Conflict? What conflict?

The Joe Cassar saga and his subsequent resignation stole the headlines this week. That is why, perhaps, the reports on the irregular use of its headquarters by the GWU did not become the talk of the town.

In the first case the issue was that of an apparently incredibly naive politician allowing a scumbag to manipulate him – a story that fires up the imagination of the man in the street. In the second case we have all the elements of a whodunit – a disappearing document that reappears in the press and a clear case of conflict of interest.

The GWU was given the site where it eventually built its headquarters by the Mintoff administration in 1957 for peanuts, with the condition that it uses the site for trade union activities. At that time no Parliamentary motion was necessary: the government of the day freely disposed of state property as it wanted. Eventually the GWU became a shareholder in various companies that became an important source of income for the union. Leasing parts of the headquarters for commecial purposes was, however, prohibited by the terms of the contract by which it obtained the title of the property from the state.

In 1987 the terms of the title were amended through a Parliamnetray motion so that the GWU was permitted to rent parts of the property to commercial entities in which the GWU had at least a 51% shareholding.

As the Italian saying goes ‘l’appetito vien mangiando’ and as the GWU owned a half-unused gargantuan headquarters it wanted to get rid of the shackles imposed by this condition on the property. Apparently the GWU somehow expressed an interest with the Lands Department in getting these shackles removed once and for all. A valuation of the compensation that would be due to the government for this amendment in the ownership title was made. The conclusion was that the value of this compensation was €3.2 million. I do not know how this valuation was carried out but this is hardly surprising: the free unencumbered commercial value of the property in a prime site in Valletta is considerable.

Somehow, this valuation disappeared from the relevant file (surprise, surprise!) and after investigating the issue, the National Audit Office (NAO) – headed by the Auditor-General – referred to this valuation in its report commenting that attempts at sourcing a copy of the 2008 valuation had been ‘to no avail’. Yet a copy of this valuation somehow made it to a section of the press and the figure of €3.2 million made the headlines last Sunday. Whistleblowing? Hanky-panky? Your guess is as good as mine.

The NAO report found that two particular leases, one for an upmarket restaurant and one for ARMS – a state entity – were irregular as the conditon of the title was breached since the GWU had no shareholding in the two lessees.The NAO recommended that the government sue the GWU for breach of contract.

However, what is even more staggering is the fact that the GWU and ARMS Ltd shared officials when the lease deal was made. 

The GWU’s lawyer is the company secretary of both ARMS Ltd and Enemalta Corporation (appointed by the government). Enemalta is a shareholder of ARMS Ltd. 

The financial consultant of the GWU – Robert Borg – is a board director of the Water Services Corporation, the other shareholder of ARMS Ltd. When asked if he informed the ARMS board that there might be a legal problem with the renting of the GWU property when the issue was discussed, Mr Borg said: “My duty as financial consultant to the GWU binds me by confidentiality on the GWU’s operations.” 

This is ridiculous: the lease contract is in the public domain. It is a public contract and there is no confidentiality about its contents! He insisted that he was not part of any decision to issue these tenders, and that he was not a member of the adjudicating committee. Hence he did not see any ethical conflict.

I beg to differ. While it is understandable that the ARMS CEO was not aware of the conditions of the title of the GWU’s property, this could hardly be the case with the GWU’s financial and legal consultants. That they did not inform the board of ARMS Ltd about this problem is an unexplainable – and unacceptable – shortcoming. Keeping mum about it does not absolve the two GWU consultants of the charge of conflict of interest. 

As a result these two individuals have committed a disservice to both organisations that they were involved with at the same time. They definitely pulled a fast one on ARMS while leading the GWU up the garden path

Ignoring a public contract in such a blatant manner and keeping it ‘secret’ until it is exposed cannot be but a short lived silly hope... unless they felt that they belong to the untouchable elite who evidently have targeted the Lands Department from day one as some gold mine to be exploited in such a ham-handed and short-sighted manner.

This should be yet another wakeup call for the government to take the Lands Department bull by the horns.

A matter of perception

What I find most intriguing is that the story about the irregular GWU leases did not raise too many eyebrows while the revelations of former PN Minister Joe Cassar, did.

Is it because the latest story takes over and becomes the talk of the town and everything one hears is a three day wonder? 

Is it, perhaps, because the Joe Cassar saga is easy to understand while the GWU mess is a maze of legal niceties? 

Or, is it because no particular politician is involved in the GWU story? 

Is this a reflection on the perception of the average Maltese citizen on politicians?

Sadly, I fear the last question is the correct one, rhetorical though it may be. This is confirmed by the rumours that Labour has an arsenal of improper conduct cases under the last Gonzi adminsitration and that this ammunition is going to be used over the months leading to the next general election. Again, this might not be true at all, but just a figment of the popular imagination.

But this is what the rumour mill feeds on. And Malta – as I like to say – is a rumour infested country and one has to take everything with a pinch of salt... until some odd rumour proves to be true.