The operators of Café Premier benefitted from a scheme that cancelled 80 per cent of penalties owed to the VAT Department, The Sunday Times of Malta has learnt.
The application was made by the company that operated the café, Cities Entertainment, after the government controversially agreed to buy back the public lease of the Valletta property.
In a report, the Auditor General expressed “reservations” over whether Cities Entertainment should have been eligible to pay just €8,000 of €40,000 owed to the VAT Department in penalties and administrative fines for late payments.
Café Premier has been at the centre of a political storm since the National Audit Office released a report saying that a €4.2 million deal under which the government agreed to buy back the public lease of the Valletta property was marked by a lack of transparency and poor governance.
Auditor General expressed reservations over whether company should have been eligible to pay just €8,000
The deal, struck within the first six months of Labour’s 2013 election victory, cancelled out all the business’s debts and included a brokerage fee of €210,000 for one of Café Premier’s directors, Mario Camilleri.
The reason cited by Mr Camilleri, the Cities Entertainment director who completed the relevant form to participate in the VAT scheme, was “lack of funds”.
As a result of the government’s move to enter into negotiations with Cities Entertainment to buy back its own property, the Government Property Division (known as Land Department) lost €111,838 in revenue. The contract entered into between Cities Entertainment and government states that if the emphyteusis (the right to use the property) was transferred to third parties, the Land Department was entitled to the equivalent of a year’s ground rent.
In 2011, Cities Entertainment’s ground rent was increased from €93,198 to €111,838 per year.
The company also benefitted from the government dropping a court case initiated by the former Nationalist administration to recoup €306,975 owed to the Land Department in ground rent arrears and encroachment fees.
The government’s decision to drop the court case was made in June 2013, three months before Cabinet approved the deal. When contacted, a government spokesman said: “The Auditor General’s extensive investigation is being followed up by government. Any competent authorities, inluding tax authorities, can follow-up on any matter which the auditor general touched upon”.
It remains unclear how the damning investigation by the National Audit Office is being followed up.