Café Premier €4.2 million bailout ‘stinks of corruption’ - PN

Café Premier bailout has 'whiff of corruption' - Jason Azzopardi

Nationalist MPs Jason Azzopardi and Ryan Callus have thrown down the gauntlet and accused the government of having shown undue favour to Cities Entertainment Ltd, by paying the company €4.2 million to buy back a 65-year government lease on the iconic Café Premier, in Valletta.

“This contract stinks of corruption,” Azzopardi, the shadow home affairs minister said, of the €4.2 million contract to have the Lands Department pay Cities Entertainment to vacate the café and give it back to the government.

“The people are intelligent enough to come down to its own conclusion that this was a pre-electoral deal,” Azzopardi said, referring to the fact that Cities Entertainment had been called on by the former Nationalist administration to pay €200,000 in arrears.

FULL STORY The Café Premier bailout

After Labour was elected in March 2013, court action initiated by Cities Entertainment against the Lands Department was stopped in the summer of that year, when an agreement was reached, ostensibly with OPM consultant John Sciberras, a former director of the Lands Department, to have the cafeteria vacated.

Azzopardi said that the Lands Department had refused a Freedom of Information request filed by MaltaToday because a police investigation into allegations of commissions, had not yet been terminated.

“What is stopping the police from informing the Lands Department that the investigation is indeed over,” he said, referring to reports in MaltaToday that the investigation had already been terminated.

Azzopardi also called into question the fact that €20,000 was paid to Cities Entertainment Ltd’s notary, Malcolm Mangion, in the form of a consultancy fee. “Is government paying the company’s fee too? That beggars belief.”

Instead of forging ahead with court action to recoup the arrears, or even dissolve the emphyteutical grant - as the government was empowered to - the Lands Department paid Cities Entertainment €4.2 million to pay the government back on arrears and taxes, rather than having them pay the money they owed from their own reserves.

Of the total sum, the owners had to pay back: €307,346 to settle outstanding arrears with the government property division and €504,000 in capital gains tax owed on the land; then the sum of €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.

The Opposition has asked the Auditor General to investigate the workings of the €4.2 million compensation paid to Cities Entertainment for the rescission of the 65-year lease, ostensibly to vacate the premises underlying the National Library in Valletta. The PN said it wants to learn whether the compensation was ethical, in line with government procurement rules, whether this was discriminatory towards similar businesses and whether other intermediaries were involved in the deal.

According to a police investigation into allegations of commissions, shareholder-director Neville Curmi alleged that his partner Mario Camilleri claimed the money after reaching the deal with the former Lands Department director John Sciberras. On his part, Camilleri denied to police that this was a commission, but said that the debt had been constituted due to monies he had poured into the running of the ailing business.

The €210,000 is believed to have been constituted as a fee by a shareholder in Cities Entertainment Ltd, Mario Camillleri, for having secured the agreement with government consultant John Sciberras to have the Lands Department buy back the 65-year lease on the government property.