Montebellos’ Jerma still plagued by creditors

Developers’ appetites have been whetted by the proposed ‘American University’ at Zonqor Point for the redevelopment of the derelict and abandoned Jerma Palace Hotel in Marsaskala, but third-party claims will hamper attempts to turn the coastal property back into its multi-million potential.

Owners Peter and Geoffrey Montebello, of JPM Brothers, still have to settle outstanding claims from an accountant who demanded €3.5 million for his services to the Montebellos was granted a precautionary warrant in court to stop the sale of the Jerma Palace Hotel and the surrounding land.

The accountant, Charles Sciriha, of Management Support Services, filed the claim against JefPet Limited, a company owned by Geoffrey and Peter Montebello, who purchased the Jerma Palace Hotel in 2007 from Libyan investment vehicle Lafico. 

Sciriha claims the amount represents outstanding fees for consultancy services and representation for the Montebellos in various negotiations, including the sale of the land previously occupied by the Jerma Palace Hotel. 

Sciriha was engaged in 2009 on a consultancy, entitling him to a percentage of the sale proceeds and profits if two projects JPM Brothers had undertaken with Kuwaiti company Gemxija Crown Limited, went ahead.

Gemxija and JPM Bros owned the land in Xemxija that will now be developed at Mistra ridge. Six parcels of land owned by the Montebellos, in total comprising 3,215 square metres and valued at €3.87 million, were scheduled to go on sale by court auction after the debt taken out on the development was called in.

Sciriha claims that once negotiations on the Jerma sale reached an advanced stage, the Montebellos terminated his contract, claiming that he had abandoned his responsibilities – an allegation Sciriha strongly denies. 

The contract between the parties stipulated that the consultancy fee was to be 5% of the hotel sale: the value of the land, the share transfer to the buyer, and the remaining profit. 

The Montebellos say the €3,525,000 demanded by Sciriha was incorrect, and that the fee would be paid upon the conclusion of the sale of property, the signing of a promise of sale agreement, or the sale of the defendant’s shares in the company. None of those events had taken place. 

The land on which the Jerma Palace Hotel was built originally belonged to the Franciscan Conventuals and Ivan Burridge, and was sold to San Tumas Holdings, which in turn sold it to the Libyan Lafico in 1976. Corinthia used to manage the hotel through a management agreement. 

The hotel was never developed since closing down in the 2000s and then sold to JPM Brothers. At some point in 2009, the Tumas and Gasan groups were seeking advice on transforming the Jerma Palace Hotel into a potential ‘Portomaso of the south’, when JPM Brothers were hoping for an urgent sale of the property to settle outstanding loans with banks and creditors.

Peter and Geoffrey Montebello of JPM Bros, still have a pending application at MEPA for the demolition of the abandoned hotel and its substitution with a five-star hotel and residential units.

The application was passed to a case officer to assess the development proposal in terms of the Structure Plan and other established policies.

Financial trouble forced the Montebellos to search for buyers for the site, namely the late magnate George Fenech and Joe Gasan. The plan never materialised: a MEPA policy undertaken by former chairman Austin Walker was that hotel development should not be turned into residential development, but kept as tourist accommodation and hotels.

Gasan had then told MaltaToday that he was only consulted on the proposal. “All I know is that I was asked for my opinion but after I looked into the Jerma proposal I backed out because I didn’t like the fact that the Montebello brothers were pressuring to hurry up the deal. They were asking for just a few weeks to conclude.”