The Auditor General found “collusion” between the Land Department and Mark Gaffarena in the expropriation of a Valletta property, leading to the resignation of Planning Parliamentary Secretary Michael Falzon.

The investigation into the expropriation of part of a property in Old Mint Street, Valletta, was initiated after this newspaper revealed details of the deal last May. The deal served no identified public purpose. The government acquired the property, worth €944,500, but Mr Gaffarena received €3.4m: €516,000 in cash and €2.9m in land.

Mr Gaffarena initiated the deal, chose the parcels of land and was privy to inside information, the Auditor General concluded. “Such collusive action… was in clear breach of the fundamental principles of good governance, transparency and fairness,” the National Audit Office said.

Prime Minister Joseph Muscat said he would be taking court action to nullify the deal and return the land back to the public.

Dr Muscat accepted Dr Falzon’s resignation after the report was tabled in Parliament last night and said he would be appointing Deborah Schembri to take over. He said all transactions at the government property division would be frozen until a new independent authority was set up. The police were also detailed to secure the division’s offices and ensure no files were removed.

Standing next to the Prime Minister, Dr Falzon contested the report’s conclusions in his regard but insisted he did not fear shouldering political responsibility.

He lashed out at the report, saying that some people were now “pleased with their pound of flesh… I hope they are now enjoying the taste of blood”.

Opposition leader Simon Busuttil said that the findings showed the government was immersed in a corruption crisis. He thanked the independent media for uncovering the scandal.