Updated | No excuse for PM’s direct involvement in ‘scandal’ – PN

Prime Minister Joseph Muscat denied ever reaching a pre-electoral agreement with Cities Entertainment after the PN today called for his resignation over a €4.2 million bailout for private company Cities Entertainment.

Muscat personally entered negotiations to buy back the 65-year lease for the site occupied by the Café Premier in Valletta.

PN deputy leader Beppe Fenech Adami said the prime minister was politically responsible for the government’s decision to solve the problems of a private company using tax money: “I challenge the prime minister to explain whether he met Cities Entertainment before the election, especially given the café was closed on 8 March, the eve of the election.”

“The Opposition’s allegation that the Prime Minister had reached some form of agreement with the owners shows that the PN is still using its own yardstick when analysing the government,” the Office of the Prime Minister said this evening.

In a reaction to the statement, the PN said that a “serious Prime Minister shoulders responsibility when his direct involvement in a scandal is revealed”.

“Muscat knows that he should have never interferend in the negotiations and the only excuse he can use is that he ‘welcomed scrutiny’,” the PM said.

The PN said that “when negotiating on a personal basis, a serious politician knows that he must resign”.

“Unfortunately, Joseph Muscat’s standards are too low and the Maltese do not deserve this. The Maltese deserve a serious Prime Minister who fights corruption and wrongdoings and not get himself involved in scandalous negotiations,” it said.

The OPM insisted that the government had been “proactive” and acted to recollect €1 million owed by Cities Entertainment to the government. It said, that the Café Premier building could now be used for public aims.

“Previous administrations spent years trying to collect back the monies owed. The present government had two options: either open a fresh case against Cities Entertainment or collect the money back and pay the owners the rest of the emphyteusis to get back the building,” the OPM said.

It said that the government never held back from taking the necessary decisions and, it said, in this case it meant collecting back the monies and the site. The decision was approved by the Cabinet.

The OPM said the Police had investigated allegations of commissions paid over the sale. The investigations, it added, found nothing “illegal”. The OPM said that Auditor General did not find any illicit actions and that the value of the property reflected the market prices.

“The value of Café Premie was confirmed by three experts, including a technical consultant at the Office of the Auditor General.”

The OPM also said that it was taking on board the NAO’s recommendation that the procedure should have been better handled. It added that the contract was publicly available for further scrutiny and the “government would welcome such scrutiny”.

The report by the National Audit Office, requested by the Opposition, was spurred on by MaltaToday’s first report back in February 2014 when it broke the story that the Government Property Department (GPD) had withdrawn legal action for the rescission of CE’s lease, despite having fallen back on some €250,000 in ground rent.

Instead, on the advice of former GPD director and advisor to the Prime Minister, John Sciberras, the Cabinet approved a €4.2 million bailout to buy back the 65-year lease on the café in Old Theatre Street, Valletta; which money was used to pay the State back on outstanding rents, energy bills, VAT and tax, as well as Banif Bank loans of €2 million and a €210,000 fee to CE’s shareholder Mario Camilleri for brokering the deal with John Sciberras.
The NAO found a “lack of rigorous and documented consideration of other options” such as the legally justified rescission of the lease; “poor governance” with the Prime Minister’s negotiating team failing to involve the GPD from the initial stages of negotiations; an absence of documentation to sustain government claims that there was a danger to the overlying National Library by gas cylinders in the café; and that a 5% commission for CE’s shareholder was “unsubstantiated and… inappropriately included in the agreement.”