contract with the government
February 12, 2015: Opposition asks the National Audit Office to investigate
May 15, 2015: During this investigation, GWU redeems ground rent with Government Property Division, paying €16,000 to render property freehold
October 28, 2015: NAO concludes investigation and finds GWU guilty of breach of contract. Recommends legal action against GWU
October 29, 2015: The government says that it will pass the report to Attorney General for advice on how to proceed.
December , 2015: Attorney General advises the government to start legal procedures against GWU
December 30, 2015: The government tells the Times of Malta that AG advice has been received and “work on the advice is in progress”.
March 15, 2016: Minister Owen Bonnici tells the Times of Malta that he still awaits advice on way forward. Does not clarify what advice he is waiting for.
March 23, 2016: Minster Bonnici says that the government wants to start a new analysis beyond the legal field.