From scandal to reform at the Lands Authority

Theoretically speaking, a new law that will remove the politician’s rubber-stamp from decisions on government land and expropriation, should prevent another ‘Gaffarena’ from happening.

That fateful expropriation, a criminal waste of €1.6 million paid out to the property entrepreneur Marco Gaffarena in government lands and cash for his half-share in an Old Mint Street palazzo, became the catalyst for a sensational investigation by the National Audit Office and the resignation of lands parliamentary secretary Michael Falzon.

The Prime Minister has filed a case to recoup the lands passed on to Gaffarena, and the case gave rise to a vast reform that will turn the Government Property Department into an agency, the Lands Authority.

The lynchpin of the reform is strictly speaking the removal of the minister’s approval of decisions on public land and instead, its delegation to a 10-person board of governors that will include an MP from the Opposition. Crucially, apart from a chief executive officer in charge of operations, a chief audit officer – a sort of ‘lands ombudsman’ if you will – will be tasked not just with own-initiative audits but mandatory investigations of any transaction upwards of €100,000.

The Opposition is unconvinced, saying the audit officer will be answerable – and in turn subdued by – the CEO and the board of governors. But Deborah Schembri, the new parliamentary secretary who took over from Falzon and was tasked with the reform that the Gaffarena scandal gave rise to, is intent on extolling the virtues of how the authority will work.

“We’re placing a lot of importance on the role of the auditor, by introducing checks and balances where these never existed inside the GPD,” Schembri says.

“Although the board of governors will select the audit officer, s/he cannot be removed by that same board but by the House of Representatives. And where independence is concerned, it is who can remove you that’s more important here.

“The auditor will not just flag every single investigation, but every single complaint – whether or not s/he acted on it – will also be listed in an annual report s/he will present to the House of Representatives. Transparency here is key.”

One of the problems of the former MEPA audit officer, before the role was upgraded to that of planning ombudsman, was that when he finished an investigation, that inquiry would be passed on to the MEPA chairman, which means it was not automatically published. It was only through the audit officer’s own policy to pass a copy of the investigation to the complainant that these reports would see the light of day. How will the public get to know of every single report penned by the Lands Authority’s audit officer?

“Once completed the report will be presented to the board of governors as well as the minister and the Speaker of the House,” Schembri says, pointing out that the role of the Opposition MP on the board should aid in increasing transparency – apart from the fact that an audit investigation would not exclude another audit by the NAO.

“We wanted to have both layers of audit. An illegality would have a ‘double hurdle’ in the sense that a Lands audit will not exclude an investigation by the police, or the Auditor General, or the permanent commission against corruption. We wanted someone who was ‘closer’ to the problem, someone who could grapple with any suspect transaction more immediately. The audit officer has the kind of leeway to accompany police on physical site inspections, such is the wide berth of investigative powers. I don’t want the Lands Authority to have the bad aura it has today,” Schembri says.

But one of the crucial aspects of how the Gaffarena scandal unfolded, apart from the fact that Gaffarena himself was personally accompanied to the Lands Department by Falzon’s personal aide, Clint Scerri, to meet civil servants who seemed incapable of saying ‘no’, is digitising the documentation itself and generating an audit trail of whoever handles these transactions and drafts instructions. Part of this project started in 2012 with the Land Estate Management Information System (LEMIS), which had to provide various databases for transactions carried out by the Lands Department.

“It was a good system but it was not suitable for certain aspects of Maltese property law, such as our use of emphyteuta and leases. I set up an action committee to map out which parts of the LEMIS were not functioning and to sort out its bugs, and finally we have set in motion eight of 12 ‘modules’ the system provides, and we are about to start scanning and digitising the documents themselves. And we’re starting this from scratch.

“Additionally, every single document that gets accessed through the system will generate an audit trail, which means we will know who accessed which document and when,” Schembri adds.

This audit trail is crucial since, as the NAO report into the Gaffarena scandal showed, hand-written minutes and directors who seemed incapable of not doing the bidding for the influential Clint Scerri provided a rather archaic system of decision-making and record-keeping. It seemed simple enough to assume that anybody brought over to the Lands Department by a member of the political secretariat, should be given anything their heart desires.

“Everybody is scared of taking a decision,” Schembri says of the GPD directors left scarred by the impact of the Gaffarena scandal. “We are trying to place safeguards on all fronts… and give these directors peace of mind, by introducing a board of governors who will be scrutinising their work, with a lawyer, architect and auditor as governors to offer a more qualitative double-check. It will not be a matter of ‘here’s what the minister wants, get cracking’… I want users of the Lands Authority to go there with the peace of mind that they are guaranteed a fair deal.”

Schembri is intent on pressing the importance of how far-reaching the reform of the lands department will be, saying it will pave the way for further digitisation for users such as geo-mapped public property and a new administrative tribunal for appeals on decisions by the board of governors.

“This reform is going to completely change the way this department works for people,” Schembri says. “Take valuations of property for example” – one of the more controversial aspects of the Gaffarena reform – “We have never had a uniform way of carrying out valuations, and as ministers, we have never been able ourselves to understand why an architect would have arrived to the valuation he saw fit.”

Schembri says that the board of governors will now be tasked to supervise such valuations, which will be carried using the residual method. “Again, further oversight,” she says. 

I point out that in people’s minds, the department is tainted by decisions such as the €5 million expropriation of the land in Fekruna – negotiations that had been carried out well in advance, but whose final decision was taken just weeks before the March 2013 election; the €4.2 million Café Premier lease ‘bailout’; and of course the Gaffarena scandal. What guarantees could Schembri give that these decisions would be totally out of political influence?

“You could say that the minute these transactions happened, the audit officer would be starting an inquiry on them, because they exceed €100,000. Secondly, when cases such as these go up to the board of governors, you have an Opposition MP who is instantly aware of these cases,” Schembri says.

“So whoever tells me that this law should not be approved, I can only say that – hand on heart – this is a good law. And I don’t want to see my reputation for doing things the right way, go south.”