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Firm foundations

Former egg seller. Ex-mayor. Construction magnate. Major donor. Staunch Nationalist. Vassallo Group chairman Nazzareno Vassallo speaks to Herman Grech as his business turns 65 this year.

Nazzareno Vassallo’s foray into the business scene 50 years ago was hardly glamorous.

Too broke to invest a few cents in a new government savings scheme, Żaren, aged eight, decided to sell eggs for his father over the summer, making a marginal profit over each dozen sold.

Things did not always go to plan. On one occasion a woman bought some eggs from him and promised to pay later. When he returned for his dues, she started yelling and slammed the door in his face.

“I had a decision to make. I could tell my father I was fleeced, or else take it in my stride. I sat in front of the sea near Gillieru Restaurant in St Paul’s Bay to ponder my options and after reflecting I decided to tell my dad I’d give him the takings at the end of the week, instead of daily. That way I’d have enough time to recoup the losses,” he recalls.

“It was the best business decision I took. When I returned to school eight weeks later, I managed to save some €18, making me the richest student. It taught me I could end up losing in this field, but also that I could make a good profit. If I had given up that day, I’d probably be a farmer today.”

Fifty years on, Mr Vassallo is one of the most successful Maltese businessmen, branching out beyond his construction empire and employing some 1,300people.

The Vassallo family had a humble beginning. Żaren Vassallo’s father owned one of the few trucks on the island when the war broke out.

As a farmer he was exempt from compulsory service, but the military seized his truck to use in the war. Once the conflict was over, the father of 12 was rewarded for his pains and given a contract to clear rubble from the streets and start the rebuilding process.

Mr Vassallo Snr struck a small business deal with the Gatt family and the business grew, but by the end of the 1960s the two families chose to go their separate ways.

In 1971, Vassallo Builders was officially launched with 19-year-old Żaren, the youngest of the brothers, surprisingly put in the driving seat. An active staunch Nationalist, he still vividly remembers the moment he was given the reins – June 12, 1971 – the day Dom Mintoff was appointed Prime Minister.

“I was the revolutionary. My motto has always been to change whatever can be changed. I was keen to inject new blood into everything. I see opportunities in problems,” he says, with his trademark wide smile.

The prospects were not promising since the construction boom of the 1960s was over. But the company started breaking new ground from the outset and employed the first architect and women in the construction sector.

By 1977, he landed Malta’s first turnkey contract for the construction and completion of the Danish Village in Mellieħa. Worth €7 million, it was the largest Maltese contract awarded in the 1970s to a single contractor. By the end of the 1970s, the company had built 1,300 housing units.

In 1985 he bought his brothers’ and father’s shares, gaining sole ownership. The rest is history and as Malta enjoyed another property boom, Mr Vassallo rode the cash wave and diversified his business portfolio.

Association with the construction sector also means getting your hands dirty, but Mr Vassallo is quick to point out he was instrumental at keeping the dust settled – as much as possible.

Thanks to his involvement with the Federation of Industry, Mr Vassallo helped draw up a code of ethics for the sector, making it mandatory for trucks to cover their contents during transportation, among other initiatives.

“It was our company which introduced hoarding, scaffolding, skips, warning signs, you name it. Our work is an inconvenience by its very nature. We might be a private company but we have a public conscience. If we’re doing work in Republic Street, we need to respect commuters.”

So why, according to him, are contractors in general still notoriously known for bulldozing their way through, without any respect for the law or neighbours.

“To reduce inconvenience you (the contractor) need to incur major costs and everyone used to avoid them in the past. Yes, certain contractors don’t have a conscience where people around them are concerned,” he replies.

But he dismisses suggestions that might is right and that some contractors manage to get away with murder.

“It’s a matter of attitude, a matter of respecting the environment you’re working in. We do our utmost to minimise the inconvenience to neighbours, and there are ways and means of limiting it.”

In the sector’s defence, he points out that modern day machinery actually emits more dust particles because of the nature of Maltese stone used.

He also believes contractors are not to blame directly for the way the Maltese landscape has been defaced, especially in the last 30 years.

“They contributed to it, but not directly. Speculators are mainly to blame. It’s ironic that while you need a licence to sell peanuts in this country, you don’t need a licence to become a developer. So everyone became a developer. Too many people got into this sector because they felt it was a sure way to make a quick buck. But in reality, you can’t make a quick turnaround nowadays. It’s going to take a while for that to happen again.”

He carefully weighs his words when asked whether he believes Malta has been swamped with excessive construction.

“The construction sector is the motor of the economy,” he replies, dismissing claims that this is simply a misconstrued excuse used by contractors to keep building.

“Without construction you can’t have tourism – and there’s still a lot to be done in this sector.”

But Mr Vassallo also admits certain haphazard construction projects could have been avoided.

“It hurts me to see the roads leading to Mosta packed with four-storey apartments where beautiful terraced houses once stood. It created an excess of apartments which remain unsold and changed the way our villages look.”

Three years ago, the property bubble burst and a lot of people are losing money because everybody put their eggs in the same basket. But in areas like Tigné where apartments are selling at lucrative prices, the supply ironically does not appear to match the demand.

But should any new building ever justify blemishing the landscape, as many feel was the case with Tigné, for example?

“If things were done differently there, if the buildings in front of the sea were built lower than the ones at the back it would have been more logical. But that’sthe way things are,” he replies,awkwardly.

Mr Vassallo says large contractors will always be in the line of fire, and responds to a series of claims related to his ownbusiness.

For example, he insists he never applied to the planning authority to build a 20-storey business centre at the former Lowenbrau factory site in the environs of the Marsa Sports complex, let alone have his application rejected. There was merely an “interest” to build a landmark building on the property but an application was never filed, he says.

He adds that he cannot understand why the Labour-leaning media criticised the fact the Vassallo Group was recommended for the contract to construct walkways at Tarxien temples when his was the cheapest bid among eight.

“What’s wrong with that? They also erroneously said I won the contract of the tent project (at Tarxien itself).”

He dismissed as a blatant lie reports that his subsidiary company Care Malta was pocketing a subsidy from the government for providing beds for the elderly at Casa Arkati and Villa Messina.

“It’s the patient who is receiving the subsidy. We contributed towards improving health care standards in Malta. We take care of 1,000 elderly people in seven homes. No other company has invested so much in health.”

The biggest controversy faced by the Vassallo Group in recent years was connected with the extension of the power station in Delimara.

Mr Vassallo lists a sequence of events to prove he played by the book to tap into the controversial project. He says he was called by a Danish company to submit a quotation for a sub-contract forthe tender for the power station extension along with four othercompanies.

Former Enemalta chairman Alex Tranter, and then CEO of Care Malta, immediately called Austin Gatt, who at the time was minister responsible for Enemalta, to declare his conflict of interest in the bid.

Subsequently, the Vassallo Group was informed it was the cheapest of the four bidders, Mr Vassallo says, pointing out that the contract his company got was less than three per cent of the total cost of the power station contract.

“I have no doubt that the facts are twisted beyond recognition to put me in a bad light. I don’t only have friends in the Nationalist Party. The majority of my own employees are Labourites and we suffered under both parties in government. Those evaluating contracts under this government think twice before awarding me a contract even if it is the cheapest bid, simply because it might send the wrong message.”

Mr Vassallo rejects any suggestions that his group’s success was somewhat linked to his political connections.

“Everyone knows my political leanings but I believe in democracy. Ask any of my employees if I ever put pressure on anyone to vote for the PN. I wouldn’t worry if the PL is in government even if my employees sometimes ask me whether they would end up redundant if Labour is elected.”

Contractors are often notoriously known for their close connections with the two main political parties, which are believed to siphon money off them at will.

But Mr Vassallo leaps once again to his sector’s defence: “I don’t know why you’re limiting it to contractors. From time to time all businesses in Malta are asked to donate money to the parties. For the past 40 years I’ve been asked for donations by both parties and I helped both equally.”

But why should one of the biggest contractors in Malta feel obliged to help the politicalparties?

“God forbid we have just one party in this country. Everybody asks for my help, from parties to MPs, and I help everyone. I’ve contributed to so many initiatives in Mosta, from plays to local councils to the church. Everyone knocks at my door. It’s in my nature to help.”

He would not, however, quantify the amounts he has funded to the parties over the years. Mr Vassallo insists his donations to the parties are not reciprocated with any favours, or worse, kickbacks.

He says he has no regrets about the infamous trip he had taken on board his private yacht with former PN general secretary JoeSaliba in 2007, and then hissuccessor Paul Borg Olivier.

“I’ve been involved in the PN since 1962. I know so many party officials. I’ve known Joe Saliba, who lives in Mosta, before he became involved with the party. I’ve known every general secretary since Lawrence Gonzi. Several people join me on my boat. What do we speak about on board? Everything but work and politics,” he laughs, reminding critics that the Vassallo Group has been involved in a big way with the construction of the PN headquarters over the years.

Asked whether it fuels the commonly held perception that proximity breeds favouritism, he insists there has to be a clear demarcation between party and government.

Expressing no regrets of contesting for the Mosta local council elections under the PN banner, he says he feels closer to the party than to the government.

“I was born a Nationalist, and I will die a Nationalist. Unlike others, if I contested as an independent candidate, I would have been taking people for a ride. My only interest was to do good for thepeople of Mosta.”

During his time as mayor, Mr Vassallo used to meet some 80 people a week who requested his help, from sorting out their electricity bills to assistance with helping find a job. His help has evidently been reciprocated. Today, Mr Vassallo is honorary president of 12 Mosta organisations.

Mr Vassallo insists his only interest is to keep expanding his business, despite the tough economic times.

In 2010, when businesses around the world were folding up or scaling down, Vassallo Group increased its staff complement by 250 and the chairman says the company’s investments should be expanding well into the future.

“We registered this success irrespective of who’s been in government. We’ve never relied on anyone. Governments exist to create the right environment to sow your seeds, and I admit that since the PN has been in government, this atmosphere has been created. And it’s the employees and those people residing in our (elderly people’s) homes who havebenefitted.

“With the Libya situation and with the price of fuel shooting up, this year will be tough. Life is tough. But for me the glass is always half full.”

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