Freedom of Information request into Café Premier bailout rejected

The Lands Department has rejected MaltaToday’s freedom of information request for correspondence between the company that was paid €4.2 million to relinquish a 65-year lease on Café Premier, in Valletta, after it was being sued in court by the same Lands Department over non-payment of its annual lease.

Cities Entertainment faced court action brought against it by the Lands Department in a bid to recoup the 65-year lease. But after Labour’s election, the court action was stopped, and the government paid the company enough money to settle its banking debt, pay outstanding dues to public corporations and creditors, so that it would vacate the premises.

The Lands Department is refusing to also reveal the reports and architect’s estimate carried out to assess the value of compensation payable to Cities Entertainment, for the “amicable expropriation” – as it was dubbed by the parliamentary secretariat for lands – of the two premises on Old Treasury and Old Theatre Streets.

MaltaToday will file a complaint with the Information and Data Protection Commissioner.

As is now common practice across all government departments, the Lands Department employed the blanket exclusion clauses under Parts V and VI of the Freedom of Information Act.

The department said the documents were exempt “due to an ongoing police investigation”.

But the investigation was requested by the parliamentary secretary for lands over suggestions by shadow home affairs minister Jason Azzopardi of whether “commissions” were paid to secure the agreement.

MaltaToday is informed that the police investigation is not being actively pursued, but the Lands Department availed itself of the maximum time at law to refuse the application: it was filed on 21 April, then extended on 20 June, refused on 12 June, and again refused on internal review on 22 July – a whole three months.

Under Article 30 of the FOIA, a document is exempt from the law if it “could be reasonably expected to prejudice the conduct of an investigation” into a breach of the law. But the allegations forwarded to the police by then parliamentary secretary Michael Farrugia, are not directly related mathematical workings used to assess compensation for the Café Premier owners.

Cities Entertainment was facing court action in December 2012 by the Lands Department after it fell behind on its rent for the iconic Café Premier, located on Pjazza Regina. But the newly-elected Labour government retracted the court action, and paid the company €4.2 million to effectively ‘bail out’ the defaulting tenant, by buying back the 65-year emphyteusis.

Under the deal, the government paid Cities Entertainment to pay back an outstanding €2.5 million bank loan, their income tax and VAT arrears, energy bills, ground rents owed to the State, and other creditors of the owners of the Café Premier.

Cities Entertainment director Neville Curmi, a well-known stockbroker, had claimed with MaltaToday that taxpayers “got value for their money” because the value of Café Premier was far more than €4.2 million.

The parliamentary secretariat for lands, under Michael Farrugia (now social policy minister) reached an “amicable settlement” by cancelling court action against Cities Entertainment to pay €200,000 in arrears or face eviction.

At the time of the court action, the café was paying just over €93,000 in annual ground rent.
Under the €4.2 million deal, Cities Entertainment paid back €307,346 to settle outstanding arrears with the government property division and €504,000 in capital gains tax owed on the land; €192,748 to the Inland Revenue Department to settle income tax and social security payments, €227,058 to the VAT Department on outstanding dues and legal procedures against the company, and €130,963 in energy bills for ARMS; 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.