The Malta Gaming Authority (MGA) has paid €4.3 million to ‘fit-out’ a building it leased for 15 years to serve as its HQ at Smart City, the Times of Malta has learnt.

The decision to relocate the MGA to a new building was taken by the government-appointed board of directors, chaired by Joseph Cuschieri.

Asked to state the cost of its relocation and how much the public authority pays in annual rent to Smart City, the MGA said that it cannot divulge such information, citing “commercial reasons”.

However, it said that apart from leasing and not buying its new headquarters, it had also to pay millions (€4.3 million) so that the new building could be fitted out with all the necessary equipment. 

“The cost of the project included mechanical and electrical engineering works, plastering, partitioning, tiling, fixtures and fittings, ICT services, office equipment, light fittings, furniture and soft furnishings,” a spokesman for MGA said.

Asked for how long the MGA will be leasing its new offices from Smart City and how much will be the cost on an annual basis, he said: “The MGA's contract with Smart City Malta stipulates a 15-year lease for office space and included a full turnkey ‘fit-out’ converting the premises from shell form to fully operational offices.”

When asked for a list of the contractors and suppliers involved, the MGA said it did not choose contractors but just paid for them.

“All contractors were chosen and engaged by Smart City Malta through their own procurement process,” the MGA said.

Sources close to the MGA said the deal was “very unusual”.

“Normally, when office space is leased out, particularly for long-term, it is the lessee and not the lessor who makes the necessary arrangements and fit-outs according to the requirements of the client.”

Normally, when office space is leased out, particularly for long-term, it is the lessee and not the lessor who makes the necessary arrangements

“In this particular case, all was done by Smart City and the MGA just forked out the bill out of taxpayers' money,” the sources said.

When contacted, a representative of Smart City refused to reply to any questions including on how many government entities have relocated to Smart City since 2013, the selection of contractors and the value of leases being paid by government entities to the company.

“It is not customary within business practices or for any professional organisation to share information and various details about its clients with any third party,” a Smart City representative said.

Smart City is owned by a Dubai-based company but includes a small shareholding by the Maltese government. The latter is represented on the company’s board of directors by Keith Schembri, the Prime Minister’s chief of staff and the owner of Kasco holdings.

According to the latest published accounts (2015) the MGA has seen its administrative costs explode in the last years, from €3.2 million in 2012 to €8.6 million in 2015.

This was mainly due to staff increases. However, consultancies also hit record highs reaching €1.2 million.

Most of the consultancies were awarded by direct order on the authorisation of the regulator’s executive chairman.

Last year, Mr Cuschieri denied any conflict of interest over the number of direct orders given to Ernst and Young, where he previously worked, even though the latter was the largest beneficiary of direct orders.

He had pointed out that he had also authorised direct orders to other firms, such as Deloitte, Grant Thornton, KPMG, PWC, RSM and Nexia BT.

According to an analysis carried out by the Times of Malta, Ernst and Young topped the list of direct orders, getting €331,137 worth of business in 2015.

Audit and accountancy firm Nexia BT of ‘Panama Papers’ fame, was second highest on the list of the MGA’s direct orders, winning €213,000 worth of business.

ivan.camilleri@timesofmalta.com

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