When directed to drop the government’s Australia Hall case against the Labour Party, the initial reaction of Iman Schembri, then director-general of the Government Property Division, was “What am I to do? I am covered by the political direction I have just been given.”
Mr Schembri was answering a question by Opposition MP Jason Azzopardi as he testified before Parliament’s Public Accounts Committee on the contract signed by the Commissioner for Lands and Malta Shipbuilding on August 20, 1979, and the one signed between Malta Shipbuilding and the Malta Labour Party just two days later.
The case had been initiated by the previous government in a bid to take back Australia Hall and Raffles discotheque over alleged breach of contract.
These properties had been passed on to Labour in 1979 in exchange for property at what later became the Marsa shipbuilding yard. Mr Schembri headed the division between January 2011 and November 2013.
He said he had requested direction on how to proceed just days before the case was due to continue in court.
He had met the Attorney General in the office of the Parliamentary Secretary at the OPM in the presence of Labour counsel Paul Lia, shortly after an international call was issued for expressions of interest in the development of the former shipbuilding site.
If the government had won its case on Australia Hall the Labour Party could have taken back the Malta Shipbuilding site, but if a basis for agreement was found some clauses in the contracts could be revisited.
An “advanced stage” towards an amicable solution had been reached in October and the decision had been taken to drop the case. Both PAC chairman Tonio Fenech and Claudio Grech (PN) questioned the fact that the decision to drop the case had not been communicated in writing as per the Interpretation Act.
Mr Schembri said he would have asked for direction in writing if he had not been in agreement, but in the light of the international call for expressions of interest, he had kept in mind the repercussions if the government won the case.
Charles Mangion (PL) observed that dropping the case had been the only way out for the blue economy in view of the government’s policy to develop the Malta Shipbuilding site.
Mr Schembri said he had been given the impression that the shipbuilding site was worth much more than the two sites in Pembroke allocated to Labour (Australia Hall and the former Raffles discotheque). Dr Azzopardi pointed out that the property division had taken court action against other emphyteuta for non-observance of conditions, yet it had not done so against the MLP for not having kept the property in good condition. This could give rise to emphyteuta complaints of two weights and two measures.
How had the division protected the national interests in the Sant government’s decision in 1998 to forgive the non-payment of ground rent by Labour for the Pembroke premises?
Mr Schembri said this was a unique, complex transaction with a history that stretched from 1979 to 2013. The loss of the shipbuilding site to Labour would have meant the government having to pay millions in compensation at market value, and foreign entrepreneurs would have been scared away. The PAC is expecting to complete its deliberations on the case in its next sitting.