Café Premier shareholder denies graft claims

A shareholder in Cities Entertainment Ltd, the company the government paid €4.2 million to buy back its 65-year-lease on Valletta’s Café Premier, has denied allegations of ‘commissions’ having been paid to secure the deal.

Mario Camilleri, a property entrepreneur whose company, M&A Investments, was a shareholder in Cities Entertainment, categorically denied that €210,000 paid out to his company from the €4.2 million payment, had been a “commission” for having secured the deal with government consultant John Sciberras.

Camilleri was said to have agreed the €210,000 as a “commission” for brokering the deal with Sciberras, by his former business partner Neville Curmi during a police investigation into an MP’s suggestions that commissions could have been paid to secure the “bailout”.

The company had been called on to pay over €200,000 in lease payments it owed to the government in December 2012. Cities Entertainment contested the order in court.

After Labour’s election victory in 2013, Cities Entertainment and the Lands Department dropped court action against each other, and proceeded to negotiate the €4.2 million settlement for the company to rescind the lease, and pay back all outstanding state dues and its private debts.

Accusations that the company was in financial difficulty and had benefited from government largesse, were amplified this week when shadow home affairs minister Jason Azzopardi alleged that the ‘bailout’ had a “whiff of corruption” about it.

“I categorically deny this suggestion,” Camilleri told MaltaToday when it was put to him that the €210,000 paid to M&A Investments was a ‘commission’ – as suggested by his former business partner – for securing the deal that cancelled out all the company’s debts.

“This was a straightforward deal, and the €210,000 were a business debt due to shareholders’ loans.”

Jason Azzopardi said that in their investigation, the police did not determine why the €210,000 had been paid to M&A Investments when this had been alleged by Curmi to have been a commission.

“Cities Entertainment was making losses,” Camilleri said. “But had we sold the lease out to a private company, we would still have had to settle our outstanding government dues and any private debts,” he said.

Under the conditions of the €4.2 million sale, 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.

Jason Azzopardi has said that the government also paid €20,000 in notarial consultancy fees to the firm of Labour MP Charles Mangion, but at the time of the deal Mangion had not been elected to the House of Representatives.

The deal was executed by order of a Cabinet directive in late 2013.

Speaking to MaltaToday, Mario Camilleri said that he had been negotiating with other entrepreneurs and food retail chains, and that the property had been valued at some €5 million by his notaries.

“We had already offered the property to the previous administration. But there was not intention of taking talks forward because an election was upon us at the time.

“After the election, I approached the new administration and it was an opportunity to have the Café Premier, which is located beneath the Biblioteca, back in government’s hands. We then started negotiations with [OPM consultant and former Lands Department director] John Sciberras.”

Camilleri insisted that Cities Entertainment were entitled to transfer the lease to a third party, had the company found a private buyer ready to take on the operation. “The land belonged to the government. But the lease belonged to us for the 65 years – and that is why the government paid that money to take it back.”

He also said that Sciberras was a tough negotiator to deal with. “They were very hard negotiations. Sciberras drove a hard bargain.”

Camilleri however refuted suggestions by the Opposition that the deal was irregular.

“It was a legitimate, straightforward deal. If I had anything to hide, I wouldn’t be speaking to you right now. This is no bailout: had we sold the lease to a private party, I would have brought in the same creditors into the deal to ensure that they get paid and that we settle the debts.”

The Opposition has asked the Auditor General to investigate the government’s ethicality in buying back the 65-year lease from Café Premier, and to see whether public procurement rules were followed.