Former minister: government must come clean on Café Premier ‘bailout’

The former Nationalist minister under whose watch court action was taken against the Café Premier owners for defaulting on rents owed to the government, wants the government to publish the workings of its €4.2 million ‘amicable’ acquisition of the Valletta café’s 65-year emphyteusis.

Jason Azzopardi, the former minister for lands, said the government must “come clean and publish all the workings” on a €4.2 million payment to Cities Entertainment Limited, to vacate Café Premier, after choosing to stop the court action against the company to pay some €200,000 in arrears.

The payments was used to settle all outstanding income tax and VAT dues, energy bills and capital gains tax for the State, and a further €2.5 million balance on loans taken out with Banif Bank.

“I limit myself to some observations, which need answers: was the government assisted by a consultant? If so, who and how much was he paid? Were there any commissions involved?” Jason Azzopardi

Under Azzopardi, the Lands Department initiated court action in December 2012 when Cities Entertainment accumulated over €200,000 arrears in ground rent.

“At the time the Lands Department was under my direct political responsibility. I always insisted that judicial action be undertaken to recover dues without fear or favour. In some cases, we even asked the court to rescind the emphyteutical deed due to the non-payment of the ground rent,” Azzopardi told MaltaToday.

But in June 2013, the Lands Department stopped the court action and in January 2014, finalised the acquisition of the emphyteutical grant – taken out back in 1998 for 65 years.

“I definitely exclude that no one, ever, spoke to me or conveyed a message to me, directly or indirectly, regarding the payment of arrears of the company in question,” Azzopardi said.

“The government hasn’t been forthcoming with complete information on this agreement and the public, including myself, does not have enough information about this agreement, except that in the public domain and a public deed.”

Azzopardi however suggested that it was strange that the government had concluded an agreement in less than three months from taking office in March 2013.

“I limit myself to some observations, which need answers: was the government assisted by a consultant? If so, who and how much was he paid? Were there any commissions involved?”

Azzopardi also said that the method used by the Lands Department to pay Cities Entertainment €4.2 million demanded a detailed explanation.

A request to the parliamentary secretary for lands by MaltaToday for the full workings of the acquisition, was unanswered by the time of going to print.

“The public has a right to know why the government did not pursue court action, or why it did not initiate court action seeking the rescission of the deed, which would have resulted in a more cost-effective solution and indeed, a zero payment by government,” Azzopardi said.

Under the ‘bailout’, the government has now acquired Café Premier and its ‘Great Siege 1565’ waxworks attraction on Old Theatre and Old Treasury streets.

The government says this was an “amicable acquisition” of the emphyteutical grant, after a decision to remove any hazard that the catering establishments in the area could pose to the treasures housed in the Biblioteca, above Pjazza Regina, and that it intends to construct an elevator to the Biblioteca.

But under the deal, the government ended up paying monies that Cities Entertainment owed the State and to their bank.

The government is claiming that even if it appropriated the cafeteria forcibly – through an expropriation – to protect the historical Biblioteca, it would still have had to pay out some form of compensation.

What is unanswered is why the government did not rescind the emphyteutical grant when it learnt that the café had ceased operating, and that the owners were negotiating with third parties to sell the business, both of which are not permissible according to the original emphyteutical deed.

In 2012, Cities Entertainment was paying just over €93,000 in annual ground rent to the Lands Department but also wracking up enormous debt from its operation.

In July 2013, lawyers from both Cities Entertainment and the Commissioner for Lands told the courts that an agreement had been reached to cease all court action for payment of arrears.

Instead of forging ahead with court action to recoup the arrears, or even dissolve the emphyteutical grant, the government paid the €4.2 million to Cities Entertainment on condition that it pays back: €307,346 in arrears to the government property division; €504,000 in capital gains tax; €192,748 in income tax and social security payments; €227,058 in VAT; €130,963 in energy bills; and also €210,000 to the company’s own shareholders M&A Investments and €3,265 to creditors Golden Harvest.

Finally, another €2,560,800 was paid to Banif Bank, in settlement of the outstanding bank loans that Cities Entertainment held with the bank, payable in four instalments.

The deal also cancels out all arrears and court action that various government departments filed against its shareholders and directors. The shareholders are Cabellero Entertainments Ltd (Neville Curmi and David Curmi), Daneta Limited, Impact Limited (Christopher Grima) and Jamco Limited and M&A Investments (partly owned by Mario Camilleri).