Opposition demands Auditor General’s inquiry into Café Premier acquisition

The Opposition has asked the Auditor General to carry out an investigation into the €4.2 million paid out by the government to buy back a 65-year lease for the Café Premier in Valletta.

In the letter, signed by MPs Tonio Fenech, Claudio Grech, Kristy Debono, and Jason Azzopardi, the Nationalist Party said it wanted the Auditor General to investigate why €4.2 million was paid to Cities Entertainment to acquire the lease.

“The Auditor General must investigate the reason for this acquisition and determine several facts in this case,” the PN said.

MaltaToday first revealed that the government had paid Cities Entertainment Ltd €4.2 million to buy back the 65-year lease for the Café Premier, when the company was facing a court action to pay €200,000 in rental arrears to the Lands Department.

The money was then used, as agreed to in the deed of sale, for the company to pay back its government dues – tax and utilities – as well as a €2.5 million bank loan and also €210,000 in a debt constituted by one of Cities Entertainment’s owners, for allegedly brokering the deal.

“If the government wanted to genuinely acquire the premises, it could have easily asked the court for the rescission of the emphyteutical contract and allow court procedures to carry on for the payment of the arrears. It would have saved €4.2 million,” the Nationalist MPs said in their letter to Auditor General.

The MPs have asked Anthony C. Mifsud to declare whether the decision to acquire the lease for value for money for the public; whether the principles of good governance and transparency were followed; whether it was “ethical” to acquire emphyteusis itself; where government procurement rules were followed; and whether the government procedure adopted was discriminatory, exposing the Lands Department to similar requests from lease-holders who would expect “a bailout, as has effectively happened in tis case.”

‘Amicable expropriation’

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.

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.

Cities Entertainment were trying to sell off their government lease on the market due to business losses and outstanding rental arrears; but Camilleri was said to have 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.

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 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.

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.