Judge me by how I work | Franco Mercieca

In a country as small and tightly interconnected as Malta, it is perhaps inevitable that popular attitudes towards ‘conflicts of interest’ would differ from the European norm.

To cite but two recent examples of how such issues are dealt with elsewhere: in 2012, the European Food Safety Authority (EFSA) chairperson, Diána Bánáti, was made to resign over her presence on the board of ILSI, a food and agro-chemical industry-funded body. The EFSA was in the process of debating the issue of genetically modified organisms (GMOs), in which ILSI had an interest. 

Separately, Icelandic Prime Minister David Gunnlaugsson resigned earlier this year over a conflict of interest involving not himself, but his wife, who was named in the Panama Papers revelations.

In both cases, it is highly debatable whether resignations would even be expected in Malta, still less received. Leaving aside that a Cabinet minister who was directly implicated in the Panama Papers is still a Cabinet minister today... Maltese politicians are legally permitted to retain all sorts of private interests that would be considered inappropriate elsewhere in Europe: not so much because the interests themselves are illegal, but because they may conflict with their public roles as politicians.

It is even possible that the expression means something different here. When it transpired that Mott MacDonald – one of the consultancy firms involved in the Paceville masterplan – had provided consultancy services to the Mercury House project in Paceville, the reaction of the Planning Authority’s CEO was to deny that this constituted a conflict of interest at all.

Enter Franco Mercieca, the government MP who chairs the parliamentary environment committee now re-examining the same Paceville masterplan, specifically in response to public concerns about the above and other issues. It also emerged that Mercieca is a 10% shareholder in property development firm Menfi, together with Joseph Portelli, developer of Mercury House. On closer scrutiny, however, it turns out that there is no direct involvement in Portelli’s other project in Paceville.

Franco Mercieca was less than ecstatic when this newspaper reported that detail in an article about Mott MacDonald’s possible conflict of interest. I imagine he can’t have been too thrilled when I raised the same issue in last week’s interview with Deborah Schembri: mistakenly presenting him as a 10% shareholder in Mercury House, instead of in Menfi.

Unsurprisingly, he is quick to point this out when we meet in the atrium of the Parliament building. It therefore strikes me as a good idea – which I admit I should have done sooner – to begin this interview by clarifying exactly what he owns first, before deciding whether it constitutes a conflict of interest.

“My involvement in Menfi started in 2010, way before I even considered entering the political environment,” Mercieca begins. “And it only has one project, which is in Gozo [Hal Saghtrija, a 13-tumolo residential development]. The permit was issued before this government, under the Nationalists. It was all above board; I declared it in my declaration of assets. You’re giving the impression, as a media organisation, that I am involved with Joseph Portelli in the high-rise development in Paceville. This is not the case. Portelli has done other projects in the meantime, but I’ve made it clear that I’m not going to be involved in any of them. This [Menfi] was something I got involved with in 2010. Once I entered politics, I no longer have any other interest in business. None at all. I even made it clear that if Menfi considers doing anything else, I would move out...”

Fair enough: I acknowledge the error in last Sunday’s interview with Deborah Schembri. But the question of possible conflict of interest still stands, albeit less conspicuously. Mott MacDonald turned out to be Mr Portelli’s former consultants, and the masterplan itself seems to favour his project: to the extent of relocating a planned public square onto someone else’s property. Now, as chair of the parliamentary environment committee, Mercieca will be deciding on a project that involves his own business partner – admittedly, in a separate investment, but a business partner all the same. 

“I wasn’t involved in the masterplan when it was drawn up...”

But he is now...

“As chairman of the committee, I asked the Prime Minister for an extension of the public consultation. If I had any other interest, I would have stopped the consultation, not extended it. Then I asked for and got another extension, for the next two weeks. And I also asked Mott MacDonald and Broadway Manning to come to Malta to actually give us all the information. If it wasn’t for us, as a committee, doing all this – I won’t take all the credit for it as chairman – maybe all this information wouldn’t have come out. I can’t see how I can be blamed for anything regarding the Paceville masterplan...”

It’s not a question of being blamed, but of having business links with an entrepreneur who stands to do very well out of a decision to be taken by Mercieca’s committee. Wouldn’t it make more sense to divest himself of these interests before chairing a committee that will revise the Paceville masterplan?

“I can’t pull out of a big investment because I’m in politics. We’ll finish [the Menfi project] off, and that’s it. I mean, there’s nothing wrong with investing, is there?”

Not with the investment in itself. The question is whether people with such interests should also be taking related decisions wearing a political hat. In this case, the connection is less direct than I earlier made out, as I’ve already admitted... but if we applied other European standards to the case, Mercieca might easily be expected to relinquish his shares in a project co-owned with Portelli.

“I would have much rather been criticised on my modus operandi, than on a potential conflict of interest. Who in Malta doesn’t have a potential conflict of interest? I’m not a nominee, hiding my shares. I’ve declared my assets. If you were investigating because I hadn’t declared my shares, and you’d heard from something else... maybe you’d have a point. But I’ve declared my shares.”

But that’s the whole issue right there. Mercieca said he shouldn’t be expected to relinquish business interests upon entering politics. In other countries, that’s exactly what would be expected. The fact that he declared his interest only means that in Malta, having such interests is tolerated as long as they are not hidden.

“I don’t think I’m actually doing anything wrong in the way I’m working as chair of the committee. I think every person who has chaired this committee before me also had interests in property. I am not the first or only one. What you’re suggesting is that if I entered into business with someone, anything that someone does afterwards... I’m automatically involved. I didn’t even know that Joseph Portelli would be one of the investors in Paceville. Now, if people think I should not chair the committee because of this issue...” he breaks into a chuckle... “they’d be doing me a favour. Less worries. No problem at all.”

Mercieca also refutes that the masterplan itself is concerned with any one project. “We’re discussing a holistic plan: where to have public spaces, where to zone for high-rise, etc. It doesn’t go into whether an individual project should have 20 or 40 storeys, or whatever. This is not the committee’s business. Our job is to analyse the plan, and let others come up with their queries. In fact we’ve invited all the environmental NGOs and other stakeholders to meetings, so that everybody can air their issues and complaints.  As chair, I could easily have arranged it so that these complaints are not heard. After all that’s how it always used to be. It was the Labour government that opened up parliamentary committees to the public. This is a new thing.”

In so doing, Labour also opened itself to a barrage of criticism: not just of the Paceville masterplan, but of its entire performance in the environmental department. In the last three years, the number of mega-projects controversially approved has (literally) skyrocketed... and thanks to a policy allowing the sanctioning of illegal buildings and the redevelopment of ‘former residences’, construction activity has soared in large parts of the country. The government has also changed its land-use policy to permit ODZ development for ‘national projects’.

All this also concerns Mercieca closely, as chair of the environment committee. What is his own opinion of the masterplan... and, more broadly, of his government’s environmental record?

“First of all, we’re getting a lot of criticism over construction, but everyone is missing the point. This government is in the process of reducing the country’s carbon footprint to the lowest possible levels. The fact that we’re getting an energy mix, a gas-powered power station, the interconnector, resulting in lower emissions... all this is being totally ignored. But on the subject of construction: do we want to have areas of land 100% developed... or do we want to have 50% of that land used as public space, and the rest high-rise? Also, if that area was earmarked for high-rise, it wasn’t by us but by the Nationalist government, with the FAR policy. Either way, I’d rather have high-rise restricted to certain areas, than spread throughout Malta...”

It seems however that we are getting both. Paceville, Sliema, Gzira are all set to shoot upwards... and meanwhile permits are being given in relatively high landscape worth-areas such as Mriehel, miles from any other high-rise zone. Meanwhile, hundreds of new applications are being filed all the time. It’s almost as though we’re addicted to construction like a drug, and high-rise is the new dosage...

“Creating wealth also has the effect of having money to put into the environment. You need money to protect the environment. It has to come from somewhere. Giving the private investor the opportunity to invest is therefore important. Environment protection and investment go hand in hand...”

But investment takes many forms. And the construction industry comes with a very high environmental price tag. Malta’s air pollution issues are caused by construction dust (and traffic) more than by fumes from the old power station. Then there’s noise pollution. Wouldn’t Mercieca agree that this government has condemned large parts of the island to constant inconvenience for the foreseeable future?

“Don’t get me wrong, I’m not saying that everything this government is doing is perfect. It’s not as though we never make mistakes. It’s a learning curve. At the end of the day it’s a young government, only four years old. Even as a surgeon: for every operation I do, there’s always a learning curve.  No matter how good you are. If you don’t have problems, it’s only because you never did anything. Not because you’re very good.” 

Four years is not ‘young’ for a government. It’s almost a full term. And the present government was also elected on a promise to be innovative and creative. Yet it doesn’t seem to have any alternative to the traditional strategy of over-relying on construction to motor the economy...

“I think maybe there is too much construction going on, I’ll concede that point. But it’s not for me to say which projects can go ahead and which can’t. That’s for the Planning Authority to decide. But the government has also launched a lot of other incentives to renovate and use empty properties in towns and villages, to make them habitable again. A lot of such projects are happening: not all the development going on is new. Even the recent initiative to sanction old buildings which are disused because of minor planning infringements... that helps, too. There is a question mark regarding which should be sanctioned and which shouldn’t, I agree.  But these are units that are there, they’re already built, and they’re not being used. Actually using them is better than leaving them unoccupied.”

To return to the original subject and broaden it slightly: earlier, Mercieca challenged me to name anyone in Malta who doesn’t have a potential conflict of interest. The question itself seems to pinpoint the very crux of the matter. It is indeed almost inevitable, when members of parliament are underpaid part-timers who cannot be realistically expected to relinquish private business interests. This systemic problem has long been recognised: it was in part to address it that former PM Lawrence Gonzi increased MPs’ honoraria in 2008... with political consequences that would later prove fatal.

Is this situation in part to blame for the pervasive accusations of conflict of interest? Would Mercieca accept a situation where MPs were better paid, but excluded from having any other form of vested interest?

“I think it is one of the most important issues facing the country.  It doesn’t make sense to have a Prime Minister on 60K, and he appoints a CEO on 130K. It makes no sense whatsoever. Nor should someone who earns ‘X’ as a salary, suddenly finding himself earning ‘X÷10’ because he entered politics. If you want good people to be ministers, I think the salaries have to go up. There is no question about it.”

But hasn’t the Labour Party made it politically impossible to do precisely that, because of the fuss it made over the Gonzi honoraria increase? Wouldn’t Muscat raising MPs’ salaries be seen as a betrayal of his earlier stance?

“I don’t think so. It’s in the pipeline. The problem in Gonzi’s time was the way it was done, behind everybody’s back. Nobody knew about it. It was wrong; you have to be transparent in such matters. There was a chance of finally rectifying that issue, and it was grossly mishandled. Now we are suffering the consequences of that. But in the future, I am sure Joseph Muscat is keen to rectify that issue as well.”