The National Audit Office said today that it had concluded that the Parliamentary Secretary Michael Falzon and Director General (DG) GPD and Director Estate Management (DEM) failed to safeguard Government’s interest by expropriating property belonging to Mark Gaffarena in Old Mint street, which although useful, served no identified public purpose.

In a statement, the Audit Office said it had established that the standards expected in terms of good governance were lacking.

"The prompt action taken by the Government Property Department (GPD) in advocating the expropriations instigated by Gaffarena, without any discussion or analysis, was deemed incomprehensible by the NAO.

"The public purpose served by the expropriation of two one-fourth undivided shares of 36 Old Mint Street was far from clear. This must be seen in a context where it was within Government’s control to expropriate the entire property.

"This Office concluded that the Parliamentary Secretary (PS OPM), Director General (DG) GPD and Director Estate Management (DEM) failed to safeguard Government’s interest by expropriating property that, although useful, served no identified public purpose."

Michael Falzon

"The National Audit Office is of the opinion that this expropriation was instigated by Gaffarena, yet readily facilitated by the parliamentary secretary OPM (Michael Falzon), the director general, government property division and the director, estate management. The NAO deems such collusive action as highly inappropriate, in clear breach of the fundamental principles of good governance, transparency and fairness.

Although the NAO noted serious shortcoming in the Government Property Division's management of this expropriation process, this would not have been possible without the authorisation provided by the parliamentary secretary, OPM

"Although the NAO noted serious shortcoming in the Government Property Division's management of this expropriation process, this would not have been possible without the authorisation provided by the parliamentary secretary, OPM."

PROPERTY VALUATION

The Audit Office said that when one considered the inflated valuation of 36 Old Mint Street, the undervaluation of Government land disposed of, as well as the substantial cash payments made, over and above the vague public purpose, the  these expropriations did not constitute value for money.

The government acquired property worth €944,500 while Mr Gaffarena received €3.4 million - €516,000 in cash and €2.9 million in property.

"The government acquired property worth €944,500 while Mr Gaffarena received €3.4 million - €516,000 in cash and €2.9 million in property."

The audit office said it had unequivocally established that Gaffarena was aware of Government’s intention to expropriate well in advance of the publication of the President’s declaration.

"The NAO is of the opinion that this information was confidential as it was sensitive government-related information that only Gaffarena was privy to. This put Gaffarena at an unfair advantage over the other co-owners as he could anticipate Government’s intention to expropriate the remaining undivided shares in advance of this becoming public knowledge.

"In fact, Gaffarena did exploit this information when he entered into two promise of sale agreements in advance of the publication of Government’s expropriation."

The audit office noted that if the Attorney General’s advice to the Internal Audit and Investigations Department is applied, then the deeds with Gaffarena may be invalid, as compensation payable by Government for the undivided shares expropriated should have been proportionally paid to all co-owners.

See full report on pdf below.