REVEALED | €350,000 from Nazzareno Vassallo company to Nationalist election campaign

Documents seen by MaltaToday reveal construction magnate Nazzareno Vassallo approved a budgeted sum of €350,000 in expenses for the Nationalist Party's electoral campaign, through a company he bought into when the company had already been crippled by almost €1 million in bad debts.

The respective sums of €250,000 for February and €100,000 for March under the entry 'electoral campaign' were approved during the last company board meeting of the Malta Fairs and Conventions Centre (MFCC Ltd.), of which Vassallo became chairman and director through his joint-venture catering company Catermax, with the Corinthia Group.

The monies were approved on 11 January, 2013 following various board discussions about the Nationalist Party's pressing needs to have tents, stages and other equipment set up for its electoral roadshow until voting day on 9 March.

Vassallo, formerly PN mayor in Mosta and widely regarded to be one of the PN's main donors, took over 65% of MFCC in 2011, when the company - then run in partnership between Nexos Lighting and Sign-It Ltd - faced near bankruptcy with one of its largest debtors, the Nationalist Party, had debts of almost €1 million since the company's inception, written off.

News of Vassallo's donations to the PN come in the wake of a bitter feud between the magnate and former business partner Ruben Caruana, who before setting up Sign-It Ltd had been employed by the PN as its outdoor activities coordinator.

It is said Caruana bent himself backwards in giving the party his stages, equipment and manpower for the September Independence activities over the past years, but only received minor payments in return, many of which were bartered.

Caruana, who still holds a 35% shareholding in MFCC through Sign-It Limited, the company which started out the Ta' Qali tent venture, was this week locked-out by order of Nazzareno Vassallo.

The lock-out, complete with all phones disconnected and office door locks changed, was interpreted as a coup by Vassallo on Caruana having diluted his share value within the company, which remains heavily indebted after no new capital was injected by Vassallo despite his takeover in 2011.

The company allegedly continues to rely heavily on bank borrowing, and the accrual of a hefty, unsecured and low-interest loan obtained in 2008 during the merger with the Malta Trade Fairs Corporation that set up the Malta trade fair under the MFCC tent when it relocated from the Naxxar trade fair grounds.

That debt was on the verge of a call-in during 2009 until the new board of directors, then composed of Nexos and Sign-It shareholders, reached new repayment terms.

Notwithstanding this precarious situation, the PN allegedly pressured MFCC shareholders to supply it with its equipment and manpower.

Questions put to PN Secretary-General Paul Borg Olivier remained unanswered.

Vassallo's approval of the expenses by MFCC to cover the PN's electoral campaign also comes hot on heels after the deed for the 65-year lease for MFCC in Ta' Qali, omitted any reference to the €1.2 million "performance bond" that was originally envisioned in the original tender of 2006 for the lucrative venue, from which the company was the 'sole bidder'.

From a legal standpoint, once the performance bond is not paid, the tender falls through and a fresh call has to be made. This was not done in this case.

Initially, MEPA had insisted on an outline development application together with various feasibility studies, among them being one for traffic and another for environment. These were strangely left out in the final agreement.

The transfer of land to MFCC was unanimously approved by both sides of the House of Representatives 'nem con' with no questions raised about the deed, during a sitting on 27 November, 2012, just a few days before the prime minister announced the election date and parliament closed.

Originally, the request for proposals issued by the roads and urban development ministry in 2007 referred to a performance guarantee of €1.5 million (Lm500,000) as a pledge for the developer to undertake to fulfil "all responsibilities and commitments as prescribed in the emphytheutecal deed to bring the project to a full state of operational completion within the prescribed period".