Cities Entertainment took almost €300,000 worth of office furniture

Former Café Premier owners Cities Entertainment were allowed to take almost €300,000 worth of office furniture and equipment after the company was liquidated.

Addressing parliament, Nationalist MP Jason Azzopardi said it was “scandalous” that a company facing liquidation was also allowed to take the assets with it.

He explained that through liquidation, owners would use all their assets to pay some of their debts.

Azzopardi said that a copy of the most recent audited accounts of Cities Entertainment were dated 31 December 2012, with a disclaimer that the audit evidence was not sufficient.

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first report back in February 2014 when it broke the story that the Government Property Department (GPD) had withdrawn legal action for the rescission of CE’s lease, despite having fallen back on some €250,000 in ground rent.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.”