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I think that this case has opened our eyes

Michael Falzon: “What is certain, and I say this hand on heart, is I did not interfere. I did nothing wrong.” Photo: Jason Borg

Michael Falzon: “What is certain, and I say this hand on heart, is I did not interfere. I did nothing wrong.” Photo: Jason Borg

Planning Parliamentary Secretary Michael Falzon stresses he did not interfere in negotiations related to the controversial expropriation of half a property in Valletta from Mark Gaffarena. But he tells Caroline Muscat the case exposedby Times of Malta highlights the need for reform.

How do you define political responsibility?

You are responsible for your portfolio. Yet one has to also look at the facts of the case from a political and administrative level. That distinction has to be made.

Do you think the decisions taken in this case were in the public interest or in Mr Gaffarena’s best interest?

What I can say about this case – keeping in mind there are two ongoing investigations – is that there was no political interference from my end; not in the property valuation and not in what he was given in return. That was done at an administrative level. As far as I know the law was followed and every note I made [when approving the deal] reinforced the need to ensure laws and procedures were followed.

Political responsibility is defined as the need to take decisions that are in the best interest of society or else face the consequences. You approved this deal on behalf of the people – don’t you think you have to carry political responsibility?

There’s a difference between approving the deal and interfering in negotiations. As Planning Parliamentary Secretary, it is my duty to sign on the dotted line, as I do for every expropriation that happens… in this particular case, the law and procedures were followed.

Accordingly, the Government Property Division (GPD) led the negotiations – in the Café Premier case we were criticised for interfering in these negotiations – and now because I did not intervene in the negotiations we are still being criticised.

The GPD [known as Land Department] establishes contact with the involved party and negotiations and valuations are done. There was no interference in the work of the architects involved. As in any other case, there are recommendations made to government – the political responsibility here is that I signed for the deal. But I have to repeat, I did not interfere.

The Land Department is your responsibility. The people who run it fall under your responsibility. Do you agree with their decisions in this case?

For me to pass judgement at this stage is premature, I believe. Let me speak for myself, I will insist on what I have always said: there was no political interference from my end in this or any other case… I think it’s unfair to pass judgement on my staff at this stage.

All I can say is that under the previous administration there were five reports for changes in the laws and procedures related to the department. This government, after the Café Premier case, commissioned another report which, unfortunately, was completed four days after this story came to light. We are analysing that report and yes, sure, with political responsibility I have to look at the report and I need to also look at the results of the investigations. If we need to fix things we will.

Do you think these negotiations could have worked out in the way they did without Mr Gaffarena having insider information?

I have to repeat; I did not interfere throughout the whole process. Some may question this, but it’s the truth. I learnt something from this story, that for example there were people [a former minister], who used to interfere on the rent of a front garden. I insist, again, I did not interfere at all. I’m not saying this to defend myself but because it’s the absolute truth.

You keep insisting you did not interfere and that the law was observed. Do you believe there’s a difference between what is legal and what is fair and right?

You’re reminding me of my first year studying law. There is justice and there are rights. What I can tell you from the information I have been given by the department is that laws and procedures were followed. That is the bottom line any politician must work with. It would be wrong for a politician to remain stubborn in the face of results that show things could have been done better and are not improved. Again, I am saying this without judging anyone.

I ask again, do you, Dr Falzon, believe decisions taken in this case were right and fair? Yes or no?

Look, whether decisions taken were right or not is subject to an investigation. What is certain, and I say this hand on heart, is I did not interfere. I did nothing wrong.

And I reiterate that if procedures have to be changed I will change them. In this case you had an exchange of properties so that the government could expropriate a building of a certain value in Valletta with other land, mostly rural, given to a third party. Valuations were done by independent architects, with no interference from my end. It would be premature for me to judge. There were people who judged me, but I won’t judge others.

Dr Falzon, the people who took these decisions, the people who recommended to you that government should expropriate half a property in Valletta, are the top management in the Land Department. We got the point, you did not interfere, but do you – as their boss – agree with their decisions?

I sign every expropriation concluded. I don’t go to see a road when the government expropriates it... I am not the expert in the department – those are the people who work there and the architects. My political direction was to follow established procedures, but I’m not the one who valued the land… The recommendation from the Land Department was that we expropriate this historical property.

When this case came to light, you first answered by saying there was no need for an investigation, only for you to request an internal investigation a week later. Yet throughout, you have continued to defend the decisions taken, as you are doing now. So why do we need an investigation?

I didn’t say we don’t need an investigation. Who am I to say that? I welcome the scrutiny… the issue is not defending what others have done or what I could have done – and I say again I did not interfere – but the point is there are two ongoing investigations. If the results show things were done differently to previous years, then action has to be taken.

There were those who said that until these investigations were concluded you should have stepped down until you are cleared of any wrongdoing...

I think many hoped to get rid of me, and I don’t blame them. I think this is a case that has overshadowed, for example, all the positive things we did at the Land Department and Mepa. I am part of the administration. In terms of whether I should resign or not, we have to wait for the results.

Ultimately, I am here to serve. In this past year since I was appointed, I was there to work and I worked. I could have stayed digging up cases, like the front garden I mentioned or the Lowenbrau case where contracts were signed within 24 hours, or cases involving properties of those in politics. I focused on my work and I am prepared to continue working to the best of my ability. I am not perfect either.

The property in Old Mint Street at the centre of the case. Photo: Jason BorgThe property in Old Mint Street at the centre of the case. Photo: Jason Borg

You are raising past cases. At the same time there are pending questions on this case. For example, the last promise of sale agreement between Mr Gaffarena and part-owners of the property was only last March. At that point, the government was only in discussions with Mr Gaffarena. How is it that the government never negotiated with the rest of the owners directly? How do you justify this?

I state again I did not interfere….

But we are talking about hundreds of thousands of euros of taxpayers’ money that could have been saved.

Not only did I not interfere in negotiations between the Land Department and Mr Gaffarena but less so in the negotiations between him and third parties. That’s where it would have really been wrong to interfere.

I am not asking about interventions in negotiations being held between third parties, but why the government chose to speak to just Mr Gaffarena?

Mr Gaffarena made his offer last July. I reiterate, we stay away from third party negotiations.

So no alarm bells rang when negotiations were just held with Mr Gaffarena?

I state again there was no interference.

But you didn’t question it?

Everyone is wiser after the deed is done. Procedures were followed, and they are the procedures left behind by the previous administration. Can you imagine what would have happened if we had appointed different architects... I am saying the truth. Those who don’t want to tell the truth, it’s up to them.

You said things could have been done better. How?

I didn’t say things could have been done better. What I’m saying is that with hindsight, things become clearer. What is certain is that the Land Department has outdated processes.

What is also for sure is that during the previous administration there were five reports on the department’s reform. Four days after this case surfaced we received our own report. We are looking into it.

What does this reform involve?

It deals with various aspects, such as the department’s set-up and its management – it’s wide-ranging.

We obviously have to wait for the outcome of the two investigations and we will implement changes accordingly.

Are there any aspects you feel have to be urgently addressed?

There are many. The government holds some 63 per cent of the country’s land mass. That’s a vast amount of resources the department has to manage with the resources it has.

There are problems that date back decades. We have problems related to expropriations that took place in the 1950s and others that are still on a promise of sale agreement. There are structural problems too.

I think this case has opened our eyes. Someone has to have the courage to implement the changes that were not done in 60 years. It’s not easy, but if reform is needed we have to do it.

Details of the case so far

• The government decides to expropriate half a property in Valletta in a staggered manner, a highly unusual process, and deals only with Mark Gaffarena. There is no contact with those who own the rest of the property, even though they were prepared to sell for much less.

• On the second part of the expropriation, Mr Gaffarena makes a profit of €685,000 within a few weeks. The owners who sold to Mr Gaffarena tell this newspaper they learnt from Times of Malta that the government had decided to expropriate a few weeks after they sold to him.

• The expropriation of half the property was valued at €1.65 million. Mr Gaffarena was paid in seven parcels of public land and over €500,000 in cash.

• Independent assessments by architects commissioned by Times of Malta conclude the public land Mr Gaffarena was given was drastically undervalued. The parcels of land he was given were worth at least double.

• The Opposition says the case reeks of corruption and asks the Auditor General to investigate. Soon after, the government commissions its own internal investigation.

• The government says the parcels of land Mr Gaffarena was given were mostly “agricultural fields”. Yet Times of Malta reveals Mr Gaffarena has a strategic or commercial interest in the parcels of land he was given.

• Two parcels of land given to him at White Rocks are worth around €2 million, according to developers who spoke to this newspaper.

• The valuation of the land he was given in Qormi ended up rewarding his illegal development on site, as architects reduced its value by 90 per cent because of the enforcement notice. Two parcels of land he was given in Żebbuġ are also strategically located behind it.

• The property he was given in a prime location in Sliema was beneath a building he already owned, and for which he had already applied to demolish and build apartments.

• Times of Malta reveals Mr Gaffarena filed an injunction against other owners in the building to stop them from selling their part to the government directly.

Who will shoulder responsibility in the Gaffarena case?

Times Talk will be discussing the issue today at 6.55pm on TVM.

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