The culture of cronyism and favouritism that has prevailed under successive Maltese governments has continued to deepen further since Joseph Muscat took over the reins of the country four years ago.
Labour’s political clique has been living lavishly on money siphoned off the Maltese coffers that Muscat’s government squanders on six-figure salaries, fully expensed luxury cars and other generous benefits. A glaring example is the package given to Sai Mizzi Liang, wife of Minister Within the Office of the Prime Minister Konrad Mizzi, who has been paid €13,000 monthly since August 2013 after she was handpicked as a special government envoy to China. At the same time, the government has persistently refused to list her achievements, if any.
Before the last election a few eyebrows were raised when it was revealed that Muscat and people involved in the Labour Party’s finances were holding meetings at the fourth floor of the Labour headquarters behind closed doors with powerful property entrepreneurs and other business operators. The proceedings of these meetings were kept secret from the public.
Yet, deals are alluded to have been struck enabling Labour to find the funds it required for an extravagant electoral campaign with billboards, full-page newpaper advertisements and tons of direct-mail appeals including a 170-page colourful electoral manifesto printed to high standards on glossy paper.
On assuming responsibility as prime minister in 2013, Muscat lost no time in taking the Government Property Department (GPD) under his ministry, which in turn entered into a number of highly suspicious negotiations with certain particular businessmen resulting in exorbitant gains to them. These manoeuvres have been interpreted by many as a fulfillment of Labour’s pre-electoral obligations to its benefactors.
Muscat’s government moved quickly to withdraw the legal procedures instituted by the previous government against Cities Entertainment Ltd. (CE) as owners of the closed-down Café Premier in Valletta, intended to recoup outstanding arrears that the company had with the GPD and dissolve a 65-year emphyteutical lease granted in 1998.
No sooner had Muscat received a request for a meeting from the company’s shareholder Mario Camilleri, he fixed a date on that same day. At that meeting on April 17, 2013, Camilleri made a proposal for the government to buy back the lease of Café Premier. Camilleri had already approached the Nationalist government with the same proposal but it was turned down.
Meetings were subsequently held between a government negotiating team and CE represented by Mario Camilleri, with the direct involvement of the Office of the Prime Minister. However, the team failed to appropriately involve the GPD from the initial stages of negotiations, according to a report by the National Audit Office. Following an offer made by CE to amicably rescind the lease for an after-tax price of €4.2 million, Muscat sought the views of chief of staff Keith Schembri who considered the offer a fair deal. Agreement was reached on September 24, 2013, with five per cent (€210,000) to be paid as a brokerage fee to Camilleri’s company M&A Investments Ltd.
As a result of this deal, an additional €1.4 million were required in that year’s budget while the remaining amount had to be accounted for in the ensuing two budgets.
Camilleri, who was entrusted by the government to keep interested parties within CE informed of developments during negotiations, offerd the other shareholders to buy out their 50 per cent shareholding in the company for €150,000, when the agreement with the government to buy back the lease for €4.2 million had already been reached without their knowledge.
The government’s alibi that it intended to acquire Café Premier to remove possible danger posed by the catering establishment to the National Library located directly above it and to construct an elevator leading to the library’s first floor, did not dissuade the Auditor General from concluding the government had demonstrated poor governance and lack of transparency.
A stench of corruption emanates from the payment by the government to CE as a bailout settlement without any clear justification or documentation, after the company had already made unsuccessful attempts to sell on the market.
Marco Gaffarena is another private entrepreneur with links to the OPM who managed to increase his wealth substantially after Muscat took his oath of office.
It took months for the economic crimes unit of the police to start its investigation into this highly suspicious business deal
Gaffarena was the first-ever Maltese citizen to approach the GPD on his own initiative to have his property expropriated instead of such procedure being commenced on a decision of the government by means of an expropriation notice.
On July 28, 2014, Gaffarena put forward a proposal for the exchange of a one-fourth undivided share of a property in Valletta that he had bought on December 18, 2007 for €23,294. This proposal followed a meeting that he had with Pariamentary Secretary Michael Falzon.
Gaffarena also offered to sell a second share of the same property to the government even though he did not yet own it, after obtaining confidential information that enabled him to anticipate the government’s intention to expropriate the property. To accelerate the expropriation, an estimate value for the two shares was made by the GPD before Gaffarena acquired the second one.
The government waited for Gaffarena to acquire the second share instead of expropriating it from its owners and timed the expropriation to coincide with when Gaffarena acquired it. Gaffarena eventually bought this share on February 26, 2015 for €139,762.
Besides, on October 31, 2014 Gaffarena entered into two promise of sale agreements with the owners of the remaining two shares in the building, who were disadvantaged by the fact that they were not aware of the government’s intention to expropriate these shares. Gaffarena was given red carpet treatment by the OPM. Clint Scerri, a 24-year-old officer in Falzon’s secretariat, accompanied him on various occasions to the GPD offices pressuring at least two public officers to get the expropriation deal done as quickly as possible.
Carmel Camilleri, who resigned from the position of Director Estate Management Division (DEM) within the GPD after the scandal was made public, complained about this pressure in an affidavit that was tabled before the Parliamentary Accounts Committee on March 6, 2016.
Subsequently, Notary Anthony Hili, another employee of the GPD, revealed that he was similarly pressured by Scerri in his testimony given in court on May 9, 2016.
Although it was within the legal right of the GPD to expropriate the entire property, it apparently succumbed to pressure and Camilleri, who was still DEM, endorsed the proposal put forward by Gaffarena for the expropriation of his two undivided shares in a piecemeal manner.
The proposal was subsequently endorsed by Raymond Camilleri, director general, without vetting or analysing the proposal, or consulting with anyone on the matter.
On March 2, 2015 Falzon approved Carmel Camilleri’s minute for the acquisition of the two one-fourth undivided shares of the property from Gaffarena, without even establishing what public purpose was to be served through such acquisition.
The President declared expropriation of the two shares of the property on January 22 and April 10, 2015.
In exchange for these shares that he bought for just €163,056, Gaffarena was compensated with €516,390 in cash and with land at Baħar iċ-Ċagħaq, Qormi and Siġġiewi as well as properties in Baħar iċ-Ċagħaq, Żebbuġ and Sliema valued at €2,760,000 by independent architects although estimated to be worth €1,128,610 by the GPD.
Gaffarena himself identified the properties while their valuations were prepared prior to the publication of the expropriation notice.
In his report, the Auditor General slammed Falzon and the Camilleris for failing to safeguard the national interest by readily facilitating the expropriation of Gaffarena’s property, which led to the resignation of all three from office.
As to Muscat, he filed legal proceedings in his own name against Gaffarena and his wife to recover the assets transferred to him in the expropriation deal.
This was considered as the only choice left for Muscat to save himself from the embarrassing situation of being called up as a defendant.
Ridiculously enough, it took months for the economic crimes unit of the police to start its investigation into this highly suspicious business deal, as two police inspectors within the unit were discovered to be themselves in business with Gaffarena.
It becomes evident that Muscat is very generous to his privileged ones, but instead of digging into own pocket he leans on public funds which are being repeatedly abused, making corruption the hallmark of his government.
Denis Tanti is a former assistant director (industrial and employment relations) in the Ministry for Health.