Taxpayers footed €210,000 ‘commission’ for Café Premier

Maltese taxpayers have footed a €210,000 payment to a former owner of the Café Premier, whose former business partner says was a commission representing 5% of the total compensation deal, for reaching an agreement with the government to buy out the lease for the Valletta café.

The government gave the company, Cities Entertainment Ltd, €4.2 million to vacate the government property so the government would buy back the 65-year-lease on the Café Premier.

But the ‘expropriation’ amount also included a €210,000 payment for a company owner, who claimed the money as a ‘debt’ for having reached the deal.

MaltaToday has learnt that the deal was reached by Mario Camilleri, as a representative of M&A Investments – a shareholder in Cities Entertainment – and architect John Sciberras, a former director-general of the Lands Department who was medically ‘boarded out’ in 2008, but now serves as a consultant at the Office of the Prime Minister.

According to a police investigation, it turns out that Cities Entertainment were trying to sell off their government lease on the market due to business losses and outstanding rental arrears; but Camilleri reached an agreement with Sciberras to have the government take the premises back and cancel executive letters ordering Cities Entertainment to pay back its arrears.

In the agreement, the Lands Department accepted to pay €4.2 million to Cities Entertainment to allow it to pay back all its dues to the State – rent, income tax, utility bills, VAT, even bank loan arrears – but also factored in a €210,000 payment for M&A Investments.

The director of the Joint Office, architect Duncan Mifsud, a former Labour candidate in 2008, was entrusted by Sciberras to establish the price to be paid by the government, using formulae established by law by the previous government.

But the government property division has so far refused a Freedom of Information request by MaltaToday, to present the workings into how it came to the €4.2 million valuation for the Café Premier.

It was Cities Entertainment director Neville Curmi, a well-known stockbroker, who told police in their investigation over an MP’s allegations of commissions, that Camilleri had taken a commission for the deal.

Curmi was said to have protested the €210,000 payment. Camilleri denied to police that this was a commission, and said that this had been a debt he claimed for having poured in extra cash into the Café Premier to keep the business going.

What is unclear is why the government paid a sum of money that included a “commission” – as claimed by Curmi to police investigators – in its compensation for the lease.

Piecing together the chronology of events through court, land registry and police reports, MaltaToday has established that an agreement was formally reached some time in November 2013 after both Cities Entertainment and the Lands Department decided to withdraw civil action over arrears payable on the Café Premier.

Cities Entertainment had launched civil proceedings against the Lands Department, after the latter served it with official letters to pay €200,000 in arrears in December 2012.

The compensation was then formally paid out when the deal was formally sealed in January this year.

The police investigation identified Sciberras, on a retainer from the Office of the Prime Minister, as having been tasked to evaluate Camilleri’s offer.

According to their investigation, although Curmi was said to have been unhappy about what he called the commission, he accepted that Camilleri had managed to bring the deal to the table, again reinforcing the impression that Camilleri and Sciberras had sealed the deal.

Michael Farrugia, the then parliamentary secretary for lands, had told MaltaToday in February that the “amicable expropriation” allowed the overlying National Library to eliminate any hazard the catering business could pose to the treasures housed in the Biblioteca, and to build an elevator to improve access.

The public deed for the compensation specifically outlined what the €4.2 million had to be used for: €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 €3,265 to creditors Golden Harvest.

Additionally, Mario Camilleri’s company M&A Investments was paid €210,000, the debt which his former business partner Neville Curmi described to police investigators as “a commission” for securing the deal.

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